06/12/07

04:19:08 pm, Categories: Entrepreneurship, SalesQB Diary  

The Idea

Early in 2006, we formed our Advisory Board and brought on Ravi, Ashok and Shiv, a heavy hitting team with an extensive background in enterprise apps, start-ups and investment banking. Right about this time, we were introduced to a general partner at a Tier-1 VC firm in the Bay Area over coffee. We connected very well with the general partner and at the end of our brief conversation, he asked us to think about using a Web 2.0 go-to-market strategy and said that if we adopted that approach, he would be willing to fund us.

Web 2.0 was the trend of the year in 2006. JigSaw, VisiblePath, LinkedIn, Plaxo and other similar companies had adopted Prosumer go-to-market strategies and secured VC funding. And with the impetus of this promising conversation with a Tier-1 VC firm, we turned on a dime and went Web 2.0

The Funding

Funding at this point was still coming from our consulting operations and the family retirement fund, though the hope was that before the end of the year, we would have closed on a Series A round.

The Pedal to the Metal

So, we slowly backed off from the promising sales conversations we were having with Fortune 1000 companies late 2005 and developed the third generation of our product, or should we say our “service”. We launched the Web 2.0 edition of our sales coaching service in August 2006, along with some social networking elements thrown in.

We came up to speed on how sales worked in the Web 2.0 space, and realized that marketing, advertising and sales were all one dizzying continuum. We engaged PR, SEO and Email Marketing as our primary marketing vehicles. We got a fair bit of traction from Email Marketing and signed up close to 150 users for our free offering before the end of 2006.

We continued to have conversations with the Tier-1 VC firm and opened new channels with other VC firms that played in this space as well. The goal was to raise money, bolster our marketing efforts, sign-up a ton of users for our free offerings, create a ground-swell and make money from “to-be-determined” premium services. Déjà vu, anyone?

The Lessons

In hindsight, I am not convinced that Web 2.0 was the right go-to-market strategy for the type of services we were offering. LinkedIn, Plaxo and JigSaw were successful because they offer what I would call “casual” offerings. That is the users can use these services to complement what they are already doing. If they stop using these services, their world is not adversely affected. Whereas, SalesQB’s services directly affect the way reps sell. We were recommending how reps should position their offerings in each deal, develop value propositions & business cases, and sell to decision makers. This is serious stuff. Once you take SalesQB’s recommendations in a deal, you better stick with it till the end. Bottom-line, if a rep applies SalesQB’s recommendations consistently, he will come out ahead. But the operative word is “consistently”.

Herein is the disconnect. For a rep to find SalesQB’s services useful, he has to pay for it, take it seriously and commit to it. The Web 2.0 approach of providing a free offering, sign-up a ton of users and then figure out how to make money didn’t make sense for the value we were attempting to deliver.

As a Web 2.0 company, it is also very tempting to draw comparisons with established Internet players (eBay, Google, MySpace, JigSaw), wishfully think about gaining just 2% of that coveted market. Or keep drawing analogies with emerging trends like social networking / media, SaaS, tagging and Wikis and dilute your focus. Bottom-line, you are selling services to a target market. Unless you provide a simple way for your users to do their job faster, better, cheaper, your offerings will not gain traction.

Then, there is the Clayton Christensen puzzle on whether you try to create & lead a new market or try to position yourself as a niche player in an existing market. One of the co-founders of KPCB is on record saying that it is immensely easier to create a small place for yourself in an existing market than to create a new one. If only our egos allowed us to see the wisdom in this comment.

Even with a Web 2.0 go-to-market strategy, one has to think about what one’s priorities are – revenue or growth at all costs. For example, would it make sense to create a user base of 1M users for your free offering (possibly at a huge marketing cost), and have 1% of your users (10K) pay for your premium offerings. Or would it make more sense to just target 10K paying customers to begin with. It all depends on what your offerings are, and how much of a “networking effect” they create & require. LinkedIn, Plaxo and JigSaw are examples with “networking effects” entrenched in their offerings. However, with SalesQB offerings, we could just have focused our meager marketing dollars on creating a small paying user base to begin with.

So here we are. Three years into our company, essentially selling the same solution (deal-specific sales coaching), but still trying to figure out how best to sell it and to whom. Goes to show how critical product management is for a start-up. Needless to say, after three years of constant mid-night sessions & self-financing SalesQB, some cracks were showing up in the amour. We have given ourselves till mid 2007 to raise funding and take SalesQB to the next level. Let’s see what 2007 throws at us.

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