iSPIRT works to transform India into a hub for new generation software products, by addressing crucial government policy, creating market catalysts and grow the maturity of product entrepreneurs. Welcome to the Official Insights!
Problem solvers, responsible builders of companies, communities and ecosystems are the foundation for progress and growth of any nation. What drives all of them is a sense of challenge, ownership of problems, allegiance to autonomy, demonstration of personal accountability and the thrill of finding a solution. This energy is fueling a growing product movement in India. iSPIRT is proud to be part of this movement.
Every movement sees itself as a moral enterprise. Our moral imperative is to help lift India out of poverty over the next 20 years (see 2016 Annual Letter). Technology platforms are powering this ambition. These technology platforms have a significant role to play in driving innovation everywhere. Where India stands apart is that it has carefully thought about digital colonization and has boldly decided that its core technology platforms will be public goods.
Since our public technology platforms are open-access, we expect both Indian and Silicon Valley entrepreneurs to participate in building solutions for India’s hard problems. Thus, Indian entrepreneurs will compete with Silicon Valley entrepreneurs not just in the US market, but in the Indian market as well. This inevitable competition will play out in the context of the maturity of the two ecosystems. Hence, unless we develop the Indian technology ecosystem rapidly, our Indian entrepreneurs will not succeed. iSPIRT brings an intensity to building our technology ecosystem that an entrepreneur displays for building her startup.
Four years on, there has been good progress but there is much more to do. We believe that Silicon Valley does an admirable job of innovating for the first billion. India has the potential to innovate for the next six billion.
Last month, for the first time, I witnessed something really special. Even for someone like me, whose very job and calling is to evangelise this nascent software ecosystem of ours, this was something extraordinary.
I’ve been doing this a while, and what happened last month was one of the best feelings I’ve had in this journey.
This is what they got together for: To help 52 other, smaller B2B startups in achieving scale, like they have.
It’s no exaggeration to say that the founders of these companies are some of the most important product leaders we have.
In the first session itself, Shekar Kirani pointed out that a platform like this will not be easily available, and the assembled startups needed to leverage the best from the network and from the folks who had arrived with the the express intention of helping them. And the product leaders who also made an important point – that they did not want the new age startups to go through the same grind, or make the same mistakes they had made in their years of scaling.
I was amazed. It is almost never that you see such accomplished professionals come together towards helping and nurturing young startups from their own learnings.
And what was this? What was happening?
This was the 2nd edition of #PNgrowth.
The first one had been in Jan 2016 at the Infosys Campus in Mysore where we had assembled around 186 founders to help companies think about Category Leadership. It went really, really well, but the feedback was that that perhaps keeping it focussed for fewer founders would help the cause better.
Many heated discussions were conducted over breakfast, lunch, dinner, and beer (especially beer) on the program for the 2nd edition and on how we can add value to the content.
These conversations were typically 4-6 hours long, which meant that the entire program/content took us over 200 hours with 12 founders brainstorming for the past 3-4 months.
It really did take us that long.
And those deep discussions based on the 1st edition’s feedback was what the program for November was based on.
And now that #PNgrowth 2016 is over, I decided to take a look back and share some of the learnings in organising this, and on how we pulled this together.
This year, the program was designed to help companies chase ‘Good Scale’, that is, to achieve high growth without compromising on quality. There were 52 founders with us, from all over India, and a few from outside as well.
Before we get into the details, a larger question must be addressed again, largely because it keeps getting brought up. This time, I’m trying to use a different approach to explain this. Bear with me.
WHY IS iSPIRT DOING THIS ‘MOVIE’ CALLED PNGROWTH?
iSPIRT’s mission is to make India a ProductNation. We have many initiatives like Playbook Roundtables, PNcamp, etc which are focussed around building products and helping companies achieve good scale. Although there are many accelerators in our country, very few offer value to the founders/companies. Keeping this in mind, iSPIRT wanted to do something unique and create a platform which would help companies think about growth in an effective manner. More importantly, we want to make ongoing mentorship accessible to the founders.
The goal was to create 8-10 companies every year which would eventually go on to become $10mn revenue companies in the next 3 years.
WHO ARE THE DIRECTORS OF THE MOVIE?
These are the co-chairs.
The first edition of PNgrowth had just finished and I was looking for someone to be the architect for the second edition. I met Shankar Maruwada for lunch at Muffets & Tuffets and was having a completely different conversation. But, as we touched upon the PNgrowth topic, Shankar had lots of suggestions on how we could do this better. I immediately requested him to help in designing the program and helping me organise it better.. He accepted graciously, and was keen to help.
My next request was to get Pallav Nadhani involved again. There is a reason for this. Pallav, in many ways, was the person who forced us to think around Category Leadership. The first meeting took place at Pallav’s place which went on till 2:30 am.
By then, I had had several interactions with Aneesh Reddy, and the early playbook roundtables on Product Management had been done by him. I reached out to him and he was very keen to be part of the program and help us.
With Shankar, Pallav and Aneesh on-board, the pillars of the event were erected.
WHERE DID I FIND THE STAR CAST FOR THE MOVIE?
These, of course, were the facilitators.
Around 4-6 months in advance, we started working on the content for the event. Various topics were discussed. One thing was clear to me: Every founder had immense passion and commitment to add value to a certain topic. The format we had in mind was to make very interactive session. All of us had had enough of the ‘sage on stage’ approach. The founders were to lead sessions and work along with the participating entrepreneurs to help them extract maximum benefit.
Many discussions later, Pallav & Shankar actually started with using the frameworks & mindflips and were later joined by Girish & Aneesh. Manav & Shekhar also used the same in their session.
It was great to see that all the facilitators did an outstanding job of delivery of the frameworks and ensured that they shared real life stories and lots of data and numbers from their companies. What was more important was that they made sure they spent time with all the attendees and ensured they received personalised attention. They were able to build a personal connect and trust within the startup community by sharing internal information even though they didn’t have to, thereby making the discussion even more credible.
WHO CAME TO WATCH THE MOVIE?
Oh, that. We had huge demand for tickets from the audience, the founders of India’s growing startup community.
HOW DID WE THEN SELECT WHO ACTUALLY GOT TO SEE THE MOVIE?
This time, right from Day 1, we only wanted to get select founders to be part of PNgrowth.
To begin this selection process, we laid out which stage of startups would benefit from PNgrowth. We then went on and created a list of founders and reached out to them. Apart from this, we reached out to folks from within the eco-system and got them to recommend companies to us.
Each company was recommended by atleast 2-3 founders from the PNgrowth curation team. We did zero marketing for PNgrowth except for a video, which we used to communicate to potential participants. We received overwhelming response for the event thus putting me in a fix at several situations where I had to inform founders that they have been rejected for a program/event. It was difficult, but in the interest of the event, it had to be done.
We finally had 54 founders who confirmed their participation, out of which 52 showed up for the bootcamp. These companies were divided into groups of 6 based on the type of customer/geography they were catering to.
WHERE DID WE HIRE THE SUPPORTING ACTORS?
These were the mentors, and we were able to get around 14 founders as mentors and were simply amazed by their commitment for the two and a half days of the event. Mentors were involved in all facets of the event – from intense board room discussions to the dance floor. Let me go little more deeper on the role that they played. In every session, the founders got access to few frameworks, mindflips which they had to fill and discuss with their peers + mentors. Lot of learnings were shared by mentors and it became very valuable to the founders. Very few of them tweeted from the program as everyone was busy interacting, engaging, absorbing content, but here is one of the tweets which acknowledges the mentors.
WHAT ABOUT THE CREW?
Getting to them, the volunteers.
In my work, I get to interact with many volunteers in many initiatives, but this time the commitment and the passion with which the volunteers worked was unimaginable. Folks would go to sleep at 5am and be ready next day at 8am. They would ensure that mentors/founders have had breakfast, etc and would go an extra mile to take care that founders are focussed on their work and don’t get distracted.
Volunteers also interacted with the founders to understand if the pace/level of the sessions suited them. Lot of planning was done in advance that each and every person who is part of PNgrowth goes back with a WOW experience. I still wonder where they get so much of inspiration from.
I don’t know if i would ever be able to do something like that. Hats off to all the volunteers who put together an awesome experience for the PNgrowth family.
SO, WHAT WAS THE MOVIE ALL ABOUT, THEN?
Day 1
The Founders started with a cricket match between the cohorts itself.
Sharad Sharma, our guiding light, kick started the event with his words of wisdom for all the founders.
And then it began with Pallav’s session on Who are you? As founders, entrepreneurs have to pitch or sell their ideas constantly, so as to inspire the listener to believe in their dream to either fund the idea, join the team, tie up with the startup, or write about the startup. Is there a method to this? Can this be an acquired skill?
In this session, founders learnt and practiced a simple framework that enables them to improve their ability to pitch their ideas in the shortest time, to the desired target audience – VCs, journalists, co-founders, customers, business partners, and employees.
The next session was focussed on how to maximise the value of your product. If you as a founder were to increase the perceived value of your offering (Increase average MRR by 1.5X and/or reduce churn to 0.5X),how would your economics change? How would it change your CAC, margins? What would you as a founder then do differently with your product strategy, go to market strategy (positioning, marketing, channel, pricing), team/organization structure, to increase pricing by 1.5X, in the scenarios below as relevant to you. This was followed by an interactive session with the mentors.
This was end of Day 1 and then we had networking dinner, drinks, some dance and lots of conversations led by Vinod & Ashish.
Day 2
The second day was a more power packed with two sessions. To their credit, the founders were highly engrossed in their sessions, sans their mobile phones and laptops which helped in making these sessions successful.
During the first half, Girish and Aneesh engaged in an extremely fruitful session on product-market how to scale 10X with emphasis on how to establish your sales funnel and building a repeatable sales cycle. This session covered on selling processes from SMBs (by Girish) and enterprises (by Aneesh). They also shed some light on how pricing, positioning and selling varies from one geography to another.
Apart from this, Suresh also gave his insights on selling global products out of India.
The complete session went on till almost tea break after which the candidates came back in for the third and final session by Shekhar and Manav.
This session was meant to give a befitting end to the two rigorous days of activity.
While Manav spoke about how to choose your niche category and expand to other similar industries and geographies, Shekhar’s session was centred around what a VC looks for a in a startup. In the session,
Shekhar did a Q&A round with Nags and Girish on what it takes to build a successful organisation.
He also delved a bit deeper on aspects like how to choose the right market and how to intelligently figure a way out of a market and move into one that is expanding by extracting maximum business value.
Here Raghu also added his thoughts on what it takes to raise venture capital and how one should structure an organisation for a CEO to utilise his time in the most efficient manner.
Though the mentors tried to cover as much ground as possible over the two days, they took questions from audiences on anything they still might have a doubt about.
After this was a complete group photograph since some of the mentors had to leave that night. The energy of the picture speaks for itself. Before calling it a day, the founders were given tasks/homework for them to present on the final day.
Day 3
The third day, we had some inspirational stories from Sanjay Anandaram(Seedfund), Mohit Dubey (CarWale), Phanindra Sama(RedBus), Raghunandan G(TaxiForSure), Sanjay Deshpande(FortyTwo Labs). We had actually planned for only Sanjay to talk about “entrepreneurial mindset” and then we thought about inviting all of the above folks to share their energy.
Something which we had planned for 20-30 minutes went on for around 90 mins and it was an absolute pleasure to hear some of the learnings/failures from all these founders. Below is the NPS score of 89 for PNgrowth 🙂
After this, all founders were made to do this exercise on “Getting to 3X Growth in 12 Months”. All mentors with their cohorts spent time with the founders and helped them on what they should be thinking about this. Six Founders got an opportunity to share with the whole group.
Finally Shankar invited all volunteers to share few words on why they volunteered for PNgrowth. With it, a spectacular three days came to end, with some photographs and a lot of hugs, cheers, and greetings.
For me, it was a great feeling to see all of this happen, and at this scale. This probably capped off the year of 2016 for me and iSPIRT as a year in which we were actually able to make the ecosystem function as a cohesive, united entity. Lots of work is ahead of us, but as I write this, I acknowledge a task well begun.
Many thanks to Sairam for editing & Shruti for filling the blanks.
When a startup has taken roots, validated its reason for existence, sprouted shoots to shape itself as an independent identity it needs shift phase again for next stage of growth.
At this phase it is no more called a startup but revenue making business which will eventually be profitable. Making and scaling revenue requires a lot components to work together as a system.
A system that includes your products, your values, your people, sales engine, outside advisors, investors and more to nurture revenue and protect it as #1 priority. A gear change where many startups trip
In some sense focus has to shift from managing uncertainty to managing complexity.
This roundtable will delve and experience and tactics that have worked or not in this where discussion about importance of setting the right sales organization or its linkage with engineering or support teams will explored and analyzed. If you are interested, please apply here
This Playbook Roundtable is scheduled for 11th March in Delhi and will be facilitated by Aneesh Reddy of Capillary Technologies.
Enterprise Sales, Marketing & Inside Sales Team Build Out, First International Customers Acquisition, Enterprise Pricing etc. I understand, we have heard these topics in multiple events & conferences, so why this round table be different? The difference is gyan vs hearing from real person with real experience which sometimes exactly what you want to hear, even reading 10 books will not help compared to one line coming from a CEO who has done it over and over again and seen the success.
In this Round table, Aneesh was leading and moderating the discussion. He leveraged the experience of other founders which made the most out of few hrs of interaction. The participants are founders of mid-stage startups, who have good-size customers and have decent ARR (Annual Recurring Revenue), growing and scaling.
This blog narrates the learning in the form of Q&A.
How to establish a meaningful and sustaining Partnership for your B2B enterprise business and grow your business?
Partner are those who have done similar product sales in medium/large scale before, so ask them for their sales targets (region wise) and their profile of B2B partnership in their existing set up. That is a good validation point for partnership. {It is like validating by their current and past experience in partnership}
Partners could be the companies who are into services (in your industry vertical like healthcare or retail etc) and likes to have monthly revenues.
If your product sit on top of other product and integrates then go for a partnership program to the base product. For instance, if your product complements or built on top of Salesforce, then you can enroll in Salesforce has AppExchange program wherein you can list your product and generate good visibility and leads. Partners, could be the product that your software compliments or built upon it.
Partners could be the implementation companies of the product that your product built on or compliment. Say your software built on Salesforce, then the service companies who are implementing Salesforce solution could be your partners.
You could also go for two-way partnership, like I push your product and you push mine, sometimes one partner performs a lot better than the other, in that case, be open and refine the terms as you go in the journey.
If you are enrolling in partnership programs from large companies like IBM, Salesforce etc and see if you can use their promotion events and brand your product, many gives a free offer for promotion. You might end up in getting leads worth a lot that might seems impossible to generate by the solo marketing you do on your own. These large companies also have paid outreach which has high outreach and see if it is worth investing.
Incubator and Accelerator, if you are part of any incubation center or accelerator that helps a lot in getting the right partnership e.g Microsoft accelerator
How to bring transparency in partnership? You might also want to try “Lead Protection Program” which creates 100% transparency in the leads generated, let your partners enter the leads in your CRM & both of you can track the status and you can also make sure that right analytics are coming out.
If the partners are asking for exclusivity, ask for minimum guarantee e.g 30 qualified leads per quarter per area
Partnership takes time to achieve, so keep experimenting, be conservative and go slow, do a some sort of pilot before you sign larger partnership contract. And ready to fail as it takes time to get into right partnership.
How to acquire customers in new international market?
You can go with the existing customers and if they have business overseas then you can approach them for the initial open door to international market.
Another suggestion is to participate in events and have a booth or something so your product gets exposure and you might end-up in getting partners or customers
LinkedIn is a great source to find first few pilot customers in that region.
Overseas partnership also you can explore using LinkedIn or Quora, but it is not that easy to find viable partnership
And also cold calling for opening doors also worked for few startups.
If your product is like B2C then publishing in appstore, Appstore marketing, google adwords would be a good start, but if you are in B2B and enterprise sales, then the steps mentioned in the beginning are the way to go.
Once you have handful of customers internationally, select a country where you could open a small sales team may be start with one or two guys and these guys need not be very senior like VP level, 2 yrs to 5 yrs exp and they have to work with India Sales team parallaly. You might need to travel and stay there for a while for initial years to establish a sales pattern oversees.
How is to do pricing for your product?
See your competitor price and product features and how much it solves the customer problem, how your product makes them dependable, this combination will help you to arrive at pricing.
If your product a lot better than your competitor, do not lower your price to compete, you need to stay at a price tag for the right product.
If your product does not have India based competitor, see the US pricing and create some kind of benchmark value to arrive your pricing.
You can have different packaging but not too many, max 3 to 4.
You kind of have to experiment with pricing, for e.g one of the enterprise product was priced it 5k for the first few customer during pilot (initial years) and when they need to sell the product in the second year to a bigger organization, they tried quoting 1L and end up in selling at 60k. So you need to try and see how market is reacting for your new pricing, first few year keep experimenting, you will be able to arrive at pricing between 1 to 3 yrs if not before.
When you sell enterprise product, make the price attractive in the pilot stage and after showing the desired results, you can go for high price and the customers would not mind paying it as they have seen the results which impacted their top line.
The pricing could be geography based and can be different. And again, find the right pricing by seeing your competitor and demand in that market.
If you want to give freemium version, give it free but let the customer give you some kind of asset that you can use for your business like marketing or brand building. For e.g refer 2 friends to get the free version or share in your facebook page to get the access. Some kind of exchange of benefits for freemium version.
What is the most painful growth in the entire journey of the startup?
1M to 5M growth is the most painful where you are likely to make mistakes
While growing fast, you need to be careful when reaching to new markets, not all regions works great for your product. US need not be the best market for all products. If you have invested in one region and seems like it is not working, then shutdown and alternate your sales strategy in overseas.
Please refer “acquiring customers in new international market” for more details.
How to upsell and cross-sell to your existing customers?
There are two ways, first upsell more apps/ additional features to the same customer
Second is find out other departments or other sister organization and do a cross sell
An customer account is usually handled by an account manager, the upsell/cross sell need be done by different person say group account manager.
Every group account manager handles multiple accounts, like 5 to 10 accounts, is responsible for upselling. The account manager finds opportunities for upsell. Do not mix up the account manager dealing with customer on day-to-day basis to do upsell as the negotiation will become very tricky otherwise.
How to give discounts to the customers in SaaS product?
The discounts needs to be distributed, do not give them at one go.
For instance, do a yearly subscription with 2 months off. Those two months are going to be 11th and 12th month. So incase they leave in 6 months, these discounts does not qualify.
Another way you could spread across 3 years like 3rd month, 6th month off, 22th month off for discounts.
How much is the typical yearly renewal increase in ARR for the Enterprise Product?
8 to 10%
We need to say 10% increase is very common and if the customer creeps, bring down to 8%
How to get testimonials and referrals?
Usually testimonials are done after building a strong relationship with a customer. Usually after 1 or 2 years. Make sure that the account managers and CXO’s of the company has a good relation built with customers to ask for testimonials. Once you establish those soft links, whenever the customer delightness go very high and initiate the process. e.g Release of product feature which solves one of their pain point which the customer demanded for a while.
Another idea is to mention this in the subscription or contract time itself. Suppose if the customer is asking for discounts then you can tell him that you can enroll in the “Loyalty Program” in which you might have to give testimonial & also give 2 referrals and participate in the case study within the first 2 years and you are eligible for this much discounts. This way the customer is well aware of the expectation and also enjoys discounts. Do not give discounts for free, make him have some benefits offered to us.
Does awards and recognizing important for startup?
This comes directly into credibility building so it is good to get some recognition
The important point is apply for recognition that are credible and genuine with a selection process like boot up awards by ispirit
Have some sort of recognition award or have an article or mention in international news & media like Techcrunch, Harvard Business Review, Gartner, Marketing Magazine, Forbes, Wall Street Journal etc.This will help both India & international brand building.
You can use a PR agency to reach out these media and appear for the competition or for the product review
Name some books good for Inside Sales and for Complete Sales?
Second rounds onwards read the inside sales interview in the below questions
How to provide incentives for your IS(Inside sales) team?
Incentive are always a motivating factor for the Inside Sales team. We have laid out some numbers as a sample for you to see below.
2% to 3% of Annual Recurring Revenue(ARR) for new customer acquisition.
2% to 2.5% of annual revenue for UpSell/Cross Sell or have a fixed amount like 10k for all revenue of 3L to 5L per year, 5K for 2L to 3L etc.
You can also say, if you get a referral from a customer then the account manager gets 5% of revenue.
You can also include testimonial incentives for e.g Video testimonials 10k, Text testimonial 5k, Case Study like 10% of ARR
Even you can add some incentive for first go-live means successful deployment and this is applicable for enterprise products
Make sure these numbers are published and you make sure the check is given to him as soon as you receive them from the customer.
We would be writing another blog on a related & demanding topic “How to set up a Inside Sales Team from scratch & generates Leads?” in the upcoming week.Stay Tuned and Happy Reading!
Capillary Technologies is an information technology company headquartered in Bangalore, India. Established in 2008, Capillary is present in about 30 countries with over 200 enterprise customers.
In this short candid chat with Aneesh Reddy, the co-founder and CEO of Capillary Technologies, he bluntly mentions that growth is a bitch! Aneesh shares how his company spent 1.5M to reach 1/6th the current company size versus spending 24M to grow the next 5/6th.
Watch the video below and see why Aneesh thinks growth is tough.
PNgrowth is an iSPIRT initiative in collaboration with Stanford’s Graduate School of Business and Duke’s Fuqua School of Business to facilitate entrepreneurs to scale their business.
Please click here, to join a hangout session where members of iSPIRT, Stanford and Duke university share how the issue of scale can be addressed and how PNgrowth can facilitate the same.
The 25th playbook roundtable held last week (01 March 2014) brought together about 14 startup practitioners to discuss and gain insights on some of the challenging aspects of Sales in product companies. This roundtable was hosted at Accel Partners office in Bangalore, and was led by Aneesh Reddy, from Capillary Technologies. In a span of about 5 hours, a diverse set of topics were discussed. Prominent takeaways from the roundtable were insights on approaches to pricing, decision making during sales cycles, dealing with resellers and partners, setting up a sales team for the first time, how to plan for your Sales team when you are scaling up and dealing with Sales in new geographies. The following paragraphs detail the key learning from each of these above aspects.
When to setup your first sales team?
Entrepreneurs should be selling themselves till they achieve repeatable revenue streams, irrespective of the sector and nature of the offering. One should start looking at a dedicated sales team only when the founding team cannot anymore respond to leads / queries in a time bound manner.
If the founding team does not have deep skills in selling, it may be useful to involve a consultant to setup the team and the processes and learn on the way. Firms such as Gosonix have helped setup the sales processes for startups as they began to address increasing customer interest.
There are also organizations that provide inside sales services to startups. A few startups such as Freshdesk have benefited by use of such extended inside sales teams.
Inside Sales Operations and Management
Based on the target geography that you are working on, one should use the qualification criteria to build a sales pipeline. Macro parameters such as number of employees or revenue of the enterprise in the segment and country that you are targeting to sell provide good starting points to develop the qualification criterion.
Inside sales activities have yielded good results in English speaking countries such as US and Europe, however, has been very difficult and non-efficient in UAE, South Asia and non English speaking parts of Africa.
Accent training is a must if you are reaching out to customers outside India. Training partners are available to help you with accent training needs of your sales team.
For markets such as South Asia, cold calling does not work – since language barriers and culture is not very assimilative. Field business development operations are cheaper than inside sales operations if the target market of focus is on South Asian countries.
Sales Best Practices
A 30 second script consisting of factoids describing who you are, what you do, which customers have you dealt with, how has it helped them is a must for any startup Sales – irrespective of whether you set shop just today, or if you are scaling your startup.
Have a clear separation of duties amongst your lead generators and deal closers. Usual practice is to hire a deal closing guy for about 5 lead generators.
Ensure efficiency in your Sales operation by tracking the conversion of calls to meetings to actual leads and finally to conversions or drop-outs. Expect about 1 lead to come for qualification from about 10 calls on an average.
Once you have a lead, qualify the lead using the B.A.N.T or the more comprehensive S.C.O.T.S.M.A.N technique to ensure you spend the optimal time on that lead.
Differentiate and track marketing generated leads and inside sales generated leads. Provide visibility to the Field Sales personnel on the source of the lead to ensure they have the right context to qualify and initiate a discussion with the prospect.
Indian customers – especially in the SMB segment take a lot of time to decide to buy. Keep them engaged continuously with good marketing content after initial contact. They will get in touch with you and buy when they decide to go ahead.
Pricing
Pricing is the trickiest aspect in Selling. For offerings where the value added by your offering / solution can be calculated directly or indirectly, pricing conversations is a lot easier – since you have data to back your discussion. However, in other cases, one has to use all available information and work on a range to begin with.
For startups that are in their early stages, back calculate based on your expenses to decide on pricing. Another approach for SaaS based early stage startups is to price based on the CAC (Customer Acquisition Costs). General agreement is that a CAC of about 5-6 months is ideal, and a CAC of upto 1 year is tolerable for early stage startups.
A barebones calculation of pricing should be based on the product of revenues, gross margin you want to derive and customer lifespan for your offering. David Skok has good articles on these topics.
Complement your Sales efforts by your Marketing efforts
Use marketing as complementary aspect to sales – apart from leveraging it for various aspects of building your brand and communication etc. Nurture your customers by segmenting them based on the previous interaction by your company and send relevant content that could be of use to them.
For startups targeting global customers, ensure that you generate adequate content by means of customer acquisition stories, case studies, announcement of new customer wins, participation in events etc. This will help build the initial set of opportunities from the marketing side.
Use the rental lists of magazines that are widely read in the field of your offerings to increase mindshare. Blog or write regularly on Industry trends in some of these magazines to offer a good discount. Engaging with a PR agency based on the geography in the early stages of market entry also can pay off.
Last weekend, we had a playbook roundtable on sales(mainly B2B) at the Ozonetel systems office in Hyderabad. Aneesh Reddy from Capillary led the RoundTable. The focus of the roundtable was on sales in product companies. This included early stage sales as well as issues faced during scaling sales. A lot of points were covered and the participants were involved in very lively discussions with almost everyone learning something new from the others experience. So without further ado, the following were the main learnings from the roundtable:
1. Sales solves everything. The panacea for all the problems of a startup is sales. Somtimes even a PPT is enough to do sales. This was explained by Aneesh how in their Capillary journey they showcased their to be built product on PPTs to prospective customers and made the sale.
2. Initial sales has to be done by founders. This was universally accepted by all the participants. So every founder has to become a sales person. There is no second way about it. Once you scale to a certain level, you can look at hiring dedicated sales head and building a sales organization.
3. Freemium model does not work too well in India. Get a customer to pay something(maybe even Rs.100). Make the customer also invested in the product. Only then will they give the time necessary for your product and evaluate it properly. Pilots work well, but try to make them paid pilots.
4. In India Push sales work, for outside markets, consultative sales works. In all cases, your sales person should be willing to listen to the customer and understand his pain points.
Payment Collection
Payment collection is a big problem for SaaS products. Following up every month for the collections is a full time job. Some pointers to help in this are:
5. Quarterly, Yearly payments. See if you can push your customers to pay quarterly, yearly upfront. Give a discount two sweeten the deal. This is ok as you receive the money up front and you are reducing costs on processing collections.
6. Disconnect services. Most participants agreed that disconnection of service works as a deterrent to the customer. Give enough indications/alerts about the pending disconnection and follow up with a phone call for collecting your payment.
Lead Sources
7. List rentals. Aneesh suggested that buying the list of conference participants gave a better RoI than sposoring some event. So identify some good conferences in your domain and buy the participant list from the conference organizers.
8. Attend exhibitions. Exhibitions in well known places like HiTex in Hyderabad gave a lot of leads to the NowFloats team.
9. Subscribe to local magazines. Local magazines are a good source of business listings as all good businesses advertise in local magazines. Build your list by mining this data.
10. Employ a good PR agency. Once you are at some level of scale, it makes sense to employ a PR agency. The PR agencies have good contacts in the media and they will get you good coverage. Though, they may not directly get you leads, they will help in brand recall, hiring and fund raising efforts.
Inside sales:
11. Start with a 2-3 member inside sales team. Aneesh was of the strong opinion that inside sales is the way to go for B2B sales in India. Start small and monitor the team closely.
12. Invest and be patient. Sometimes, it takes around 3-4 months for an inside sales team to show some traction. be invested and be patient. Things will slowly pick up.
13. Team composition. One combination could be 1 data collector and 2 tele callers. Try different approaches and see what works best. To get started, you can out source the process, but that may turn out costly.
In the next part we will look at some metrics that will help us monitor sales.
iSPIRT’s roundtables create a buzz in the Indian software product community. Shehjar Tikoo doesn’t like conferences and seminars. The entrepreneur of e-commerce enabler Unbxd finds them boring and one sided. But all that changed when he attended the iSPIRT roundtable on Product Management in Bangalore. Says Shehjar, “I liked the fact that the audience was very carefully chosen as were the facilitators. The discussion was very healthy and I came away with some great learning. In fact, I still refer to my notes and each time it has something new to say to me.”
iSPIRT is known for bucking the trend. At the heart of the iSPIRT movement is the spirit of democracy. So just like decisions are made collectively and jointly, roundtables are whiteboarded and collaborative. It’s a joint learning exercise for both facilitators (note they are not speakers) and participants (not delegates).
Says Aneesh Reddy, Capillary Technologies, “It took couple of calls to talk about the challenges of product companies and the team defined three problem areas – Product Management, Sales & Positioning & Messaging. The format was very clear in the minds of everyone – peer learning where founders come and do a deep dive, the objective was to create a cancer survivor network model for product start-ups.”
The first playbook Roundtable went on for around 260 minutes and attendees spent another 30 minutes outside the office networking.
“Round tables are a great way for teams, entrepreneurs to cross learn about the best things that worked in their scenarios and some of it can be implemented and experimented by other startups too, cross learning from startups is essential for this ecosystem to build and am glad iSPIRT round tables do exactly that.”, said Vijay Sharma of Exotel.
Since the first program on April 4, iSPIRT has covered more than 120+ product companies (up to August 3). While the impact of the programs is slowly percolating the software product initiatives of different companies, what has proven an instantaneous hit is the format of community learning – for founders, by founders – little wonder it’s called a [Playbook] roundtable!
When nearly two dozen product enthusiasts sit around a table passionately talking for 4-½ hours, expertly addressed by two product veterans – Amit Somani and Amit Ranjan, you can expect an information overload. And, it did seem like drinking from the firehose, trying to capture all the takeaways in the intense back and forth, where even a tea-break seemed imposed. A blast it was – this iSPIRT Playbook Roundtable Delhi edition on “Effective Product Mgmt & Delivery”, focused around learning for startups.
[This was the NCR session on Apr 13th. Initiated, as part of iSPIRT, by Avinash Raghava, and very ably facilitated & supported by Aneesh Reddy. Great facility and great Food by Eko Financials. Thanks guys, Awesome effort!!!]
iSPIRT Playbook Roundtable in Delhi (Click to see all on Flickr)
Thankfully, there was a structure, laid out initially across specific dimensions – Product Planning, Delivering, Hiring, Culture, Metrics, Customer. These themes kept repeating through the session with questions coming from participants across the breadth & depth of product management, and many times touching upon all the aspects of running a product company.
Here’s an attempt to sum up the takeaways from this long & exhaustive (not exhausting, yet!) session.
Planning & Delivering the Product
– Product Planning in many start-ups is not an elaborate exercise. It is typically handled by one of the founders, and “build and adapt as you go” is the norm.
– Delivering a great product is always an intersection of Engineering, Design and Product Management, with Product team in the driver’s seat. This intersection and collaboration is one of the critical factors in getting a great product delivered.
– Getting the Engineers and Designers to collaborate is one of the key challenges. As per Amit R, what helped them at Slideshare was the fact that they always hired Engineers with a flair for Design. A great developer as part of the product team is 70% Engineer & 30% Designer, as per him.
Product Metrics
Amit S emphasized that metrics are very important for product managers. When the team grows (when you can no longer rely on people to just talk to each other and get things done), the metrics-driven product management becomes critical. Touching upon the right hiring in this context, Amit S insists on covering the candidate’s thought process around metrics (with open questions such as – what would be your primary metric if you were designing the Delhi metro).
Metrics & the Rule of 1/1/1: This is one rule around metric that Amit S follows. What will be your metric for 1 Week, 1 Month, & 1 Year. Break it down, with crystal clarity and follow it up religiously. (A great resource for B2C space around metrics is a presentation by Dave McCleor – Startup Metrics for Pirates).
Some learning around Metrics:
– It is important to be clear of the vision, and how it connects to the primary metrics that you define. There’s a direct correspondence between identification of the key metric and the clarity of what the product is trying to achieve.
– Relevance of the metrics to the specific goals through the product journey is important. As one goes along in the product journey, the dimensions on which key metrics are identified may vary. Initially it may be customer acquisition; And then it may be engagement; then conversion; retention; life-time value; and so on.
Customers
One of the key questions around customer aspect of product management is – What is the right spec for the product? One of the biggest mistakes product managers tend to make, as per Amit S, is when they confuse the “Customer Requirements” with the “Product Requirements”! Sorting this out is the core to the responsibility of a Product Manager.
Some of the tips & tricks around Product Specs:
– When faced with a requirement, the first pass criterion (in B2B scenario) should be – if the requirement is relevant to at least 3 customers.
– There are various tools to interact with customers, and get feedback: Surveys, Net Promoter Scoring, Feedback through the product interfaces, and so on.
– Get the Information from Customers, Tone it down, Tune it further, and then arrive at the specs for “Engineering”.
– What should the spec typically look like? Default Rule of Thumb – 1 Page Spec. It should be very focused, very clear, in what the feature is trying to achieve, and at the same time not too long.
– A Good quality spec considers the “Least Granularity of time” with Clarity of thought. That’s from the Project Management perspective. From the functional perspective, Amazon has a good model that can be followed. Every Spec at Amazon is a 6-Pager Document – forcing people to establish clarity of thought and articulation.
– Another good alternative is the 1 Pager “Lean Canvas” by Al Ries.
– It’s also important to be clear on “What” requires a spec and What doesn’t. Both at Slideshare and MakeMyTrip, the team goes through multiple “Lights-on” stuff that they need to perform to keep the business running on routine basis. And these are fast-track enhancements and modifications driven by immediate business needs and marketing requirements. The Lights-on requirements are different from Core Functional Specs for the product roadmap.
– Another criteria that decides how detailed the spec should be is based on the number of users getting impacted.
– How do you handle customer requests with investment requirements that are not justifiable on the ROI? There are multiple considerations to this. The “Life-time Value” of the customer is important, and if such investments allow you to enhance it and calculate ROI in longer term benefits, it may still work well. There are alternative ways to look at this though. In the experience of Aneesh at Capillary, they had divergent requests that led to a very different direction for the Product and transformed it from “Mobile CRM” to “Intelligent CRM”. Another possibility could be to look at partner ecosystem and see if there’s a synergetic way to address these needs.
– How do you manage your customer requirements into “Not to have” features? How do you single out the noise? While it is nice to think of an ideal situation of getting the product requirements at the planning stage, when the customers use the product, they often come back with plenty of views that need to be funneled down. When you have to discard some requirements, it is important to “talk to a lot of people” to ensure weight. Also, some of the requirements die-down on their own, clearly indicating noise factor. It is a balancing exercise between reducing the hassles in customer feedback process and creating enough friction to dampen the noisy “Vocal Minority” (the term that Amit R uses to refer to the few customers that may be so noisy that their voice seems more important than is worthwhile for the product).
Hiring and Product Management Structure
As per Amit R, Product Managers should be (are!) Second-in-command in the sense that they decide the future of the company. Considering this, it is critical that one single product dimension doesn’t overweigh the hiring process. So, intake process for Product Managers needs to follow the 70% rule – The Product Managers need to be aware on all the broader and holistic dimensions of running the product business including sales, marketing, operations, design, and so on, with 30% depth on the critical Product Management areas.
Some of the specific tips on this from Amit S and Amit R, and some from participants:
– Determine if the candidate can think holistically and de-clutter the thought process in the crowded set of inputs. Ability to deal with ambiguity.
– Product management is typically a “common-sensical” thing. Look for common sense and intuitive angle.
– A great product manager would do well on what can be referred bluntly as “dhandha” (Money part of the busines). You cannot afford to have a Great product with “no” money.
– One of the participant companies built their structure around Customer Success. Majority of the Product roadmap is driven by the Customer Operations, Tickets, and resolutions – and driven by how customers used and viewed the product in B2B scenario. In such cases, they typically found it useful to move folks from Customer Success team into the Product Management areas.
– In case of another successful participant company, the CTO is playing the role of Product Manager and it is working very well for them.
On the relationship between the CEO/Founder and Product Managers. As per Amit S, Product Manager is the CEO of the Product, while the CEO is (of course) the CEO of the Business. One of the challenges for the Founders is how quickly they are able to let go he Product Management and start focusing on the business and Product metrics. Amit R also emphasized that it can work cleanly with the CEO focusing on the business aspects while Product Manager focused on the Product aspects while maintaining the alignment.
Where should the Product Manager Report? At high level one case say that it depends on where you are in the evolution of the product/company, and what the Product really means to the vision of the company. However, over time, Product Management needs to be separated from Marketing and Engineering. In essence, Product Manager shouldn’t report to the Engineering or Sales or Marketing. In corollary, there should not be a reporting into Product Manager as well. Product Manager is a “Glue” job, and is key to a healthy tension for the product direction.
Product Manager is WHAT of the Product – Defines what (functionally) should be built. Engineering is HOW and WHEN of the Product – Details out & manages “How” (technically) and “When” (schedule-wise) should the stuff be built.
One needs to also establish clarity on Product Management being different from typical Project Management. Also, there are strategic aspects of product that are owned by the executive management, however, you always need a “Champion” of the product that is independent of the other forces that drive the organization.
Importance of Data Guy! Another structural aspect that Amit R emphasized on (multiple times!) was the importance of a “Data” person in the Product Team. This role is almost as important as a Product Manager in the sense that Data & Analytics can play a key role in the product Roadmap definition. There are various flavors of the Data – Dashboards and reporting, Product Management level Metrics, Decision Science, for instance. Interesting to note is the fact that at LinkedIn, next set of products are heavily influenced by “Decision Scientists”. (Cue References: Hal R Varian, Chief Economist at Google and DJ Patil)
While there was a whole lot of structure to these discussions, we had some extremely valuable side discussions that link back to the Product Management, and very important to address. Here are some! 🙂
Positioning. For a clear direction for Product Management, the positioning of the product in the market is a key factor. How do you refer to the product? The answer to this question, in case of start-ups, seemed unanimous that the start-ups are too limited in resources/focus/energy to be able to create a new category. Aligning to an existing category with a differentiator is the key to early success. For instance, Slideshare referred to itself as “Youtube of presentations”, Vatika positioned itself as Parachute with Additional ingredients, “Busy” positioned itself as Tally with better inventory management and statutory reporting.
(Positioning is an important theme and comes with lot of related broader areas for considerations for Product Companies. We will have a round-table specifically around Positioning in near term)
What’s a Product? (A rudimentary question, I know! But worthwhile to hear the perspectives! J) How do you differentiate functional Product Management from the technical side of it? As per Amit R, “Product is the core experience or core touch-point for your end-consumers with your business.” It is worthwhile to note that the various types of customers may have different ways to access the product and there may be different ways to define the touch-points for every segment. For instance, Slideshare follows a Freemium model where 5% of the Paying customers may have a different set of touch-point experience from the rest of 95% free users. So various segments, such as Free B2C, Paying B2C, Paying B2B, and Partner B2B may all have different touch points with the same Product.
How do you get the Product Managers to champion the cause of usability and aesthetics? As per Amit R, in case of Slideshare, CEO happens to be from the usability background and that helped a great deal, since the thought process permeates across. It is important to engrain the usability in the way of the product management, since you cannot bolt it later, as per Amit S. There are various ways MakeMyTrip tries to do that. One of the eureka moments, for instance, for Engineers and developers was when they were shown a “live session” of a user through the Screen capture tool. It also helps to have the live user sessions in front of the product team. Some of these approaches can build that appreciation for the user actions in the minds of product team, over time with sustained effort.
Retention and Customer Lock-in: Slideshare has learned the harder way that ignoring Emails as a mechanism for customer engagement and retention is costly. LinkedIn relies on Email based “Customer retention” and “Returning Users”. Jeevansathi.com uses a strategy to map the customers in various life-stages and uses various Email and SMS templates to engage them even through the very short life-time of 3-4 months.
The Mobile Storm: As per Amit S, having a Mobile Strategy through this year and next year is critical for the product companies. Web is no more the only option, and for some products, it is becoming a mere secondary. Mobile First makes sense. The transactional figures for Mobile are increasing at such a rapid pace, that an afterthought based Mobile based functionality may not work so well.
If this is any indication of the things to come, the product ecosystem will benefit immensely from the initiative. Looking forward to the furutre editions, and share more!
Avinash Raghava, who is doing a wonderful job of getting product start-ups together all over India, organized a product management roundtable with the help of Aneesh Reddy(CEO, Capillary). They invited Amit Ranjan (Cofounder, Slideshare – acquired by LinkedIn) and Amit Somani (Chief Product Officer, Makemytrip, ex-Google) to share their insights with a small set of entrepreneurs.
Credit for all the good stuff goes to Amit Ranjan, Amit Somani and Aneesh Reddy. Notes are rough. If anything is unclear, feel free to comment.
Here are some quick notes/thoughts from the event:
Who would make a good product manager?
Someone who can do 70% of everything (coding, design, listening to users etc.)
Best way to find a product manager in India is to find someone who did a startup but failed – he/she is likely to know all the various aspects that go into managing a product.
Someone who can lead by influence and manage to juggle all the balls in the air. Should be someone who can say NO.
It’s a very tough position to hire for – you need to have patience – you might go wrong the first few times. Once hired, give them around 5-6 months to get the hang of the whole thing.
What does a product manager do? What is his role about?
A good product manager would understand the requirements from various constituents and write a detailed specification, plan for bugs, testing, urgent requests and then create a product roadmap/deadlines.
A product manager has to identify and write down what metrics will move once the product is launched (e.g launching the mobile app will increase our repeat orders by 9%) – in some cases it is just to ensure that people work on things that matter but overtime it also brings more accountability.
Engineers tend to underestimate the time it’ll take – product manager needs to be able to correctly estimate how long something should take. And you will get better at it with time.
Use the 1/1/1 rule – sit with the engineering team and plan what needs to be accomplished in 1 week, 1 month and 1 six-month period.
People want to see the product roadmap – it is important for the CEO / Product Manager to communicate this to their team mates since a lot of people feel uncomfortable if they don’t have a clear idea of where the product is headed. (Amit Ranjan mentioned that people may even leave if they feel that the founding team does not have a clear vision – but the nature of start-ups is such that it is bound to happen that the product roadmap keeps evolving)
You need to hire coders who have a design sense (that eliminates 70% of work later).
Role of special data or analytics person has become very important (Amit Ranjan said that he could see that products of the future will be decided and influenced by data scientists). It is very important to get such a person on board early. Someone who has crunched SQL and nosql logs etc and can find trends and look up aberrations. Read up on Hal Varian and DJ Patil to understand more about this.
Difference between customer requirements and product requirements – customer requirement only becomes product requirement when more than 3 people require it (it’s a rule of thumb) – (People shared various tricks they use to ensure that the customer requirement is serious – “just wait for a few days and see if they come back with the same request”, “ask them to email it and not take feedback over the phone” etc. – these are situations where there is too much feedback coming your way. In most cases, it is best to make it as easy as possible for people to give you feedback).
Keep product engineering teams small – Amit Somani mentioned Jeff Bezos Two Pizza rule i.e. if the team cannot be fed by two pizzas alone, it is too big. Read more here.
Try to do daily scrum – gives everyone a sense of what everyone else is doing and ensures that people are making progress
Everything is a 6 page document – another Jeff Bezos funda for getting clarity. So a specification or a product request could be a 6 page long form document which ensures that the person achieves clarity before building anything.
You need to benchmark your product against other products especially in enterprise. When starting a product from scratch this can be a really useful exercise.
Amit Somani suggested a mental trick – before building a product, write a one page press release for the product that comes out upon product launch – what will this press release have? What the key features? The target audience etc. This PR drafting exercise could help you decide what to build, what is critical, and for which audience.
Don’t ignore email as a channel for activation and returning visitors
Product activation – Use banners on your own website – do get them to take action – on landing page – on other parts of the website
Track at your mobile traffic – people at the roundtable reported some crazy growth numbers for mobile internet usage – huge sites are now getting 20% to 60% of their traffic on mobile. Mobile traffic is split 50%-50% on mobile browser (including WAP) and mobile apps. This was a big eye opener for many people.
Tools people recommended
Use Trello (a Joel Spolsky product) to manage your product
Use Zapier business tool to connect various sources of product input (e.g. taking Zendesk tickets and automatically creating Github issues)
Use Clicktale or Inspectlet to record user sessions
Use Morae for recording users’ reactions when they are using your product ((Amit Somani mentioned how they put a live usage recording on a LCD screen in the technology room so that engineers could understand how their products were being used – it lead to a lot “can’t he just click on the button! Why is he scrolling up and down!”). One way to get users for such recordings is to ask interview candidates who come to your office to use your product and see their reactions.
Use a call-outs software when introducing new product features (like Cleartrip / WordPress / Facebook do).
Concluding notes
This was one of the most gyan-heavy sessions that I’ve attended. It was useful to hear things from people who had been there done that. Aneesh (even though he is based out of Bangalore) had taken the lead to do this with Avinash and our hope is that the group meets every 6 weeks to keep the conversation going. We’ll keep you posted.
Feel free to email me at ankur AT Akosha dot com if you’d like me to give more details to you.
On a related note, there was some basic debate about what a “product” is. We didn’t get into it at length because everyone in the room intuitively understood what a “product” was. However, we had internally debated about it – if you are interested, do read –Understanding Product v. Service [ThinkLabs Notes 1].
The goal was to create 8-10 companies every year which would eventually go on to become $10mn revenue companies in the next 3 years.
My next request was to get 
It was great to see that all the facilitators did an outstanding job of delivery of the frameworks and ensured that they shared real life stories and lots of data and numbers from their companies. What was more important was that they made sure they spent time with all the attendees and ensured they received personalised attention. They were able to build a personal connect and trust within the startup community by sharing internal information even though they didn’t have to, thereby making the discussion even more credible.
HOW DID WE THEN SELECT WHO ACTUALLY GOT TO SEE THE MOVIE?
WHAT ABOUT THE CREW?
I don’t know if i would ever be able to do something like that. Hats off to all the volunteers who put together an awesome experience for the PNgrowth family.
The complete session went on till almost tea break after which the candidates came back in for the third and final session by Shekhar and Manav.
After this, all founders were made to do this exercise on “Getting to 3X Growth 
In this Round table, Aneesh was leading and moderating the discussion. He leveraged the experience of other founders which made the most out of few hrs of interaction. The participants are founders of mid-stage startups, who have good-size customers and have decent ARR (Annual Recurring Revenue), growing and scaling.
How to acquire customers in new international market?
How is to do pricing for your product?
How to provide incentives for your IS(Inside sales) team?
