Asaf Darash is the Founder and CEO of Regpack
, a cloud registration system for businesses, organizations and groups.
inspired you to be an entrepreneur?
What formative experiences have helped prepare you to lead a startup?
- I believe that entrepreneurship is in your blood or it's not. So for me, I never thought of doing anything else. I suppose I was inspired by my father who is an entrepreneur.
What challenges have you faced and how has that shaped the Company?
- I feel strongly that getting my Ph.D. really helped me solve problems in a holistic way. I think about my startup like a scientist with a focus on data not intuition. Systematically checking things, running experiments and checking things with data are critical for startup success. People often forget that negative results are answers too and that valuable conclusions can be drawn from experiments with answers you do not want or expect.
Tell me more about the decision to scale the company back.
- The biggest challenge has been overcoming limited resources. We scaled our company down so we could be profitable but this has forced us to find creative ways to get by with less. For example, as we added new customers, our service requests grew linearly. We simply couldn't afford to add customer service reps so we needed to find technology solutions that could scale. We ran experiments in both the product and with emails. We found that adding deep links in the product to specific desk.com answers saved help desk requests. We also found that automating emails with quick tutorials before the 30 minute training session greatly reduced help requests. Customers were able to learn the basics from the tutorials which meant they could ask meaningful questions during the training session. These two changes resulted in 53% less help requests.
- When we first started the company, we had a bit of Silicon Valley fever. We raised money and hired a bunch of people. We were very focused on growing and building features that were cool. When the money started to run low, I took a step back and realized that the company was not moving in the right direction. At that point, we had two options - go out and raise more money or scale down and march the company toward profitability. At that point, I knew Regpack was solving a customer need but I still did not know if it was possible to build a real business around it. I did not want to raise money and find out in 3 years that it was not working. I didn't want to waste money or my own time. It just made more sense to see if the business could stand on its own two feet. So we scaled down from 18 to 5 employees.
What was the impact on culture, product and customers?
How did you motivate the members of your team after your decision to scale the company down to profitability?
- The decision has made all the difference and has worked out very well. Scaling down was painful but it allowed us to develop a very tight focus. We cut out extraneous features and really developed a customer-centric culture. It happened almost automatically because we needed revenue to survive. The team developed very close relationships with customers that drove product decisions. We developed a 2 way emotional tie with our customers that can only be described as love. Check out our most recent blog post and you can really feel how much customers love working with us.
Thanks for stopping by Asaf!
- Once I made the decision, I went to my 6 best people. I took them aside and told them what was going to happen and why. I explained that the road ahead was going to be very challenging and I asked them, "Do you want to be a part of this journey?" Luckily 4 out of 6 decided to come. Motivation has not been an issue for the team because scaling down to 5 really bonded us together and gave us a mission. We are in this together and we have to make things happen.
Sunil Rajaraman is Founder and CEO of Scripted
, an online marketplace that connects brands with content marketing needs to professional writers.
How did you get started?
Has being an MBA founder helped or hindered you?
- I guess you can say I have a non-traditional background. A lot of folks in Silicon Valley are ex-techies from Google or Facebook. For them, they always have the path to start a company and raising money is an easy option. I always knew that I wanted to do something entrepreneurial but I came from a consulting background. The risk and uncertainty of starting a business was really holding me back from leaving to start something. So, when I went to business school, I figured out pretty early on that grades didn’t matter so I used that time as a riskless way to launch a startup.
What did you do early in life that has laid the groundwork for success as an entrepreneur?
- Both probably. Stanford, Wharton and Harvard are really the three schools where an MBA actually makes a difference in the valley. Outside of those schools, MBAs typically don't matter as much in the eyes of prospective financiers. None of the MBA coursework helped or prepared me for running a startup. I really hope that every MBA program overhauls the curriculum to make things more modern and metric driven. What did help was the network I developed at UCLA. I was able to find a small group of very smart people to surround myself with that have been helpful and supportive.
Congrats on your recent Series A fundraising. Do you have any tips or secrets on the fundraising process that you’d like to share?
- I took a lot of programming classes in high school and I was the AV geek that helped other people in high school. While I enjoyed programming classes, I didn't focus on getting super technical. Instead, I developed an appreciation for what it took to build things, which helps me a lot today. In addition to technical skills, presentation skills are so critical to being a CEO. My AP Economics teacher was really big on presentations and he really taught me how to present. My high school English teacher was also critical – we had a class of 10 people and you just couldn’t get away from doing your work. High school in general was very competitive and forced me to work hard.
How do you manage the stress of a startup and balance the emotional highs and lows?
- To be honest, I did a lot of things wrong. My advice from the process would be to stay focused. You have to be very focused and have a story that is going to be valuable to them. Then, you have to run a competitive process. Timing matters and you need to get multiple parties to come together at the same time. Once you have one term sheet, competition takes over. However, most fundraising rounds never come together. The probability of raising a Series A is very low and most entrepreneurs overestimate their chances.
- One other critical piece of advice is to not get hung up on valuation. If you believe your company will be successful in the long term, your valuation today won’t matter. People optimize too much for valuation and I don’t think they understand it. Securing the right amount of money and having the right investor are much more important.
- I struggle with this still and I think a lot of people struggle with this. Being a CEO is a hard job. The big realization I’ve come to is that you have to be authentic with people. It’s okay to say you are struggling. It’s important to have people in your world that you can have open, authentic conversations with who will be supportive. I get together every few weeks with Gary Swart, CEO of oDesk. I also have a very supportive wife and she has a detailed understanding of what I do because she is also at a tech startup.
Thanks for stopping by Sunil!
is an inventory management and order solution for omni-channel eCommerce. Brandon Levey is Founder and CEO.
What was the inspiration for Stitch?
- The inspiration came from my prior businesses – NakedCotton, a sustainable clothing company and WidgetFactory, maker of a bendable stand for iPhone. These were both very small businesses but we faced the inventory management channel. I actually wrote my own software to solve our pain point and it was total overkill in hindsight. One day I was at a trade show and I saw people taking orders on carbon paper and filing them into binders. That's how everyone was conducing business and I knew there had to be a better way.
What has been your secret for success at Stitch?
Have you had any hiccups along the way at Stitch?
- We've done a particularly good job at listening to our customers. We are very deliberate about it and we always make the time to listen to our customers. Customer feedback is the #1 thing that drives the company forward.
What inspired you to push forward during the periods when things were not going smoothly?
- Early on, we implemented a freemium model. We had really high hopes but it just did not work. We just didn't hit the traffic volumes or conversion numbers. It also took us away from our core focus on customers as we couldn't provide the level of service to our free customers that we would want to give to our paying customers. One other hiccup has been in hiring. Hiring the wrong people is so costly from a time and money perspective.
What laid the groundwork for your success as an entrepreneur?
- I just have this belief that the people I am working with will just figure things out. You don't have to accept failure, you can find ways to change your situation. You just need the motivation and time to figure things out. For example, I learned how to code from a book I bought on Amazon.
Thanks for stopping by Brandon!
- Honestly, the most important attribute of a successful entrepreneur is working hard. I worked in high school and through college. That laid the ground work for my work ethic. My Dad was a serial entrepreneur and he would take me to work on the weekends when I was a kid. He got up early every morning and worked late every night. His employees loved him for his dedication. I never truly appreciated how incredible it was for him to balance work demands and personal demands.
is a DIY mobile app development platform for native iOS, Android and HTML5 apps. Bizness Apps powers 50,000+ apps in the Apple app store. Andrew Gazdecki is Founder and CEO.
How did you get started?
- In college, I created a website for a class that connected developers to small businesses that needed work done. I noticed that there a lot of restaurants that wanted websites and mobile apps. I jumped on the idea that I could build a template mobile app for one restaurant that could be used for any restaurant. I really didn’t want to get a job after college. I honestly just started with the idea that I could get a few clients and make a living selling to maybe 50 restaurants and make $50K a year.
What resources were most helpful in college and what advice do you have for other college students?
- Chico State was a huge help and a big piece of my success. I was a rookie entrepreneur and there is a lot that I needed to learn (and still need to learn!). My original goal was very modest (design agency, lifestyle). They had a business plan competition. I entered 3 times and never made it to the finals. Teachers saw how driven I was. Ryne Johnson and Peter Straus would meet with me and they would help me work though gorilla marketing strategies, basic business principles and they forced me to follow through on our discussions. I entered the completion again my senior year and I won 1st place. One of the teachers introduced me to Christian Friedland and he became an investor/mentor. At that point, I had 30 customers and I was only generating $1,500 per month so he was helpful. Chico had a lot of resources and guidance available and I am very grateful. I was the only person who was really driven so I got a lot of attention. My advice to college students would be to seek out help. Colleges and professors want students to be successful but they are not going to go out of their way. You have to earn their help through hard work and persistence.
What is one thing that Bizness Apps is exceptionally good at and what is your secret?
- Every company has so much room for improvement and I always say that good is the enemy of great. I am proud that we have a such a strong focus on the customer. A lot of startups are very focused on raising venture capital. I always figured that I would raise money from my customers by solving problems and making them happy. As a result, we built a very efficient company. We have always focused on every dollar as if it was your last.
What advice do you have for anyone with a non-technical background who wants to do a startup?
- You need to hire an awesome developer. The best ones are just wired to develop – their personalities and brains are just wired differently and it comes so naturally for them. You have to find someone who just loves it. Because I wasn’t technical, I had to have a skill so I wasn’t dead asset. I am a designer focused founder so I did UI and focused on gorilla marketing. You need to find a yin to your yang.
Who would you like to thank for helping you along the way?
Thanks for stopping by Andrew!
- Christian Friedland. The guy is such a great person to work with and has been absolutely critical to the success of Bizness Apps. In addition to that, he's one of the rare investors you'll find that really does care about your outcome more than his. That's hard to find these days in business.
is a San Diego startup helping retailers automagically manage inventory and analyze sales by tapping into mobile POS data (Square, PayPal Here). Bach Le is a Co-Founder.
What was your inspiration for leaving the comforts of a cushy job at Intuit and starting Shopventory?
- My wife Hannah owns a boutique retail store in San Diego and I was amazed at how difficult it was to find an inventory management platform that tied in with Square. I built a solution for her on the side. At the same time, I knew I wanted to work for myself and take a shot at building a company. When I started thinking about it, I realized there was very little downside. Ask yourself, what is the worst that can happen? You will always be able to find a job given the developer skill set. You give up a little bit of salary in the short term so you have a shot at building something that changes the world. It's a no brainer. If I do go back to a corporate job, my experience is so much richer because I've taken this risk. My advice to anyone considering a startup, just do it!
What is the best advice you received when starting Shopventory?
- The best advice I've received is that you want to be solving a real problem - a pain point. On top of that, you have to solve a problem that people are willing to pay for. I've always found that the idea is to build something with a business model from the beginning. Starting something just to acquire users and then figure out monetization later is really tough. When they succeed, those companies have crazy multiples and get tons of press, but the outcomes are so fickle.
What is the luckiest break in Shopventory's early history and why did it almost NOT happen?
- Tough question. Because you are essentially selling to a consumer when you sell to SMB, I decided to do some quick tests with adwords before I even decided to turn Shopventory into a business. The response was overwhelming. That was lucky. Then my co-founder Rares and I threw in an application to Techstars at the last minute and we were shocked and very when we were accepted. Dave (our CEO) joined as a result of Techstars and that was a completely unexpected and very lucky break.
What is a failure you have experienced as an entrepreneur and what did you learn from it?
- Looking back at my previous attempts at startups, I had a lot of failures and I realized that I spent WAY too long building product before I ever tested to see if anyone would sign up and pay for what I was building. That made me embrace the lean startup approach which changed the way I think about product development and that's why I emphasize early interaction with customers. Another important lesson I learned was how to balance the emotional swings of a startup. I force myself to take one day off every weekend and do something fun. Startups are completely overwhelming. There is always work to be done, but you have to take breaks. Enjoy life.
Who do you admire and who would you want to thank for helping you along the way?
- My lovely wife Hannah! I'd also like to thank the people at Techstars - guys like Brad Feld. He has a very interesting take on being a founder. He taught me the value of transparency. That really resonated with me. Transparency should extend to every relationship in a startup - entrepreneur to Board, CEO to employees, startup to customers. That's the way I want to do business and that was the advice I got from Brad. It's also my strategy to deal with failure - you have to be honest with yourself and the people around you.
Thanks for stopping by Bach!
According to a Sarah Lacy article
from earlier this year, Andreessen Horowitz almost had an iron clad rule to never invest in verticals. The main reason to avoid vertical investments was because they had small addressable markets and thus it was difficult to build a big business.
Thankfully, Emergence ignored traditional thinking and bet early on Veeva Systems (NYSE: VEEV). What did we see that made us think it was a big enough market? We had a core thesis that SaaS made verticals more attractive. SaaS products can evolve faster than on-prem deployments and thus, we believed vertical SaaS applications could achieve high levels of customer satisfaction by combining vertical market expertise with rapid, focused iteration. This customer satisfaction would enable vertical SaaS vendors to perfect a use case and then sell additional products and services to their happy customer base.
Let’s look at RealPage (NYSE: RP) as an example. RealPage sells web-based property management solutions to the multifamily real estate industry. Using the 2009 US Census, I used a bottoms-up approach to calculate total available market size for RealPage with their initial product at ~$780MM. By 2008, RealPage had expanded its product offering and increased ASPs almost doubling their market size to ~$1.7B. Lastly, at the IPO, analysts projected future growth in product offerings which tripled market size to ~$5B.
I was really impressed by the Techstars Boulder demo day. Luke Beatty and Eugene Wan put on a fantastic production and the 10 founders did a phenomenal job showcasing their ideas. In contrast to other incubators, the consistency of quality really stood out for me. This may be the result of Techstars' focus and small class size. Of course, given my focus on B2B cloud, I was also very happy to see that the majority of the startups were focused on solving the needs of businesses.
The Boulder ecosystem is also quite impressive. The community here is incredibly open, thoughtful and willing to help. I met so many angels, advisers and service providers who had volunteered their time and resources to help accelerate the lives of 10 startups.
Of course, I have to give a shout out to Bach Le and Rares Saftoiu of Shopventory. I'm so proud of you guys for grasping the opportunity
This piece originally appeared in TechCrunch.
Away from the fickle eyes of consumers, deep in the basement of app stores, enterprise mobile apps are fighting each other for the attention of business users. Given the restrictions of their target audience, business app developers simply cannot utilize the same techniques that consumer app companies leverage. Why is that? And more importantly, how can mobile business apps efficiently speed up user acquisition? Customer Acquisition Models For Consumer Apps
First, let’s examine the methods consumer app developers have used to efficiently acquire large user bases and why business app developers cannot leverage the same techniques.
Obviously, consumer apps have a large target audience as everyone with a smartphone is a potential customer for a consumer app. As a result, the size of the target audience is capable of generating enough web and app-store search volume to build an initial customer base for apps. Plus, the undifferentiated nature of consumers means that cross promotional advertising on consumer apps can be a very effective and efficient user acquisition technique. For example, an advertisement for a mobile game can appear on any mobile app and the end user is always a potential target. On the contrary, the target audiences for business apps are often much smaller and may be focused on a particular vertical niche such as doctors or real estate professionals. As a result of the smaller target audience, business apps do not see a sufficient level of web and app-store search volume. Further, cross promotional advertising is much less effective because of the niche target audiences. For example, less than 1% of US smart phone users are doctors, which makes it very difficult to target that vertical with display ads.
Lastly, consumer app developers with deep pockets have been known to game app store rankings. At the launch of a new consumer app, the developer can pay for downloads through services, such as Chartboost and Tapjoy, until they crack the top 25 of an app store. At that point, their visibility on the app store leaderboard increases their discoverability to the point where organic downloads can take over. Given their smaller target market, mobile-first business apps simply cannot compete with consumer apps for space in app-store rankings (there are no business apps in the iOS Top 50 as of this writing).
Building Virality Into Enterprise Apps
Now that we’ve explored what is not working for enterprise mobile apps, let’s focus on what is working: designing your product work flows to drive direct exposure to new potential users and building in opportunities for indirect referrals through word-of-mouth virality. Dropbox
is the quintessential paradigm of designing virality into a product. Users are incentivized to refer Dropbox because they receive free additional storage for doing so. Additionally, the act of sharing a file with a friend inherently exposes Dropbox to new potential users and serves as a trigger for customers to talk about the service.
Building on the lessons learned from Dropbox, there are three techniques that emerging mobile-first business app developers are using to build virality into their products: triggers, incentives and work flow.
Triggers are events that spur an action. In this particular context, triggers are actions that an app user takes which provide for an opportunity to discuss the application. Expensify
, a mobile app for business users to submit expense reports, has built in two word-of-mouth referral triggers: 1) every time a user takes a picture of a receipt for expense reporting, they are triggered to talk about the app with the coworkers or clients present; 2) the act of submitting an expense report triggers an explanation of the product to the person approving the report.
Incentives play on the concept that users are much more likely to actively refer a product if they receive some practical value for doing so. Plangrid
, an iPad app for managing construction-site blueprints, uses incentives to spread among the different companies that collaborate on construction sites. Plangrid’s value to each site user increases with each additional company and user that joins and adds to the project. Thus, users have a practical incentive to refer the product to new target users.
Lastly, building virality directly into the workflow of how a customer uses an app is a very effective way to expose the app to new potential users. Doximity
, a mobile professional network for physicians, has built virality into its product workflow through its secure messaging capability. Doctors use Doximity to send HIPAA compliant messages to other doctors. Every message sent from a user to a doctor not yet on the platform exposes a new potential user to the product as the message recipient must install Doximity to read the message. Key For Enterprise Apps
Mobile-first business apps have to follow different rules for customer acquisition in order to achieve the scale and marketing efficiency of their consumer-focused brethren. The key for enterprise apps is to focus on building virality into the product so users directly or indirectly spread the app within their target audience. The mobile-first business apps that emerge victorious will be the ones that leverage triggers, incentives and work flow to kick their user acquisition flywheel into overdrive.
One of the keys to Yammer’s success was their focus on metrics, and tracking customer invites was one of the most important metrics. Yammer’s success relied on two types of customer invite virality: one, intracompany virality – when employees invite their colleagues to join the company network; and two, intercompany virality – when employees invite outside companies to sign up a new company network. Measuring the intracompany virality is pretty straight forward, but calculating the effectiveness of intercompany virality is quite a bit more complicated and will thus be the subject of this post. Why is it more complicated? Because you first have to measure how many intercompany invites spawn new networks and then you have to calculate how many new users join the new company networks.
In the attached spreadsheet, you will find anonymized user and company data for a mobile social networking company. Using the domain names of corporate email addresses is an easy way to determine if an invite is intracompany or intercompany. In my analysis, for 1,000 users which were created via intercompany invite, roughly 30% of those users spawned new active company networks (they invited colleagues to join their new company network).
Taking the analysis to the second step, each active company went on to invite 10 additional users (on average). Roughly half of these new intracompany invited users became active and engaged users.
So what can we make of this analysis? In aggregate, of the 1,000 intercompany invites, 293 created new company networks which ultimately spawned 1,633 users. From here, you can calculate the marketing costs of the 1,000 intercompany referrals and accurately compare that cost to the customer lifetime value of the 1,633 active new users. If the CLV is higher than CAC, you can add more marketing fuel to the fire. So how do you accurately calculate CLV? Well…I’ll save that for another day. :)
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Customer churn is simply a consequence of doing business. Even the best SaaS companies, like Salesforce
, will lose customers when companies go out of business. So how do you keep your customer base growing when you will eventually lose some of your older customers? Do you constantly have to sell new ones to make up for the ones you lose? Won’t this simply get harder and harder the larger your existing customer base gets? Well, yes and no. Acquiring new customers efficiently is critical, but you can also offset the loss of customers with upsells and growth from your existing customer base. In fact, the best companies actually experience negative churn – their existing customer base generate more upsell revenue than the revenue lost by churned customers. Veeva Systems is a great example of a company that has turbocharged its growth by following this model. The key to generating negative churn is to have a flexible pricing model that increases with usage (number of seats, number of servers, amount of storage space). Let’s see what this might look like:
As you can see in the chart, revenue growth per cohort increases over time. As a result, by the end, each cohort starts to tilt upward. In this example, the Company actually lost ~16% of its customers over the time period for this chart but more than made up for those customers with additional seats.
The spreadsheet below shows you how to create this chart from the raw data. You can take this analysis one step further by building cohort retention curves, but I’ll save that for another day. :)
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