In the early days at Infusion, we did very little marketing. Consequently, we got very little business. We did, however, excel at Unreal Tournament.
That’s why we hired Mark.
Mark was on the payroll for a couple of years and helped us out tremendously with our marketing efforts. During his employment with us, we dramatically increased our lead flow and the number of deals we closed. The thing about Mark was that he didn’t know anything about marketing – he didn’t really know anything about anything because he wasn’t a real person.
Shortly after Clate Mask joined the company, he came to us a bit puzzled as to exactly who this “Mark” guy was that we were paying $3,000 a month.
So we explained to him: “Mark” was the persona we had given to marketing. We knew that marketing was critical to the success of our young business, but like most start-ups, we didn’t have a CLUE how to market ourselves or our product. So we decided to start by budgeting $3,000 each month to marketing and that we’d figure things out from there. Our only rule was that we spend all the money. Kinda like Brewster’s Millions, only with $3,000 instead of $30,000,000…
And we put him on the payroll to make sure that “he” got paid before we did.
Of course, Clate turned that $3,000 budget into a successful pay-per-click campaign and with the help of influential marketing coaches like Reed Hoisington, Dan Kennedy, and Bill Glazer, we were off and running.
What was your first experience marketing like? Did you have a coach? Did you just figure it out? And what have you found that works for you?
Joel Spolsky recently blogged about a topic that I think applies beautifully to small business owners:
“You will frequently hear the claim that software engineering is facing a quality crisis of some sort. I don’t happen to agree with that claim—the computer software most people use most of the time is of ridiculously high quality compared to everything else in their lives—but that’s beside the point. This claim about the “quality crisis” leads to a lot of proposals and research about making higher quality software. And at this point, the world divides into the geeks and the suits.
The geeks want to solve the problem automatically, using software. They propose things like unit tests, test driven development, automated testing, dynamic logic and other ways to “prove” that a program is bug-free.
The suits aren’t really aware of the problem. They couldn’t care less if the software is buggy, as long as people are buying it.”
This geeks-vs-suits battle is played out in almost every business, big or small. The smaller the business - the more likely the debate turns into a schizophrenic dialog inside one poor guy’s head:
The angel on one shoulder tells him to never sell out - that craftsmanship and quality should never be sacrificed just to make a quick buck. The angel gets up on a soapbox and preaches about the evils of money-grubbing big business - how they don’t care about the customer and how their product sucks because they cut corners to save money, etc, etc.
Then the devil on the other shoulder reminds him that he has a mortgage payment due in two days.
It’s not the gap between “product quality” and “revenue” I want to talk about - I think this debate is actually pretty healthy. There is a gap far more dangerous to a small business: the gap between quality and perfection.
You see, small businesses can rarely afford the luxury of perfectionism - in fact, unchecked perfectionism will usually transform your business from “small” into “small-er” or “out of”. In the early days of Infusion, we had to constantly battle perfectionism. It crept in from all aspects of our business: product development, marketing, sales, accounting. These are a few of my observations:
- There are three situations where perfectionism hits: when you’re performing your craft (whatever it may be), any time you have to write something, and when you have to make a decision. Case in point: I should have been done writing this an hour ago!
- Perfectionism working alone = bad = expensive
- Strict deadlines and accountability combat perfectionism better than anything.
- It is absolutely critical that you recognize the “good enough” point. Anything beyond “good enough” gets more and more expensive the more time you throw at it.
- Don’t confuse quality with perfection. There’s a BIG difference. And don’t fight perfectionism so hard you lose quality. That’s an equally devastating mistake
And if all that isn’t enough to get you to shed you perfectionist tendencies, check out a study that showed perfectionists to be more “anxious, neurotic, and exhausted”.
And this post is officially “good enough”.
I came to the realization this morning that committing to a SaaS platform not only binds you to the technology, but also binds you to the business strategy and target market of the platform provider. This is a HUGE deal!
Case Study:
In 2005, I wrote an integration piece for SomePlatformProvider.com that would help small teams manage their weekly catered lunches. The first thing I did was research SomePlatformProvider.com’s customer base. What I found was that the average customer size was 50-100 employees. Because I knew I would be selling to SomePlatFormProvider customers, I thought it would be wise to tailor my offering to fit the budget and needs to companies with 50-100 employees. Doing this paid off huge for me! Soon I was the #1 provider of catered lunch tracking and making a ton of money. Everything was great. But then, my sales started dropping off. I did a little research. Most of the new companies that signed on to SomePlatformProvider’s services didn’t do catered lunches, I found!! After more research, I discovered that instead of the average company size being 50-100 employees, it was now 400-800 employees. And what I found out was that companies that big never did catered lunches - They all hired in-house chefs to cook because it was cheaper. It was only the smaller, more entrepreneurial companies that did catered lunches. Slowly my sales dropped off to the point that I had to shut down my business.
I wonder how many people who sell platform bolt-ons have really considered this. What if the target market of the host changes to something that’s not compatible with what I’m selling?
When people talk about “platform”, they usually use the word ecosystem. This is actually a really good word - because the balance is just as delicate as an environmental ecosystem. The smallest change could cause hundreds of businesses to fail!
When I was getting my feet wet in software development, I remember a recurring debate that happened between myself and my mentor. At the time, we were in the business of custom software for small businesses (for those reading - you couldn’t see it, but my neck just twitched and my eyes rolled into the back of my head). We were trying to use these small projects to build a core of reusable software that would allow us to increase profits until we could turn it into a resellable product. Yes, we were smoking crack more or less. The problem we were constantly running into was:
- If you want code to be reusable, you have to take the time to plan and code it right.
- Nobody (and especially small businesses) wants to pay you to do that.
My mentor’s argument was that I was rushing the projects and in turn creating dreaded “spaghetti code”.
My argument was that he was taking waaay to long to “do it right” and we were losing money because clients wouldn’t pay for the work.
Under these circumstances, I was the one who found success. It wasn’t because I was the better programmer, though. In fact, he had much more sophistication in his design than I did. But when it came right down to it, I was the one who could deliver a product that worked, was on time, and within budget.
We had a mantra in the early days: Customers want their software good, fast, and cheap. They can pick two of the three, but can’t have all three. And naturally, almost every small business chose fast and cheap.
Now our company is in a much different position. We have a product and our customers don’t dictate HOW we develop. We get to do that now. And preparing for the long haul, we are definitely bringing the “good” back. Now we just have to decide if we want fast or cheap to go along with our “good”.
We are in the process of working on a groovy new interface to our already sweet small business CRM product, InfusionCRM.
Our product is web-based, written in Java - and I was thinking that we should definitely check out the latest craze in the Web 2.0 world - RIA. After some googling, I found that all three of the bigs were cross-platform. So I immediately went to check out some demos. I looked at:
1. Adobe Apollo (AIR)
2. Microsoft Silverlight
3. JavaFX (Poor Sun, I don’t think they ever intended JavaFX to be on lists like this one)
What I quickly found was that (with the exception of JavaFX), what these platforms meant when they said cross-platform was Windows+MacOSX. No Linux, no legacy Mac, no Lindows (How could they leave out Lindows??!!!).
Before I get flamed, I know that Adobe is planning a Linux version, and the people over at Mono are going to port Silverlight, and I really honestly don’t care about RIA products for Linux as a user.
I’m worried about what is means for Linux developers.
Most Web-based Java developers I know (EE and SE) develop on Linux. If the RIA runtime providers aren’t providing runtimes for Linux, what can we expect for development tools? It’s too early to tell right now for sure. Providers are just now coming out with the brand-new 1.0 versions as we speak, and ultimately the market will determine how well RIA runtimes are adopted (will it really make the ubiquitous HTML+Javascript obsolete?).
I for one will be watching very closely!
I was talking to the sales guys today, and they helped me realize why Infusionsoft is so cool. I’ve taken it with a grain of salt because sales guys could probably convince Steve Erkel that he’s cool…
But anyway…
Most database software programs out there follow the repository/retrieval paradigm: I put something into you (the software), then later I get it out. It seems to fit, since that’s pretty much what a database is, but what does that do for a business?
Well, for an enterprise, it’s HUGE! It puts millions of records into one place so reporting, mining, and accountability can be managed. It allows managers at the tops of massive org structures to get a peek into what’s happening in their world. It allows you to forecast, track, report, search, and mine the data. And that’s why they pay huge amounts of money to get it.
But what does it do for a small business?
Not much.
Yes, it organizes their stuff, and helps them locate information easier. And it helps them to stay on top of their tiny little staff. But what’s the motivator for them to implement? And how much money is it going to make them?
Really, what’s the most important thing for any small business? A solid marketing and PR plan, right? (I didn’t come up with that on my own. I did a little research on the internet)
If there is any software out there that automatically creates and executes a complex marketing and PR plan for you given little or no investment, we could all be put out of business. But since there’s not anything to date, I’ll continue…
Who has time or money for a marketing and PR plan when you’re struggling to make ends meet running your small business? And if you don’t have time or money for a marketing plan, then the most important thing in your business just became — time and money.
How do you get more money? You either spend less, make more, or get funded. Except that you can’t get funding without a good marketing and PR plan. And you can’t spend less because then you have to fire people and then you can’t get the work done to pay the bills. So you only option is to make more money.
And how do you get more time? You can’t hire someone else to do your job because you have to make more money to pay them, and it sets you back in the money department. And you can’t just spend less time because then you won’t get the work done to make money. And you can’t work more because you are already working 18 hours a day. And time really is money.
What a small business really needs is an infusion (rim shot) of time. Time to spend working on the thing that really matters: the killer marketing and PR plan.
Which brings me to my robot.
 Let me be clear that I hate the word robot as much as you hate this picture. But the word starts with an R, and everyone knows what a robot is.
The difference between what we offer and what other people offer is that our cool robot can perform human functions. For example, I could tell this robot over here that whenever someone’s credit card is about to expire (15 days before expiration) to email them that their card it about to expire and provide an online form for them to update the date (form coming soon).
How much time did I have to invest to have this piece of work done? $0.00! Well, technically, I had to pay $2.30 per hour - which is far below minimum wage - more like Indonesian sweat shop. And that’s if it’s the only thing he did!! What if in addition to handling 300 expiring credit cards, he also executed 91 individual marketing pieces going to over 1,000 prospects and customers, including mail, fax, email, and manual tasks! And then he kept track of everything he’d sent so he could continue to execute the sequences. And kept track of opt-out requests, and additional information requests that would cause people to jump from one marketing sequence to another? And all in one day! For $18.00? It’s hardly legal.
And it’s not just about time. The opportunity cost for a small business owner to NOT work on his or her business is nothing compared to the peanuts they pay themselves. What we offer is much more - and it’s less tangible than money or time. It’s the freedom for people to create lasting value in their business.
Oh yeah, and we also have a pretty sweet repository.
Quickly, can I rant about the term SaaS?? I just don’t like words that have two lowercase letters squeezed between big letters. Yes, it’s very symmetrical, but it’s practically just a sentence with the first letter of every word, like we used in our notes in 8th grade (INVU4URAQT). And SaaScon bugs me more, because it breaks the logic of lowercase-articles-only. Instead of SaaS, they could have used these:
StrorW
Software that runs on the Web
StraS
Software that’s really a Service
SnotD
Software not on the Desktop
Was there really anything wrong with ASP? or On-Demand? or Web-based?
I think we should come up with a new name.
There was lots of talk about platform at SaaScon 2007, starting with SalesForce’s Jim Steele revealing Apex (SalesForce’s new development platform). As part of the presentation, a SalesForce developer presented an application he’d created using SalesForce’s Apex. The application allowed for tracking time-off requests, and included a custom time-off record, workflow rules for escalation, actual code to calculate holidays and weekends, and a calendar to show the time people were taking off.
The demo was very impressive, and definitely seemed to validate the Saugatuck keynoter’s suggestion that we will see a handful of what he called SIP (SaaS Integration Platform) stacks pop up from big players. A SIP stack would provide a SaaS platform where developers could write mini-applications that would run within the vendor’s SaaS infrastructure and could extend existing functionality. Developers would be able to develop sweet little bolt-ons and not have to worry about hosting their code themselves (or creating the core functionality).
It’s interesting to contrast this idea with something like SugarCRM’s development platform. SugarCRM can also be customized, but you have to download the code and host it yourself (I’m not sure how many vendors want to run your infinite loops in their multi-tenant environment).
Either way though, it seems that these platform providers will run into a conflict of interest by providing both a platform AND functionality (think Vista/3rd party spyware). It’s already playing out. SalesForce recently purchased a Web 2.0 document management provider to be the driver behind SalesForce Content. So where does this put the 20 existing providers of document management solutions within SalesForce’s AppExchange? I spoke to one of these vendors at the event that was very frustrated with SalesForce’s new acquisition. They had spent a ton of time and money to establish themselves as a premier provider of the service within SalesForce, and now they face the prospect of being obselete within SalesForce.
It will be harder to convince development companies to jump onto a platform when there’s no security that the platform provider won’t build the exact same functionality into the core of their application later. But, on the other hand - a platform provider shouldn’t be held hostage to 3rd party apps in their developer network, as it puts them at a distinct competitive disadvantage. It just seems to me that companies like SalesForce will have an extremely difficult time balancing the relationships with 3rd party developers with the need to put the best product on the market.
On the flip-side of the equation, a platform provider that provides very little or no end-user functionality, but rather focuses on the infrastructure and platform tools will also have a hard time attracting developers because the developers don’t want to have to start from the ground up. No way the SalesForce developer is going to create a fully-integrated time tracking system in a weekend without the huge head start the core SalesForce architecture provided (Users, Permissions, Layout, etc)
So, where’s the happy medium?
Props to Kelly for the title (I never heard the phrase before).
Towards the end of the conference, one of the moderators mentioned that he noticed a recurring theme that SaaS vendors are moving up-market as more and more enterprises adopt SaaS. As a company that services “true” small businesses, we lend a keen ear.
Let’s assume for a moment that big players really are moving up-market. For a company that provides solutions to true small businesses, this appears to validate our market analysis that larger SaaS crm vendors (SalesForce, RightNow) have out-priced the true small businesses (relative to the feature-set they get), and the lower-end (Act!, Goldmine) don’t provide the functionality required to really automate small business. As I sat in awe of SalesForce’s beautifully branded PowerPoint presentation and the nice numbers they were flashing, a few questions came to mind:
1. Can we sustain competitive growth given the fact that our sales/support overhead is several times (proportionally) that of the big boys? (We have to sell/support 1,000 customers to equal 100 larger SalesForce clients.) Or is this “Death by a thousand duck bites”?
2. Does this get us to “The leading provider of active crm software for small businesses?
I think the first question is answered by asking another question: When we say competitive growth, who are we competing against? Is it SalesForce and RightNow? or is it Act and Goldmine? Or is it another SaaS-based company out there? From everything I can tell, it’s none of the above. We appear to be the lone wolf in the land of automated crm software for true small businesses. The big boys can’t afford to come down to service true small business, and the small players can’t provide the features and SaaS platform small businesses need. For SalesForce to increase their revenues by 5% in Q3, they would have to sell around 83,000 seats PER MONTH on their current small business pricing model. I would imagine it’s the same for the other large CRM vendors. And that assumes that their current pricing structure would include the equivalent feature-set of ours (which it doesn’t come close to).
So, looking around - I don’t see another player in the true small business space that can provide the feature-set we provide for the price we provide it. Our sales guys said that we just don’t lose sales to SalesForce, RightNow, Act!, or Goldmine. We don’t really lose sales to anybody! In fact, one of the sales guys with years of experience working for a huge software company they said that our close rate on people who attended a demo is higher than anything he’s seen!
And if there are no other competitor in our space, then instead of asking ourselves if we can sustain “competitive growth”, we should be asking ourselves how fast we can grow and if we can sustain margins. Because if we can sustain margins - there are millions to be made.
And I think I answered my second question.
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