Category: SalesQB Diary

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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05/05/07

04:15:52 pm, Categories: Entrepreneurship, SalesQB Diary  

The Idea

After licking our wounds from the small business CRM battlefield, we decided to position OppCoach as a stand-alone product that could plug-in to any CRM system. The natural ally, with this approach, seemed to be Sales Training companies. So, we started figuring out how to make a dent in the sales training market.

The Funding

Funding at this point was still coming from our consulting operations. The thought process was that if we could get a few customers to sign-up, our valuation would grow exponentially and we would have to give up less of our equity when we did a Series-A round

The Pedal to the Metal

Early in 2005, we developed the second version of our product. A stand-alone sales coaching product that provided opportunity-specific sales coaching and industry / domain knowledge. We retained the name OppCoach and even integrated it with SalesForce.com. We identified a conference hosted by the Professional Society for Sales & Marketing Training and got ourselves a booth there. We headed to the conference in Amelia Island, Florida, and started networking.

We met with numerous, leading sales training companies (Porter & Henry, Forum, Trainque etc). Each of them was thoroughly impressed with what we had to show. The CEO of Porter & Henry went to the extent of saying that OppCoach provides the coaching & mentoring to reps that sales managers ought to but don’t.

Then came the rub. I talked to the CEO of Porter & Henry and asked if he would be interested in partnering with us. He didn’t mince his words. He said that partnering with us wouldn’t make sense for his firm, because we would be going after the same customer dollars, and thus cannibalizing each other’s sales opportunities. I tried to come up with revenue sharing models and synergies, but the ice didn’t break. It didn’t help that the sales training market is incredibly fragmented, moves at a glacial pace and doesn’t really appreciate “software” solutions.

In the second half of 2005, we fine-tuned our positioning a bit, and started directly targeting sales training groups in Fortune 1000 companies. We were having very good conversations with brand name companies (Pfizer, P&G, Canon etc) and making good progress. Most customers we talked to would leave the meeting excited about the prospects and potential opportunities. By the end of 2005, we hadn’t closed any deals. Obviously, sales cycles for new solutions in Fortune 1000 companies weren’t going to be quick. So, we hunkered down and waited with bated breath for 2006.

The Lessons

Selling solutions is very different compared to selling services. Completely different value propositions, sales cycles and capital requirements. Our management team had a good bit of experience selling services, but selling solutions took a good bit of getting used to.
In retrospect, even though we had a good bit of traction with sales training groups in Fortune 1000 companies, I realize now that we weren’t targeting the right decision makers. Sales training groups typically “don’t do software”. The decision-makers we should have been targeting are those who also bought CRM / SFA systems, namely Sales VPs who are in charge of overall sales operations. Goes to show that just zeroing in on a target market isn’t sufficient. You need to go down to the target decision-makers and present compelling value propositions. We were learning hard-earned lessons, albeit at the end of a very sharp stick …

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04/20/07

04:15:27 pm, Categories: Entrepreneurship, SalesQB Diary  

The Idea

This is the year I left IBM. Had a gut feel that there were major inefficiencies in how reps tackle solution selling (a.k.a complex sales). It was obvious to me that for reps to effectively sell solutions, they required deep industry & domain knowledge to establish credibility with decision-makers. And having had an enterprise apps background, I started thinking that there had to be a way to package the knowledge required for solution selling, very similar to how “best-practice” business processes are packaged in enterprise apps. With this little nugget of wisdom, I quit IBM and started-off on my own.

The Funding

I didn’t have much of a net worth to begin with. So, I started off doing IT consulting, something I had been doing for the past 8 odd years, to bootstrap SalesQB. The idea was to do consulting and put food on the table, and then bootstrap SalesQB with the positive cash flow. A tried-and-tested funding model, except that it takes a lot of perseverance, mid-night sessions and family commitment.

The Pedal to the Metal

Now came the hard part – figuring out what to sell and whom to sell to. We decided to take a crack at the small business CRM market, which was beginning to get a lot of media attention that year. Over the course of 2004, we developed the first version of our product. A full-fledged CRM application and then some. We had a plug-in called OppCoach™ that provided opportunity specific sales coaching. If you had an opportunity in your CRM system, OppCoach would ask you a few questions to determine the sales context and then recommend a customized sales methodology for that specific opportunity. In this version of our product, we didn’t have industry or domain knowledge embedded as yet. But I am proud of the fact that we had a full fledged product that could have gone toe-to-toe with Siebel, SalesForce.com or any other leading CRM / SFA product out there.

We determined that the best way to take a crack at the small business CRM market was to partner with regional IT resellers. So, we went to a Gartner conference called Small Business Vision, where Gartner was trying to bring ISVs like us together with regional IT resellers. We went to a conference in Orlando to meet with IT resellers in the South-East.

Very quickly we figured out that we were having a hard time rising above the Small Business CRM noise. All the big CRM vendors (Microsoft, Oracle, Siebel and SalesForce.com) were hammering the small business market that year and our family retirement fund didn’t quite have the wherewithal to taken on these 900 pound gorillas. Furthermore, there were 2 dozen more CRM vendors (Pivotal, ePiphany, SalesLogix etc) that were trying to enter this market.

We gave up on the idea of taking our offering to the small business CRM market and started looking at ideas for 2005

The Lessons

Most of our leadership team had a management consulting, enterprise apps and technology-heavy background. We were very entrepreneurial and had launched sizeable practices within management consulting firms. However, when we decided to target the small business market, we should have consulted closely with someone who knew how product management worked in the small business market. It took us close to 4 months of spinning our wheels to figure out that we were headed nowhere with this approach.

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03/12/07

04:12:20 pm, Categories: Entrepreneurship, SalesQB Diary  

This is an attempt at maintaining a journal on how SalesQB evolves over its lifecycle. If things go well, hopefully this journal will serve as somewhat of a blueprint for successfully launching start-ups. If not, well, you will get some concrete ideas on what NOT to do!

For obvious reasons, this journal is a bit dated. That is, I will describe what SalesQB’s inner workings and machinations were for the previous year. We continue to deceive ourselves into thinking that we are smarter than the rest and that we are working on ideas that no one else knows about …

Happy reading.

Sampath

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