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Why “No other product like yours” is not cause for celebration. #PlaybookRT

On Saturday, December 6, 2014, founders, CEO’s and others from startups based in and around Mumbai met at the office of WebEngage. We were there for the iSPIRT PlaybookRT on Positioning and Messaging by Shankar Maruwada. Below are my notes and thoughts about the event…

Identifying and defining your customers

Shankar emphasized that the process of developing a positioning and messaging strategy starts with identifying and defining who our prospects or customers are. Finding out what they value and what their pain points are. In case of an existing customer base, one must evaluate what made a customer choose our product over other options.

It is important to remember that finding out who your customer is, is a lifetime process. And the results of such an exercise can keep changing over time.

The positioning and messaging objectives

Once customers have been identified and defined, we must start work on how we should define our product so it appeals to the customer base identified. Our positioning and messaging should be such that…

  • It gets the customer’s attention quickly
  • It is extremely easy for them to understand what your product is
  • Enables them to see without much effort, how the product would be useful to them

Using Analogies

Analogies can be a powerful method to quickly position your product in the mind of the prospect. A new idea is better understood when it is stated in the context of an already well known idea.

To take the example of some popular movies which were based on newish ideas at the time they were pitched…

  • The film “Aliens” originally was pitched as “Jaws on a Spaceship” and that image sold.
  • Similarly the 1994 movie Speed was pitched as “Die Hard on a bus”!

Some other helpful tips to help with your positioning process…

  • List out what questions you want your customers to ask? That will help you figure out how your positioning should be.
  • Don’t get trapped by words. Get the idea and thought first and then figure out how to articulate them.
  • When you say there is nobody like you, you are in trouble. No one wants to be the first person to be a fool.
  • People will position your product anyways. It is not optional. Your job is to guide them to the positioning you want.
  • To add credibility to any benefit that you choose to highlight, quantify that benefit. For e.g. Product X is so simple that employees complete their tasks in half the time
  • Your positioning statement and initial messaging should be as short as possible. Remember internal chatter in the prospect’s mind starts in about 30 seconds.
  • When there are multiple benefits, try to create a hierarchy of benefits.

One way to really know that you understand your customers is to see if you are able to predict their behavior. If you can successfully predict their questions or action, then you have a good job!

Curse of Knowledge

One of the most interesting things that Shankar spoke about was the Curse of Knowledge.

Wikipedia describes this as…

The curse of knowledge is a cognitive bias that leads better-informed parties to find it extremely difficult to think about problems from the perspective of lesser-informed parties. 

Anyone who has attempted a positioning and messaging exercise for their products has surely battled this. It requires us to…

  • See ourselves from the eyes of the prospect.
  • Understand how they perceive us currently. Understand what our prospect values.
  • Understand how our product must appear and what it must say so the prospect feels enough trust and sees enough value to go ahead and purchase.

The curse of knowledge is easily the biggest roadblock in this process. A better informed person is not always able to anticipate the judgement of a lesser informed person. Applying this to sales, it is said that a better informed sales person may actually be at a disadvantage as compared to a lesser informed agent pitching the same product. This is because the better informed agent may fail to ignore that knowledge which they posses but the prospect does not.

They could end up over estimating the prospect’s product knowledge or the value the prospect attaches to certain benefits or features.  A lesser informed sales agent would probably have a better idea of what the customer has understood. They would probably explore more to understand what the customer truly values.

It is important for the prospect to see our positioning and messaging as relevant to them. The curse of knowledge can fool us into believing our messaging is universally understood.

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Your working space inside another startup in Silicon Valley. #AtithiValley

A few decades back, when the technology boom in India was starting and our now ubiquitous technical talent was finding its footing, there remained a huge gulf between the India & the US in terms of exposure and application of new technologies. Which is why a lot of pioneers and early tech visionaries, wanting to be in on the action, decided to take the trip to the Valley itself.

That was a difficult time, as networks weren’t well established, access to companies and face-time with people was limited.

Now isn’t like then.

The rise of the Indian contingent in the Valley has meant that it is far more easier to travel to the US, and perhaps even start operating from there. Moreover, hungry and promising startups can travel to the Valley when they want to, absorb the culture, ask the questions they want answers for, network for funding and come back to get stuff done. This has been happening increasingly in the last few years and slowly positive results are coming out of it. Hobnobbing with product guys, resonating ideas with consumers, strategies for go-to-market, sales execution from professional who have done it many times over, accelerates the time to market.

We at iSPIRT have been thinking about this for some time now; the Valley has a lot to offer to the Indian ecosystem, and we need to use all that it has to offer.

iSPIRT is pleased to announce the Atithi Valley program, a first-of-its-kind initiative that will enable Indian startups to travel to the Valley and call another company’s space as your office for 2-3 months, using their facilities, bumping into creationists and maybe getting mentored. 10 companies have signed up for the program and we have access to around 20+ spaces in Silicon Valley, from San Francisco to San Jose.

If you are a startup and are planning to travel to the Valley in the next few months, please sign up using this form and get one of the iSPIRT Founder Product Circle donors or Fellows to recommend you. We will help you find a space in the Valley, opening up a new vista of knowledge and opportunity.

 

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Voice of Customer Digital platform for Indian SMEs – the Inquirly story #BootUpINDIA

inquirly-logoInquirly is an integrated Voice of Customer Digital platform, designed exclusively to help Indian SMEs listen to their customers, engage with them, act on specific requests, all of these, using a single integrated platform. Product Nation interviewed Anjan Choudhary, founder of Inquirly to understand about the start-up, its products and experiences working with Indian SME customers. Read on… 

Tell us about the circumstances which led to creation of Inquirly

Inquirly came into existence formally about a year ago. However, the thought process behind it started some time during 2012 – when I was working at Accenture. Inquirly was born primarily due to the culmination of my prior experience as an entrepreneur in the manufacturing sector, and later as an IT professional working in an MNC.

While at work for Accenture, in the US, I noticed that digital technologies were disrupting the economy in many different facets – bringing about new ways to perform marketing and sales activities, financial transactions etc for an enterprise. Immediately, it stuck to me that I could leverage these technological advances, and put it to use to serve the sales and marketing needs of many SMBs in developing markets. This led me to start small experiments to validate my thoughts and concepts. After a few iterations, and early customer validation, I quit my job to start Inquirly.

What is unique about your product – and how do you think it differentiates itself in the marketplace?

Inquirly is an Integrated Voice of the Customer Digital platform that enables companies to move beyond the limitations of traditional marketing, Sales, and customer service. Inquirly offers a holistic platform to listen to the customer, engage with the customer and act on real time and continuous actionable data thereby enabling businesses to get precise insights leading to proactive business decisions that result in greater efficiency, enhanced customer satisfaction & engagement and ultimately propelling continuous business growth.

For example, a restaurant owner, can monitor all online review comments from one screen with sentiment and Intent analytics, influence scores, by using this platform she can also understand the prospective customer preferences of dining, identify and target the prospective customers more effectively by offering discounts and other incentives, review whether these promotions worked effectively or not, and most importantly, get actionable feedback from customers – all of these in real time. Most of these could not have been done on a single platform earlier – and at affordable price points. This is how Inquirly differentiates itself from other point based solution providers.

Describe your experiences from the field during your first six months. What were the key learnings you obtained from these initial days of operation?

AnjanWe have had both good and bad experiences as we started to work full time on this product. The good part is that we have been continuously getting positive feedback on the features and utility of our product from our customers. Early adopters have given us constructive feedback on how things can be improved further – and we have been at it.

On the other end, one of the key things we misread during the early days was our assumption about the Indian market opportunity. During the controlled launch period, we learnt that the market penetration was not going to be at the pace we had initially assumed, and so, we had to rework on those projections a bit. We also learnt that India is not a Do It Yourself (DIY) market and so we had to start our services arm much early than we anticipated. Another important one was that recurring payments in SaaS based platform is not possible as per the Government guidelines and the market is not ready to make yearly/quarterly payments in advance.

As a result of the above experiences, we have learnt that we need to remain agile, identify the right ‘Market’/ buyer persona and target the same with perseverance, and to invest in inbound marketing while building the product.

How has internal operations at Inquirly evolved based on the above market place realities that you narrated?

Clearly, the learning we have had from the field has impacted our internal organization. On the sales front, due to our experiments in our early months, we now have a good understanding of the sweet spot for our product and also on its applicability in different domains. We now have been converging on this set, and have built up case studies and business scenarios, which is helping the sales team to close more deals.

Having a very strong, balanced development team is always one of the key assets to a start-up. We have ensured that our development team is staffed with the right mix of experienced folks and young talent – so that we are able to iterate on new features within weeks and release the updates to the market. On the financials front, we have been bootstrapped all this while, we are on target to break even by March 2015, post which, we expect to get more financial leverage to expand our business to other cities in India in the short-term. In the long-term, we do plan to go international.

Thank you for your insights! In closing, can I ask you to share three things that you deem as priority for product entrepreneurs targeting the Indian customers?

Sure. First and foremost, make sure that you converge on the target market which has the most burning need to use your product. This may take few iterations in the early days, but be at it and ensure that you have greater clarity on the sub-set of customer segment that you want to target to begin with. Second, ensure that you simplify user experience dramatically. The adoption rate of Indian customers, in my opinion, is directly dependent on how easily they can use your product. Last, perseverance is required when working with emerging market – since, given the nature of the market, and the background of customers, you need to continuously work with them to reassure the value that they will obtain, by using your product. This will mean that your sales cycle will be longer. Hence, plan for it in advance and execute accordingly. Good luck!

 

 

 

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8 Powerful Things I learned about “Positioning your Startup” at the iSPIRT #PlaybookRT

As a founder or technologist mired in the day-to-day tasks of product building, it’s easy to get drawn into thinking of your product as a collection of features. But do customers also see our products as a stack of features? Or do they see products as a sum of the solutions that they offer? How do we best translate our offerings into a simple and sticky pitch that piques our customers’ curiosity and gets them to purchase/sign-up?

To find a thinking toolkit to these type of questions, I attended the iSPIRT Round Table on Startup Positioning at the WebEngage  office in Mumbai this Saturday along with the founders and product leaders of 14 other unique startups.

2014-12-06 16.57.35Over six intellectually stimulating hours, all of us had our product pitches brutally critiqued by everybody else under the guiding presence of Shankar Maruwada, an ex-P&G marketing wiz and the man who got millions of Indians to sign-up for the Aadhar card.

Here are the Top 8 things I took away from the #PlaybookRT.

  1. First, make sure you are positioning to the right customer—A startup can have multiple “customers”. The customer who will purchase and implement your product may not be the same as the one who will use it. Which one of them do you pitch to? Example—should RippleHire (an employee referral hiring tool that uses gamification) position itself to a company’s Chief Recruitment Officer who will deploy the product in his company, or to the company’s employees who will be the actual end users critical to the product’s actual usage?
  2. Then, know your customers well—What 3-4 specific things do you know about your customer, which you can use to create a pitch? This resonated very well with me. Having interviewed a bunch of Instamojo’s customers in the past few days and quizzed them about the outcomes they were trying to achieve by using Instamojo, I had learned that “non tech-savviness” was a common characteristic among most of them. This insight suggested to me that Instamojo’s positioning should embed the fact that it requires “Zero IT Knowledge”.
  3. Find out the customer benefits that your product delivers and communicate them—Beware of confusing features with customer benefits! Features define the tasks that a product completes. Benefits capture the outcomes that customers achieve as a result of using the features.
  4. If your product provides multiple benefits, prioritise them in decreasing order of importance and then communicate just the one or two most essential ones in your positioning. Communicating too many benefits at the same time could make for a confusing message and take the focus away from your product’s superpowers.
  5. Beware of the “Curse of Knowledge”—As product leaders, we are prone to become so close to the body of knowledge surrounding the product and internalise so many assumptions that we forget what it is like being the user. Positioning the product correctly requires us to place ourselves outside the realm of features, technologies, implementations and industry terminology and speak in the language of customer’s problems and our solutions to them. Example—product leaders of Enterprise Resource Planning (ERP) software may forget that many in their target customer base may not even know what ERP stands for, though the same customers may still be facing the problems that ERP software aims to solve.
  6. Use the power of analogies—Often, a complex concept can be explained simply using the construct “We are the X of Y”. Example—“Foodpanda is the Uber of Food Delivery.” or “Wishberry is the Kickstarter of India”. While such a construct may not always fully convey the idea, it catches you the customer’s attention enough for you to then elaborate further on how your product’s benefits make the analogy valid.
  7. Use the power of stories—A powerful customer story can illustrate your product’s benefits and allow the target of your positioning to visualise herself in the story. Example— Apartmentadda helped an amnesiac senior citizen find his way home. His apartment complex’s security guard pinged all its residents on SMS about the lost gentleman using ApartmentAdda. Among those who received the SMS was the old man’s son, who promptly arranged for his pickup.”
  8. Use numbers for a strong impact—What numbers can you say about your product that will help your prospective customers visualise its impact on their lives? Numbers can be about the number of customers whose lives you have changed, the number of steps (hopefully very few) it takes to get started with your product, the number of transactions your product did in the last X hours, the number of hours of customer work your product will end up saving, etc.

Guest Post by Apoorv Pandit, Sr. Product Manager, Instamojo

IMG_0839

 

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Tax challenges being faced by the(SPI)Software Product Industry and Budget Recommendations made by iSPIRT.

With the budget closing in on the industry there are hectic conversations to represent the Software Product Industry in the right manner in the Ministry of Finance. The tax issues both on the Indirect Tax and Direct Tax have been plaguing the Industry for a long time and this hangout addresses the things which need to be done very well. The Indepth Knowledge of  Bharat Goenka (Tally Solutions) and the  moderation done by Sumeet Kapur(Employwise) leads to an in-depth conversation on the Tax issues.

Bharat divides the two issues into, First, the Direct Tax about TDS the why and when it should be applied along with Industry perspective, the second issue was Indirect Tax – the confusion around excise and service tax relating to products and its definition and applicability of VAT .

It becomes important to introduce the Constitutional Framework under Indirect taxes which broadly talks about Manufacturing and Services being taxed by the centre and anything that is traded is taxed by state.

Confusion arises around “Service” and “Right to Service”. Whereas “service” is not tradable a “Right to Service” when sold is a tradable e.g. a Mobile phone service being provided by a Telco is a service where as when a vendor sells a recharge coupon he is selling “Right to Service” that actually will be provided by the said Telco.

Hence, under this concept of “Right to Service” tends to be tradable until the service is rendered and not after it is consumed, because the title to right to service is nor more existing after consumption. Service is therefore treated as tradable commodity thus qualifying for VAT in states and the Center charging service tax, this leads to invoicing for both VAT and Service tax on a software product.

What is needed is clarity on the issue of tradability of service as “goods” and “service delivery” as “service”.

GST will bring in changes but the taxes will be shared between states and center. GST it self may not fully solve the problem of duality of tax on software products. The problem of duality on VAT and service shall be sorted out only when there is clarity on “Right to Service” as a tradable commodity and “service” is achieved.

We as an Industry need to help Government formulate a distinction between “Service” and “Right to Service” as a tradable, so as to do away the duplicity of VAT and Service Tax so that service tax is charged only on part of service and VAT only on tradable value added portion if and when a service is traded further by channel partners of the service provider.

Direct Taxes (TDS)

Sumeet introduced an issue on TDS. Primarily a TDS made by payers to software company leaves less cash on the money collected. This is mainly for software product which sold leaves the product company with 10% less cash on the money collected.

Bharat mentioned that Software despite being a tradable product is the only product that is subject to TDS. This creates a bigger problem for the young companies and growing industry as early years do not allow you the sufficiency of profits.

We need to bring in front of Industry that no trading activity should attract TDS. Also that by doing away TDS the Government is allowing the profitability and business growth thereby allowing more business to happen and widening the tax base eventually.

Sumeet was of the view that, if software product companies are being subject to a TDS there should be Tax credits available on service tax so that the cash availability to businesses can be balanced.

Bharat added yes we can represent to the Government on this that either give me an input credit or refund TDS on day I file my return. Sumeet added that refund must be done even if there is a scrutiny.

Pramod from Nucleus Software added that in an event the question of Duplicity of VAT and service tax was raised to the Revenue Secretary, who showed his inability to do away with duplicity on tax as VAT is a state subject.

Conclusion

Many of the changes in law have come in past few decades and there was a lack in taking the cause to Government or lack of sufficient clarity in helping Government to clearly define distinction between Goods and Services and to separate out Right to Service being traded verses Services.

Bharat Concluded by saying, in the present efforts done to represent to government, we are looking at adequacy of clarity and this clarity is much needed even if the GST is coming to solve the issues and problem in this regard.

The detailed budget recommendations can be seen here.

With Inputs from Sudhir Singh, ExcelICT

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Nuts and Bolts of Marketing & selling SaaS products to US customers from India for First Timers

In innumerable brainstorming and “gyan” sessions with friends, mentors and experts, one of the most stressed focus area is getting product market fit as soon as possible and then follow it up with scaling sales.  I think most early to mid stage entrepreneurs are instinctively aware of this but struggling with “Hows”.  So when I saw this playbook promising precisely to explain how, I grabbed a spot. I wasn’t disappointed. Suresh Sambandam is very down to earth and spoke earnestly and in detail about different steps he took while selling the OrangeScape’s product KiSSFLOW. Attendees who themselves run early to mid-stage companies and Kishore Mandyam of Impel CRM chipped in with their stories and inputs. Here is the detailed enough capture of the same.

The relevancy of this session is greatest to Early and Mid-stage entrepreneurs going from $0-5K MRR to $50K MRR selling to US MSB. This session is NOT meant for discovery or product market fit but I have inserted the discussion at the end.

The blog is organised as below Product Market Fit / Pricing as step 0; Followed by Inbound Sales and Marketing and then finally Outbound Sales and discussion on tools.

2014-11-15 16.37.05Product Market Fit

The absolute first step (may be zeroth step) in Sales process is getting the product market fit. You know you have a Product Market Fit with a B2B Mid-Market SaaS product when unknown folks start buying (Inbound sales is picking up traction). Unfortunately in cases that were presented at the session, the discovery process of the product happened organically based on another product that they were building.

However the generic solution for early stage product discovery goes like this.

  • Create a landing page with a “notify when ready”.

  • Create a SEO/Adword campaign for getting early adopters. You need to be very clear about the product category and fine tune your Adwords to exactly match what product aspires to solve. There are usually two approaches to any product i.e Disruptive Innovator or Faster Better Cheaper. So Adwords need to be in line with these

  • Once people signup engage with them and partner with them to fine tune the product.

To put succinctly Bring-> Engage->Convert->Succeed; As you can clearly see from this model, “Marketing Comes Before Product” or as Suresh puts it bring the horse to the water.

Pricing and “Freemium v/s Free Trial”

So which model suits best for a SaaS product? Is there one preferable over another? Very subjective topic but the thumb rule seems to be for SMB / Mid-market SaaS Free Trial is a best method to go.

Models aside, what matters most to the conversion is the post-signup engagement and the price factor. Faster conversions are dependent on many factors but one of the key factors is pricing. If pricing is within the decision-making authority of the midlevel managers, it is easier to convert. The discretionary spending seems to be around about USD 5K. Keeping the price low per user and making minimum unit purchase of say 10 users per bundle works quite great.

Inbound Sales

WebSite – Suresh firmly believes that Website is a core asset for a B2B SaaS company and hence should not be outsourced. He advises to have a minimum team of Web Developer, Creative Designer and Automation Engineer.  This would help perpetual A/B testing in short cycles..

Couple of nifty tricks to make the whole experience frictionless is to have a one click signup. Visitor should be able to experience the main software within few seconds. The other participating companies in the round table have used various  techniques to authenticate emails like SMTP Ping, email pattern matching, etc.

It is also important to closely monitor the users interaction with the website, capture it and feed it back to the Engineers to close the gap and arguments between Sales/Marketing and Engineering. One of the recommended tools in this category is FullStory.

RajanSEO

Lot of interesting debates on this; discussion ranged from how get the right keywords for searches and what optimization works and how to track the metrics. Suresh again firmly believes in having a dedicated SEO guy and focus on defined key words. They manage about 28 keywords and track them very meticulously. Some thumb rules and objectives again are

  • Do it Slowly but Steady
  • Don’t alert Google
  • Build Backlinks (Naked and Anchor)
  • Improve Google Crawl Frequency

Adwords:

It is preferable to have one dedicated person with number crunching and finance background. This will help track the cost per signup for search ads

Content Generation:

While it is important to have this come from founders, it is very hard to find time for the founders. One technique employed by KiSSFLOW is to hire fresher from visual communication background who has a grammar nazi attitude and give a very specific target like 2 +2+2+1 per week (2 blogs published 2 interviews done, 2 assured interviews for next week and 1 research post). He also uses 10-80-10 formula for the content itself where beginning 10 and ending 10 percent are reviewed in detail by founders.  One of the other key points stressed was to have self ads in each of the content which leads to signup.

Outbound Sales

Contact DB

Obviously the most critical first step here is having a database of all the companies and the decision makers that you want to reach out. Linkedin Premium works best. This is how Suresh does it. He uses Linkedin DB to create a list of all target companies and then assigns the task of creating the contact details to an online consultant who was discovered on Elance. It usually works out to INR6-INR10 per contact. There are other dbs one can purchase directly from companies such as Data.com, Discover, rainking and slew of others.

Once contacts are obtained it is very important to use direct emails as opposed to using mailchimp, constantcontact, etc as most of them will not land in inbox. It also helps to be as personalized as possible.

Sales DNA

It is absolutely essential for the founder to set the tone of sales.  For US be ready to pull night shifts continuously.  Although it is the founders calling, it is good idea to assume the persona that appeals to US clients say Bob and position one as a sales manager. It is also important to make the sales hire to listen to the call handling to build on this.

Channels

Not all channels are suitable for SaaS and one needs to do some trial and error to figure out the best channels. The channels include Events, Road Shows, Reselling Partners and Referral/Affiliate partners, may work well but Orangescape has ignored them.

Metrics, Tracking, Tools

Meticulous tracking is critical and many tools are available to manage and measure the process. Some that are being used by the roundtable companies are listed below.

Metrics to track

Metrics to Track

Suresh SambandamTools

These are the various tools used by the KiSSFLOW team and other participant companies who attended the roundtable

tools

Conclusion

Very hard to summarize such a detailed session, but one parting thought stands out. Attention to details followed by automation and customization seems to be the way to go.

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Product Management Roundtable For Startups by iSPIRT In Pune. #PlaybookRT

After all the missed opportunities of being at a PlaybookRT by iSPIRT, I finally made it to Pune last weekend for the roundtable on Product Management. Amit Somani and Rahul Kulkarni conducted the session. While I can’t do justice to all that was discussed at the session, I am translating my notes from the Roundtable into this blog post. After sharing some of our product dev insights in my last post Learnings From Building A Consumer Facing Web Product, this was a good opportunity to become a sponge and soak in all that I could manage. 

As a startup founder who hasn’t previously worked in a product company, starting a product business is tough. And being a CEO with no technology background, doesn’t help the mix either. The challenges for building an internet product for me may be more than the average amongst the ones attending this Roundtable, but product management is still a tough beast. Understanding consumer needs, building a product around it, figuring the right metrics for your business, measuring it and iterating is puzzling for anyone, specially given the fact that we are always chasing a moving target.

2014-11-08 14.15.57To give you a taste of how things play out in the real world:

When we started PriceBaba back in 2012, mobile apps were a good to have, desktop traffic was bulk of Internet usage and little did i know that India is on the verge of such massive investments in online shopping. Over 2 years later, the story is very different. Mobile is huge (both web and apps), online shopping is real and consumer Internet in India and the investment landscape which was looking slow between 2012-2014 has picked up crazy momentum.

For a startup that is bootstrapped, at an accelerator or even seed funded stage, getting the product market fit, raising funds to survive, hiring good techies and dealing with an uncertain market which is changing fast is a daunting task. If you add to that the learning curve involved to make things successful, you would know why I appreciate this Product Management PlaybookRT by iSPIRT so much.

The Product Management #PlaybookRT

Amit and Rahul kicked off the session by helping us define our product vision (and separating it from the company vision and mission). We were asked to make a 30 sec pitch by each of us on our product vision along with two things that we would never do. Both Amit and Rahul played devils advocate and helped us think through what we are doing. Learning: A quick dipstick to check if your product vision is well defined, ask employee no 20! If they can define it well in your (founders) absence, then you have set your product culture right.

Stack rank your requirements. What is the single most important thing you? Rahul suggested us that things can’t move forward till we stack rank our priorities. We must know what is the most important thing that we do. A somewhat heated discussion was on how important the user interface of a product is for being successful. Should we fret about having the best UX out there or build a product that is very compelling, offers a better price than competition and delivers what is promises reliably? To cut short on what could be a day long debate, here are two independent bits I picked up from our facilitators. i) If you are offering something that no one else can, your consumer will also use a command prompt to get it. ii) Your Apps UX is much more important than what it was a few years back and it is getting more and more important by the day. But that may not be the lone factor in getting a winner out there. That said, don’t purposely try to build a bad UX 😉

The user experience is not just defined by what the user does on your mobile or web interface. It is every touchpoint that the consumer has with your brand / service. It is the whole packaging of what a user goes through. For a e-commerce site it would go down to the professionalism and courtesy of their delivery boys. Similarly, when taking a view of product, the challenge isn’t always about getting that killer UX designer to work on your mobile app. It is really defining what your product does and how.

Each of us got enough time to define our key metrics and find ways of measuring them. With my experience I can surely tell you that it is indeed true that which ever metric you track on a day to day basis, improves quite magically 🙂

Tips on collecting feedback & effective product management: 

  • Take feedback from your extreme users. Either the ones who are very naive and would ask very basic questions. Or from the extreme users who would want every pro feature out there
  • Group users by commonality. Set goals for users who perform well. So track a users life journey within your app, figure key milestones and set them as goals. Optimize for these goals. So if you know that a user who completes Level 1 of your game, is most likely to play till Level 4, try to optimize such that you acquire users who will complete Level 1

Apart from the evergreen Google Analytics which is great for averages, tools like Mixpanel, Kissmetrics and Wizrocket are great for digging into specifics. You may want to give them a spin. You may also want to check Dave McClures talk on Startup Metrics for Pirates. 

playbookRT

Hiring. The Big Deal. 

So the tired entrepreneur in you is thinking already, when can I hire someone to take some of my money and all my product problems? Well, well not so soon! Product Managers come in various flavours and to begin with, YOU are the PM. Hiring a lead product manager is tough and transition is not easy. You need folks who are curious, bring product insight, are analytics, can be strategic and can work with really smart engineers. This is an individual that blends great communication skill and simplicity. So where do you find such a mahapurush?

Amit suggested a good strategy of hiring young grads and train them to become good PMs in a year. They will love the opportunity at the start of their career and won’t burn a big hole in your pocket. That said, a dedicated product lead will take over the duties from the founder(s). This would ideally happen at a later stage for most of us attending the Roundtable. The three flavors of Product Managers are:

i) A Project Manager who will get your task list executed

ii) A product manager who will get the job done but won’t give a new direction to the part they are leading – the CEO holds the strings. Also example of Windows OS where changing one aspect as per will of a Product Manager won’t fly, it would need the to go hand in hand with the whole OS

iii) The Business Owner – Give this product manager your metrics and let him/her chase it down for you with full ownership

^cheat sheet: Google for questions asked to Product Managers at Google / Amazon / FB 🙂 

2014-11-08 14.22.30Best Practices For Product Development: 

i) The Amazon Approach – Write a press release before starting the product development. Also read this by Ian McAllister of Amazon:

ii) Before you launch the product, predict the no of users your new product / feature would have for the next week & month. Define the usage metrics

iii) Have extreme clarity in goals, let people make mistakes but own the job

iv) Questions to ask yourself – Is this world class? Can an engineer look this up and build it in 2 days? Why are you uniquely positioned to do that?

Also appreciate if someone else has users and learn as to why they have users for what they have built. You can learn a lot from that. Eg: Google & Apple learnt about good features that would eventually go into their OS by looking at some trivial but popular apps on their App Stores.

Books recommended by Amit and Rahul: 

  • The innovator’s dilemma by Clayton M. Christensen
  • Start with why by Simon Sinek (also the TED talk by Simon)
  • Profit from the Core: Growth Strategy in an Era of Turbulence by Chris Zook
  • Only the Paranoid Survive: How to Identify and Exploit the Crisis Points that Challenge Every Business by Andrew Grove

2014-11-08 16.26.16

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iSPIRT now Tracking the Size and Growth of the Indian B2B Software Products Industry through iSPIxB2B Index(Oct ’14 Edition)

iSPIX-b2bWe believe the discussion about India’s technology industry – whether in government circles, the media or in Silicon Valley – overlooks India’s B2B software product companies which sell globally as well as into India. Instead, there is a lot of discussion about IT Services companies and E-commerce players.

We would like to shine a spotlight on these Indian B2B software products companies through the India Software Products Industry Index – B2B (iSPIxB2B), which we are launching today. The index tracks the thirty most valuable B2B software product companies headquartered in India and companies headquartered elsewhere in the world where cofounders are in India right from the creation of the company onwards.

The data suggests that the B2B software product industry has been growing nicely outside of the spotlight – the enterprise value of the top 30 companies is $6.2 billion (₹37,500 crores) which is higher than we would have imagined before starting out on this effort.  The top 30 companies employ over 18,000 people.

iSPIx-B2BAnd the top thirty companies in alphabetical order are:

We have descriptions of the top thirty companies, aggregate statistics and methodology for computing the index in the report itself. We’ve pulled out a couple of the findings here:

–     For those companies started pre-2006 (50% of the list), they were generally bootstrapped to scale and then about 40% of these companies raised growth capital. These companies are mainly domiciled in India and many are verticalized, selling into banking, financial services, retail and travel.

–     For those companies started post-2006 (50% of the list), about 73% have got early-stage venture capital into them now – the majority by far are not bootstrapped. 50% are domiciled in the US or Singapore and many more are horizontally focused in areas such as CRM, collaboration and ad-tech.

We will publish an updated iSPIxB2B index every six months – please do send us names of companies you think should make this list and we will make sure to contact them. In the meantime, please share this document with your colleagues in the software industry and participate in the discussion around these findings in the comments section here.

Thanks to all the volunteers at iSPIRT who worked on this project as well as Professor Sharique Hasan of Stanford Graduate School of Busines, Stanford Univerity; Professor Rishi Krishnan of IIM-Indore; and Klaas Oskam of Signal Hill for providing input and guidance.

We will publish an updated iSPIxB2B index every six months – please do send us (at ispix(at)ispirt.in) names of companies you think should make this list and we will make sure to contact them.

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How to Structure Sales and Marketing in a SaaS Business

PlaybookRTThe discussions continued post-lunch in the Playbook Roundtable led by Girish Mathrubootham, CEO and founder of Freshdesk, organized at the Freshdesk office in Chennai. During the extended session, Girish outlined the sales and marketing structure in a SaaS business. While this may be only taken as a pointer to setting up the sales and marketing teams, each business owner needs to focus on the appropriate strategy that brings him the maximum number of customers. As explained in the last report on this roundtable, firming up the business model after iterations and adaptations is very important before a SaaS business would scale. Remember the product is the key. And when the celebrated investor Andreessen Horowitz featured in his blog Mark Cranney’s “If SaaS Products Sell Themselves, Why Do We Need Sales?” it kicked a lot of debate on why Cranney is right. Some strategies outlined by Girish might be of great help in not only positioning your product but also making sure that customers continue to use it after they buy it. The Q&A format continues.

How do you structure the sales function?

The sales function has two components: inbound sales and outbound sales. For inbound sales, the ability to identify good people to fill the position is absolutely essential. If they have capabilities of researching on the customer and can write personalized mails, that works better than lifeless common mailers. Further, the response rates increase in case of personalized mails although it might not convert into sales immediately. The inbound sales guys should be able to identify themselves with the customers and a “We” pitch infuses confidence into the customer’s mind. In all, inbound sales people should be able to make the customer feel special about interacting with the product and the organization behind it.

Outbound sales is a pure arithmetic in one sense. Read Predictable Revenue by Arnold Ross. If you invest x amount of money, you harvest an amount y (usually as multiples of x) as revenue. To be able to achieve this, you need to have a structure sales organization inside the team. It could be divided into market research team (which identifies potential target sectors and customers), sales development team (which continuously interacts with the customers to understand their requirements and explains to them how your product can address their needs), and an account executive team (which specifically oversees one or more specific customer accounts). This should be supported by the pre-sales team.

People are key to all the roles mentioned. It’s important for the CEO or the senior management to identify who is good at what and then placing them at the position they can perform best. If someone is capable of creating a good rapport with the customer, move that person to pre-sales. Some people show an inclination to solve problems. Put them in the support team.

A small hint about shifts. Keep the people in the same routine, which means keep them in the same shift they come in. Some people like night shift and if they want the night shift, keep them there. Rotating shifts might need to unnecessary resetting of biological clocks of the shift people that might show up as poor performance. Be wary of this.

Should you hire a salesperson in the US?

This question continues to create varied views in the minds of SaaS entrepreneurs who find the US market attractive for their product. The right answer is it depends.

If you are able to close the deal through online and telephone interactions, it’s good and some big deals might also happen. But it’s not a scalable model. A salesperson in the proximity of the customer at times becomes necessary to go after big-ticket size deals and close them. Customers feel confident about having a support person near them. It also involves cultural and mind-set issues and the customers become comfortable with the organization present in the same country as them. It would be better if you would hire a person after you are sure that big ticket size deals would happen. The salesperson should be capable of going after big deals and closing them. One note of caution: Make sure your sales person is working full-time for you and not moonlighting. What is the final word? Again, it depends. The best option is to hire a full-time sales person in the US for closing big-ticket deals. Beware of the cost of the sales guy and the difficulty of getting sales out of them. There have been bad experiences for some. Maybe learning about that helps and also get tips on how to hire the sales guy in the US. There is no one strategy that works and it’s largely your own learning curve. But some pointers from people who already have a sales team or a sales organization in the US helps.

Identifying the right sales people

Sales people are either hunters or farmers. Hunter sales people hunt for new customers and go after new domains aggressively. Farmers have the ability to nurture the existing customers. It’s important to identify a person’s skill and decide where they fit in the sales organization. Read Jason Lemkin’s interview on SaaStr.com.

Retargeting customers can be done through Google mail. Don’t overdo mass mailers. You run the risk of Google labelling you a spammer. Write personalized mails.

Remember, a closure of sales that results in a recurring revenue (for example, through subscriptions) converts into a higher revenue over a period of time, without the need to add new customers for an increase in the revenue.

What is the role of marketing in a SaaS business?

The marketing team should generate qualified leads, which the sales function also should do. Both of this converts to good sales.

Once you identify your target, make sure you gather a valid e-mail address and a valid phone number. There are ways to do it. Learn them.

Social media helps a great deal in lead generation. Customer acquisition happens. If you are looking at competitor social media feeds, you at times spot an unhappy customer, who wants a specific feature or has a need, which your product fulfills. Instant connectivity on Twitter facilitates this connect. Trap them and convert them into your customer.

A step-wise filter for tracking leads works wonders. Right from a prospective customer approaching your product through your website, keep track of the customer to see what is he interested in the product. If he shows more than a mere curiosity interest, track him to see the various levels at which he interacts with the product. Sometimes, customer might return after sometime. Help the customer in whatever ways possible to convert him into a buyer of your product.

How free should be the free trial?

Various strategies work. The free-trial period varies between 6 and 11 days. Look for an optimum number. Any amount of free trials is not going to hurt your business. Think of a longer horizon of the free trial. Say 30 days. This is a feel-good or hygienic factor that keeps the goodwill of your business with the customer. Provide support during free trial and try to educate the customer in what he doesn’t know. You will earn respect and convert a doubter into a customer.

Be disciplined to knock off “parasitic” customers. Keep track of customers on free trial nearing their free trial period. If your plan is to close their account, send a polite mail announcing that their account will be inactive after x amount of days. Make it as if it’s your company’s policy to delete accounts that are dormant for a period of time. Sometimes surprises spring up. The customer might sign up. Periodically getting rid of customers who don’t bring any value to your business is a good idea.

The sales strategy and expanding into new geographies

If you want to expand into a new geography, do your homework thoroughly. Study the terrain in depth before setting your foot in. You must know where you are getting in and what segments you are targeting. Understanding the culture and business practices in that geography works immensely. For example, Australians want you to call them, whereas the English wouldn’t encourage that.

Acquiring a big customer at the beginning is thrilling. But weigh your options clearly before signing on the dotted line. If your sales and support would not be able to cater to the needs of the large enterprise customer, you are better off saying “no” rather than change your business model and focus your energies on one customer. You may not be able to scale instantly on demand. Never significantly or drastically alter your business model for one customer or for one big breakthrough. It would eventually hurt.

Seal the lower end. But the lower end is always going to be cannabalized. Beware of competition and remember you can’t be cheaper than free.

Onboarding the customer

Normally, there is a problem of customers falling off after, say, a couple of months. So it is better to have a customer onboarding team to track sign-up. Live tutorials can handhold the customer for the initial period of using the product. Videos are helpful for non-tech customers.

Don’t disturb the core tech team for small technical glitches. Customer Action Response Team (CART), which fixes small bugs, is a great strategy. Focus on fulfilling customer expectations. Remember, when you solve a customer problem, you earn a happy customer.

To take a cue from Jeff Bezos, hire people who are not able to say “no” in customer development and hire people who say “no” in business development. Empathy is a great trait. Empathize with the customer and their problems and see how best you can solve them.

It’s always best to “farm” the first top 100 customers or key customers who bring 80% of your business. Remember, 20% of the customers bring 80% of your revenue. Focus on them.

With everyone in the room taking away valuable lessons with them, the roundtable wound up on a happy note.

 

 

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Launching RSPCT(quarterly event brought to you by iSPIRT & Jaaga) for the next generation of software developers

We are looking for Bangalore based founders and senior developers interested in getting to know the next generation of software developers coming up in the Bangalore tech scene now. RSPCT is a quarterly event brought to you by iSPIRT & Jaaga. We ask people to come to the events regularly (every 3 months) so you can get to know the individuals over time. We will be recognizing upcoming software developers by the public artifacts of good code they generate on the internet. These include certificates and badges from online computer science courses like CodeAcademy and EdX. We also recognize people’s rankings in online code competitions like HackerRank and CodeWars. Lastly we recognize open source contributions people make.

RSPCT

We invite you to speak briefly about your startup and why you would be good people to work with. More importantly we invite you to talk with young people at the event. Share your experience and suggestions with them. By establishing an ongoing connection advancing young developers it will be easier to recognize when it would be good to work together.

The future of the Bangalore tech scene is with the young people who are just learning to write software now. This is an opportunity for the more senior members of this scene to engage with them.

Apply to come as a Startup Founder / Senior Developer

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Global Lean Sales: The power for Demos

Playbook RoundtableOn Oct 18th iSPIRT organized a #PlaybookRT in Mumbai and the topic of discussion was Global Lean Sales. Pallav Nadhani founder of FusionCharts came down for the RT and shared a lot of useful information about how they do things at Fusion Charts. Most of the information from the RT has been covered in Rushab Mehta’s excellent blog post about the RT. I am just adding to that post…

Pallav showed us the demos that Fusion Charts built for their products and I wanted to share a few thoughts about what I learnt from that…

When selling online using a low touch sales model, the web site must replace the sales person at least in the initial phase of the sales cycle. And that is a very difficult job to pull of.

You need to anticipate every piece of information that the prospect may be interested in and make that easy to find. Your web site must then convince the prospect that your product is the right solution to the problem they are seeking to solve. Or convince the prospect that your product will enhance their business and give them a competitive edge.

But the web site must still be simple and clutter free. Putting pages of text explaining everything is of little help because the prospect will rarely spend so much time reading. So what do you do?

Almost everyone today will put up a product tour/demo to try and solve the problem. But a one size fits all demo has its limitation. Not everyone can see a general purpose demo and connect the features to their business requirements, without help from a sales person.  What can work much better are industry specific demos so prospects see how your product can be used in their industry (or a closely related industry).

Seeing the product in the context of one’s usage scenario can make it much easier to understand. Also instead of throwing all functionality at the prospect, only specific features can be showed in a usage specific demo.

FusionCharts does an amazing job of this. Their products enable data visualization and on their web site they have built a comprehensive section with dashboards to showcase the different capabilities of their products.  This includes a Gym Dashboard which demonstrates how membership based businesses can analyze their membership via cohort analysis and a really cool Music Player which showcases the performance of their product.

Looking at these dashboards it is clear that a lot of thinking and effort has gone in to them. It is surely not a trivial exercise and would require a dedicated person/team to pull off. But I think the effort would pay dividends in prospects understanding the product and encouraging low touch sales.

It has inspired us to try and do the same for our product SOHODOX.

Contributed by Shiraz Ahmed, Founder and CEO – ITAZ Technologies

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M & A Connect Roundtable on Structuring and M&A

Couple of key points that emerged during recent acquisition of startups have been issues related to structuring of the company.  Anil Advani of Inventus Law walked us through these issues in a roundtable organized by iSPIRT M & A connect program at the Microsoft Accelerator venue.

IMG_0553Many key aspects such as taxation (especially in the context of Singapore), seed funding, liabilities, ease of the process, ESOP and stock plans need to be considered, while deciding the location of incorporation .

Some key conclusions:

  • If you are a fresh company starting out and your scope is global, it is a no-brainer. Just go ahead create a US entity (Delaware C-Corp) with a fully owned Indian subsidiary.
  • The only companies who shld consider Singapore are those looking only at the India / South-East Asia market.
  • If there is an existing company with venture funding which needs to be flipped, there is more work involved since the cap table needs to be mirrored in the US Company.  The earlier you decide to flip, the better
  • If there is formal IP ownership in India, it gets more complex and several factors need to be considered before deciding to flip.

IMG_0552Some basic Q&A

1) How many people are needed to register a company.

Answer:    One.

2) Do you need a US citizen to register in the US ?

Answer:   No. A Social Security Number and bank account is needed and that can be obtained very easily in short time.

3) How much does it cost?

Answer:  Under 500 dollars from a US bank account with the money earned in US. There are legal processes to make this happen.

4) How long does the process take

     Answer:  Incorporating a Delaware C-Corp is pretty simple,      especially for an early stage company. Paperwork can be         completed in less than 1 day

This blog is too small to cover details and I would encourage folks to contact Sanat Rao, Partner (M&A) from iSPIRT for further details of company structuring.

(Refer to the Freshdesk blog for more insights )

 

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Global Lean Sales – Selling your software online to global markets, without field-force #PlaybookRT

Last week I was going through the startup class videos and one particular statement by Sam Altman stuck with me. He said “All successful founders are fanatics”. And YCombinator has seen a whole bunch of them. The way he puts it is very awesome, let me reproduce the statement here:

“The word fanatical comes up again and again when you listen to successful founders talk about how they think about their product. Founders talk about being fanatical in how they care about the quality of the small details. Fanatical in getting the copy that they use to explain the product just right. and fanatical in the way that they think about customer support. In fact, one thing that correlates with success among the YC companies is the founders that hook up Pagerduty to their ticketing system, so that even if the user emails in the middle of the night when the founder’s asleep, they still get a response within an hour.Companies actually do this in the early days. Their founders feel physical pain when the product sucks and they want to wake up and fix it. They don’t ship crap, and if they do, they fix it very very quickly. And it definitely takes some level of fanaticism to build great products.”

Read the full talk here (later)

2014-10-18 15.23.57

This statement came alive for me yesterday when I met Pallav Nadhani, the founder of FusionCharts. As he walked us through how he built his company and sharing his experiences and wonderful insights in building his company, his fanaticism was apparent. I am sure everyone who was there, wanted some of it to rub on to them. Even though it was a “RoundTable”, I think Pallav had more experience than a lot of us and pretty much carried the group. He shared some very cool insights, with real life examples and actionable suggestions.

There were 11 of us, all selling business-to-business (B2B) products in the range of $1000 – $75,000, some online, some offline, most on a subscription model, some early stage, a few past the validation stage. Almost half of the founders depended on high touch sales and half had products that were Do-it-yourself. Here is a summary of the meetup:

Pallav’s Story

Pallav shared his story on how he started the company when he was 16, to get some pocket money. He made a charting widget for himself and then wrote an article about it, which became popular. Then one thing led to another and he now runs a company that publishes 90+ types of charts has 23,000 customers and 70 people. Some of the things that he focused from very early on was:

  1. Reduce all friction for the user who is evaluating the product.
  2. He promised his users that they would get their money back if they could not build the first chart in 15 minutes. That helped him simplify the on-boarding process and make it very easy for his users.
  3. He was a one person company for a long time and handled everything from developing the product, documenting it to doing customer support.

Documentation

Pallav’s father is an author of 15 books on accounting and that gave him a strong foundation to document his product very well. This was particularly important since his target audience was developers who needed good documentation to use the product.

  1. Pallav himself wrote 3000 to 4000 pages of documentation and still reviews every word that is added by his team.
  2. Documenting the product gave him key insights as a user and helped him refine and debug the product.
  3. Every time someone asks a question. His team is forced to answer using a public document. This made sure that the same question did not get asked again and also created a good knowledge base for his product.
  4. He learned from his father on how to structure documentation (with headings, sub-headings etc) so that the reader can quickly find out the relevant sections to read.

There is another interesting anecdote. jQuery was a late entrant to javascript libraries and according to its creator John Resig, it was because it was the first one that was properly documented.

Marketing and First Impressions

Pallav’s hypothesis is that all sales / conversions are driven by “Fear” or “Greed” and products must highlight these in their marketing copy, specially the headling. He even asked all of us the rephrase the core message of our product to appeal to one of these emotions. I had strong reservations on whether this was correct and if this lead too to much focus on top of the sales funnel (new visitors). Either way, the group seemed convinced. While I thought it went went with Pallav’s aggressive and “switched-on” approach, I have my doubts if it works for all kinds of products. Products have the personalities of their founders embedded in them, and I feel its best to stick with the approach that goes best with the philosophy of the product and the creator.

Pallav also referred Kevin Hale’s analogy of building a customer relationship like a marriage and how the first visit of a customer on the website is like dating. For more on this, I would recommend Kevin Hale’s enlightening talks on the matter (later!).

Some other interesting points that were discussed were:

  1. Classify your traffic into different personas. For Fusion Chart, it is the Developer, Product Manager and Designer.
  2. Deeply understand each persona. Appreciate that they are overloaded with information and identify openings in their daily routines where you can reach them.
  3. For security startups, a weekly roundup of major reported breaches worked well when sent at 8.30 in the morning.
  4. Online marketing has evolved from “carpet bombing” to “sniper”. Audience have to be segmented and messages have to be finely targeted.
  5. It is important to reach the users main Inbox and not the promotions box. So keep the mail personal and do not add an unsubscribe link.
  6. Pallav showed how he used WebEngage for conducting surveys on their visitors and how he tested his hypothesis. For example, his survey would ask if a visitor intends to pay for the product on offer or select an open source alternative. Based on the feedback, Pallav said he would change the marketing copy.
  7. He also used VWO for A/B testing and showed us an example on which one of “HTML5 Charting” or “Javascript Charting” resonated more for the user.
  8. Asking feedback from customers who had evaluated a product was also important. A simple email with the subject “5 minutes of your time for 5 questions” gives Pallav great customer insight.
  9. He said he tests all kinds of hypotheses and keeps experimenting on the message. Examples:
    1. Do users like a simple or complex layout
    2. How many fields should a form have
    3. What colour a button should have

The attendees at PlaybookRTContent Marketing

We spent a whole bunch of time discussing and sharing great insights on Content Marketing. Sahil Parikh of BrightPod.com shared his experiences in content marketing. He has built a product for the marketing community and started a blog with the purpose of reaching out to this community. It took him six months of building the blog before he saw some returns. He has hired two content writers and produces 3 to 4 blog posts a week. He shared that aggressive content marketing teams target producing one post a day. He also reached out to Indian authors on popular blogs like ZDNet and TheNextWeb and pitched the Indian product angle that got him attention. Sandeep Todi of Emportant.com shared that he bumped into a content writer for SiteHR, a popular HR portal and is how working with her to build content for his product.

Content marketing seemed like a favorite of strategy of a Lean Sales team but again it boils down to execution. It is very hard to product high quality content and as more and more people start getting good at it, the bar keeps on increasing.

Some content ideas / anecdotes shared were:

  1. Interview / Talk Show Series: Publish interviews with customers and thought leaders in the domain
  2. Use big brands in your blog posts. Examples from Fusion Charts:
    1. How Unilever / Walmart / P&G uses data visualization
  3. Act on industry events:
    1. Security Breaches
    2. Flipkart Billion Day flop
    3. Home Depot breach
  4. “News Jacking” – Connect popular news items to your product.
    1. GangamStyle in numbers
    2. Infographics on FIFA World Cup
    3. 10 infographics on Fitness Apps
  5. Put customer logos on your site, content unless the customer objects. Don’t mention it in your contract or it will trigger a red flag.
  6. Allow your site content to be reproduced.
  7. Curate, collate good content from other site and credit the original author.
  8. Get quotes from industry influencers, the will also ReTweet your content.
  9. Speed is of essence. Create great content quicly (yeah right!).
  10. Publish whitepapers. They are popular with higher management.

Sales Funnel

Pallav walked us through the various parts of the sales funnel.

[From his slides]

  1. Awareness (ads, blog, event, word-of-mouth…)
  2. Initial Visit
    1. Different channels / different ROI
    2. Best channels = low cost, high ROI
  3. Engagement
    1. Trial, case study, whitepaper, anything that could give you email AND other information
  4. Nurturing
    1. Mix of product, marketing and sales
    2. Sales job: get the customer on the call and do aggressive follow up
  5. Closing
    1. Handover from sales to client success.
    2. Repeat business through subscriptions, up-sells or cross-sells.

Pricing

There was a very heated discussion on pricing. Pallav was of the mainstream industry opinion that price is a reflection of value. The higher the price, the better the quality of customers and revenue. There was a discussion on discounts and how in high touch sales, discounts are a bane. Here Pallav shared that adding artificial constraints to negotiate. For example, you can extend the support by 3 months instead of giving a discount, or increase the number of servers etc.

Open Source

There was some resistance and suspicion from the group in discussing this and understandably so because of the nature of the software products business that depends on Intellectual Property Rights. We did touch upon this briefly and why based on our (ERPNext) experience we see open source as a great way to not only reach out a new generation of users but also believe in an alternative way of doing business.

2014-10-18 15.24.15Conclusion

It was great to learn from Pallav, and we thank him for sharing so many suggestions and learnings. Also a big thanks to him for openly sharing specific insights and walking us through an A/B test or testing an hypothesis. This is also a great initiative by Avinash Raghava and iSPIRT, the think-tank/lobby group for Software Products to bring together entrepreneurs so that they can share tips and build networks. It would have been a bit better if there was more unstructured time so that there would be better interaction between the group, to build deeper relationships between the founders. Also a big thank you to FreeCharge.in for hosting the event and providing lunch.

Finally what really matters is execution. For me the biggest takeaway was that the product is a reflection of the creator / founder and it was important that the founders are obsessed with each detail of the product and its quality and also work with the energy that is required to do so much work. For that it is important that they see success early on as Pallav did and the once they are on to something they make sure that they do not lose it.

Specifically, for me it reminded me that its time to go back to fixing the documentation!

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Innovate on the Product, Not on the Business Model

Entrepreneurs from Bangalore had no problem driving into Chennai amid a tense political situation in Tamil Nadu. There was an air of expectation and enthusiasm on the part of more than 15 entrepreneurs who had come in from Bangalore and Mumbai, apart from Chennai itself, to listen to Girish Mathrubootham, Freshdesk CEO and founder, for the Playbook Roundtable on Scaling a SaaS business. Colourful wall graffiti greeted visitors at the Freshdesk’s vibrant office, which itself exuded energy.

A condensed version of the discussion is given in form of a Q&A.

Girish from Freshdesk

What should I focus on in a SaaS business?

The No. 1 success for your business is your product and it is key to your sustenance in business. You should know what matters to your business. Innovate on the product but don’t change your business model. Look at businesses that are in the same domain as you are or businesses that sell to the same kind of customers like yours. Adopt their business model. Copying business models is not a sin. Tweaking the business model may not be good in the long run. 37Signals started charging credit card subscription only when the merchant bank refused them monthly subscriptions as the bank felt the business is new and could fold up in any time. Such business model changes happen by compulsion and not by design.

How should I go about marketing the SaaS business?

Forget affiliate marketing. It works only for impulse buys and in an e-commerce environment. Success, if any, is not scalable. Only Constant Contact has achieved success with affiliate marketing.

Guest blogs with linkbacks to your product site is a good idea.

Positioning and lead generation are key to marketing. Trigger e-mails is just a drip marketing tool and not scalable. Killing welcome e-mails increases response rates. Getting your e-mail to land in the target’s inbox is crucial and it shouldn’t get into Promotion box in Gmail.

Text-only e-mail with no images and links works best. Attention-grabbing subject line and shortening the length to four to five lines assure greater response rates. Remember, mails are read on mobiles. So keep it short.

Instead of a uniform pitch to customers, talk to them to understand their problems. Then your demo should provide a solution to their problems. Customers at times get confused if you run through your presentation and may not connect with how the product or the features will solve their problems. Be specific.

Make your demo educational for the customer. Say something new and which the customer doesn’t know. It will earn you respect and might convert to sales.

Freemium has two groups. In one, after a trial period, you charge for the product right from the beginning. In the other, there are a free version and a paid version of the product. Nail down which works best for your business. Any number of free trials is not going to hurt your business. Leaving money on the table is a good idea. Because the customer might buy after a long time. Patience is a good trait.

Track the customer from their first visit to your website and determine the pattern of how customers find you. This is called visitor fingerprinting. Then you know where to focus upon.

Trade shows. Do they help? For small companies, they may bring some branding and don’t expect too much ROI from events. What works best is a personalized presentation to your target customer. Do your homework and create customized presentations. This might convert to sales.

Attendees at FreshdeskGenerally, personalize across presales, sales, and marketing. The response rates are 25%.

[Read Marc Benioff’s Behind the Cloud.]

[Watch Gail Goodman of Customer Contact’s video “How to negotiate a long slow SaaS ramp of death”]

Webinars? Webinars are good. All the more good if there is an expert on the topic speaking and it offers something new. Make the webinar having some educational value for the audience.

PR – Be in the news constantly. Hire a good PR agency and avoid scamsters promising hell a lot of things (say, one-page content on you in a magazine that has access to thousands of targets in a domain). They wouldn’t be suitable for your business. Churn out good stories often. Reach the people who don’t need you now. Seed them for the future.

Segregate your marketing function into a campaign team and a content marketing/product marketing team.

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Bootstrapping! Great or Bad?

BootStrapping! Good or Bad?Off-late, I have been seeing many articles on “Funded” V/S “Bootstrapped” models. Few articles have projected bootstrapped ventures as great in comparison to funded ones. I run a company that is profitable without any external funding and at times find it very odd with these sorts of comparisons. Many entrepreneur friends suggest me to continue the way we are and ask me to stay away from investors as they feel it is great to bootstrap a venture.

To me it is a factor driven by who you are, what you want to do and what your business demands. Every business needs resources (which are unique to that business) to build the business and run it. Hence the capital needs are different for each business.

I categories companies into three types

  1. Self-funded
  2. Customer Funded
  3. Investor Funded

Please note all of these are funded! Someone is funding them and that is universal.

[#NiceProduct]

We are a blend of Self-Funded and Customer Funded. Back in 2008 we started building a-ipas, a product that targets large manufacturing plants as its customers. We got exposed to an interesting problem faced by manufacturing plants where-in the ERP implemented by the company was the bottle-neck in the Manufacturing plant. The workers/operators found it hard to work with the ERP System. The ERP system was not mobile (Then) and hence the operators had to go to a computer and perform these tasks. The factory had ERP Operators sitting all day and performing the transactions as and when the workers approached them with a paper/job! Being an entrepreneur, I saw an opportunity to build something that could solve a real world problem, so negotiated with my wife, who is a software engineer to let go of her job and take up the task of developing a solution that can address these challenges. With no liabilities on our shoulders, it was an easy decision for us to risk some cash for the joy of developing a solution that would solve a real problem.

[#Start]

No business plan, no “Mission” / “Vision” statements, we started working from our rented house’s garage. Savita worked solo, with some support (mostly cooking and cleaning) from my side. We build a base version of the solution in about 4 months and offered it to the factory which we knew had this problem. As we had no identity or brand value, we had zero expectations. Lucky for us, the IT manager of the factory took interest in the solution and deployed it in the factory. He also helped us make it more effective for the worker. For him, he was getting a custom solution at a very low cost. For us we were building something that was solving a real problem. With this ideal win-win scenario, we ventured out to build an Enterprise class solution for a niche market segment with zero plan and support from outside.

Apart from Savita’s lost salary and small money we paid a couple of trainees, we had no major costs initially. We kept our focus on the solution and our goal was to make the factory workers life better and make factory a better place to work. The critical part of this journey was the partnership with the factory & their teams. They were working with us like “Product managers”, driving the requirements. We took each and every need of theirs very seriously and starting putting features into our solution. We licensed our solution to one factory and made enough money to lead a normal life. We had revenue from other business to keep us happy. Contrary to theory, we did not expand our business for a long time. We wanted to perfect our solution. Growth meant dilution in quality and delivery. So, we opted to keep low profile and continued adding features/modules to one single factory for four long years. We could have taken VC money after our initial success and grow rapidly. However, the product we were building requires deep understanding of the manufacturing domain. It required evolution of a solution and with VC money on your back, slow growth could eventually kill the business. So we opted not to go for any external investment and hence we ended up as “Self-Funded + Customer Funded”. Just to reiterate, bootstrapping was part of the need and choice.

So to say, the product development was done with significant investment of our time and energy. To keep our operating costs low, we always picked fresh engineers and invested lot of time and effort to train them. To make our product robust, we needed experts from a lot of other domains for which we developed a network of experts who worked during after office hours. Net-Net, we innovated in ways to develop bleeding edge solution using low cost resources and all the possible support from the Eco-system.

[#Growth]

Early 2014 we assessed that our solution was mature and can be scaled up. We started expanding to other geographies. Today we have Six factories globally using our solution with one factory being the world’s largest adhesive manufacturing plant. We are competing with multi-billion dollar software gains and at times are luck to steal a deal just below their noses. We have moved out of a garage to an office that can accommodate more than 40 engineers. We have 22 full time engineers working on the solution and have a branch at Singapore and two engineers at China. More than 15 Experts work with us on a need basis. We have not yet taken any external funding and are profitable.

Is it good to continue the way we are? Should we take investment? Why? Why not? are question we regularly brainstorm. We believe external funding would help us accelerate our growth. While customer funded business model helps us grow organically, an investor funded catalyst would push us to faster gear. We have just started talking to investors. There is interest but there are other challenges we have to deal with. Having bootstrapped, we are conservative with money. We are asking small money and have reasonable revenue on board. This causes confusion amongst investors. We are hopeful of closing our first round very soon. If the cost of capital is much more than what we are willing to pay, we can afford to go much longer without external funds. In event we go ahead without funding, please note that we are not continuing bootstrapping because we think it is great way to build business. It is just that we are not yet ready for funding OR have no right options of funding!

The big benefit of self-funded & customer funded businesses is their ability to do what is right for the business with long term view. They would have more flexibility and agility to deal with market dynamics. They carry risk of starvation but are generally better prepared to handle the drought conditions. On an exit, the founders tend to have much larger pie at much lower valuations. If we exit at $10M today, we would be making similar gains like what RedBus founders gained at $100M Exit. Conclusion, no model is right or wrong. No model is great or otherwise! It is your business and it is for you to define the right way to build it and execute it. We chose the self-funded route + customer funded route, because we could afford it and was the right thing for the business then.

Guest Post by Subramanyam Kasibhat, Founder & CEO Aureole Technologies