Startable - Healy Jones’ & Prasad Thammineni’s Blog

I’m happy to announce (a bit belatedly) that Pixily is now called OfficeDrop. Changing the company’s name was a pretty big deal, but it has gone smoothly. There is much more to it that just finding a domain that we could purchase and redirecting URLs. The biggest thing for us was getting feedback from customers and getting their buy in on the new name concept. So far so good!

I hope to post on our journey to find a new name soon, but have been so darn busy that I haven’t had a chance!

Brent Frei has a post on VentureBeat on increasingly interesting SaaS “app store” battle. I really care about this battle because Pixily has integrated with Intuit’s AppCenter, and it is an important part of our distribution strategy.

While Brent argues that Microsoft is losing out and will not become the powerhouse platform for the next generation of internet applications for business, I’m not yet so sure. In my mind the platform that best drives new customer growth for the largest number of third party applications will be the winner.

I think that the winner will be determined by applying the most marketing muscle plus the best user experience (both for the app developers but also very importantly from the end customer’s perspective.)

That’s my two cents; read his article.

Vivek Wadhwa had an interesting post today on selling in TechCrunch. I’m learning some serious lessons on selling now that I’m the head of marketing at Pixily - although I am very much still a novice sales manager! I reserve the right to be completely wrong/change my mind on any or all of these points

1. Aspiring to a touchless sales model is great, but small business customers like to know they can reach you on the phone. Many great SaaS companies have a great sales funnel that terminates when a customer signs up online without speaking to a sales rep. I think most small business SaaS startups hope to create this type of sales cycle. After all, how can you have a profitable company if you need to have a sales person on the phone closing $15 per month sales? But, at Pixily, we’ve found that phone calls result in sales and great free to paid user conversions. We offer a free trial, and a decent number of our paying customers choose to sign up for the free trial and eventually convert to paying customers. The highest converting (free to paid) lead source is the customers who call us and who we sign up for the free trial over the phone. The convert to paying customers by over 3x vs. the next best source. (Note: “source” is probably not the right word to use, but it’s Saturday and my coffee isn’t kicking in quite yet…) Is this sustainable in the long term? I’m not experienced enough to know at this point.
2. Customer service reps make great sales people too! Vivek mentions how developers make great sales people. I’d very much agree, since our developers often drive closed leads from networking events they attend and from conferences they speak at. But we are having success with our customer service reps doubling as sales people. First of all, they know the product. Secondly, they understand how live customers are using the product. Third, when a free user calls in to ask a question it’s the time to try to sell them on an upgrade!
3. Customers do the darnedest things with the product - asking them “why are you interested in my product” is really helpful in selling. For example, one of Pixily’s products is a simple document scanning service. We happen to be pretty good at scanning documents, and can offer it profitably as a stand alone service. We had a bulk scanning customer who was a magazine publisher. He wanted to get his old magazine issues (from the 80’s and beyond) online, but only had them stored in print. Once we actually really understood how he wanted to use our product we were able to sell him - even though we were more expensive than a couple of local scanning providers in his area. We’ve sold this particular product a few more times, mainly because we “get” what the customer’s end goal is.
4. Managing a sales pipeline is harder than it looks. When you are the VC, you get to see all these pretty sales funnels at board meetings. When you are the person trying to grow the business, keeping the different campaigns and leads all moving along in the funnels is much more challenging! I guess it’s just in my nature to enjoy playing/measuring our sales channels by output, but I have to fight the instinct to not spend too much time in analytics and not enough time in selling/content creation.
5. When selling online, content is king. I’ve had a ton of luck getting great content out of a marketing intern we recently hired. Not only has he built an entirely new site dedicated to document scanning, he’s also put out some very helpful blog posts and made content upgrades to our web site. All this content is producing - both in terms of us moving up on Google, getting more traffic and improving our conversion rate.

Anyone seen a microsite marketing strategy get pulled off effectively?

Both for my position as head of marketing at Pixily and also on my own for fun I’ve launched a few microsites recently. I’m trying to find examples of how this has been successfully, because I’m pretty much making it up on the fly as I go here. The two sites I’ve launched already are:

Document Scanning Service

documentscanningservice.com is live and is for - you guessed it - document scanning services!  Pixily has already had some sales through this site for our bulk scanning service. Does anyone have opinions on how closely tied to the main company’s brand a microsite should be?

Smart Grid

I’m using Smartgridapp.com reference place for some of the information available on the smart grid, mainly from government reports that are thick and a pain to read. As I’m getting up to speed on the smart grid, it will be a place I record what I’m learning. Anyone have any suggestions on good reports on the grid, energy usage or other topics that I need to be aware of?

A few quick interesting links:

A good friend of mine just posted a study on the impact of social media on generating actual leads vs. search on the Hubspot blog. In a not surprising conclusion, social media traffic had a much better conversion of traffic to leads (i.e. was higher yielding) than search traffic. I guess this makes sense, because if someone is engaged enough to connect with you via social media then they are probably a better potential customer.

Congratulations to DataXu, and Atlas Venture portfolio company, for formally launching its service. DataXu is a bidding platform for online display advertising and has a solid team from MIT and is headed by Mike Baker, and experienced online advertising executive. Good luck to them as they grow the business! I like the company because I believe that there is a funny power dynamic in the online advertising world - powerful ad sellers like Google also are the major suppliers of ad optimization technology to the ad buyers. So, basically the people who sell you the ad also provide you with the tool to decide if you want to buy the ad. This may or may not be a real conflict of interest, but it is strange. I always imagine the analogy of the car dealer also being the one publishing Consumer Reports. A player like DataXu should help ad buyers become more sophisticated and control their own data.

Finally,

Intuit has agreed to buy Mint.com. This is pretty cool! I believe (or hope at least) that this shows that consumers are moving aggressively to embrace the power of the internet to manage important aspects of their financial life. The thing I always thought was smart about Mint was that it required zero work - you input your account numbers and passwords and the engine does the rest. Pretty slick. Has anyone defined Web 3.o yet? If Web 2.0 was social media/having your friends and others create the content for you, is Web 3.0 automatically surrendering up lots of personal information and letting the web/AI make sense of it all?

Dharmesh Shah has yet another great post on his blog about building a sales team. He mentions the need to set compensation structures correctly, making sure you are tracking sales metrics thoughtfully and talks about the culture shock of experiencing a sales team from an engineer’s perspective.

When I was a VC I noticed that portfolio company boards spent a long time talking about the sales team. Assessing progress vs. the company’s goals, talking about lifetime value of customers vs. acquisition cost, and putting together compensation plans. Now that I’m playing the entrepreneur game, I myself am trying to understand exactly where the the fine line lies in setting a company’s sales projections. I’m really getting the feeling that it is much more of an art than the illusion of “science” given by spreadsheets! It is much harder on the inside, and now I wish I had provided more support to my portfolio companies when I was a VC and when they were working through these issues. I guess the numbers have to “come from the management” so that they are totally bought in, but the amount of effort required to do this thoroughly is pretty amazing.

I was at a private luncheon 10 days ago with Scott Cook, the founder and Chairman of Intuit. Coincidentally, Microsoft officially withdrew MS Money from the market on the same day - a huge achievement for Scott Cook and Intuit. When asked how he managed to stem off competition from Microsoft, this is what he had to say:

Solve Customer Pain Point(s)

Most companies are founded with an objective to solve a pain point but only few firms continue to focus on the customer after they have achieved success. What Intuit has done in the last 25 years and is relentlessly focussed on what the customer pain points are and then go about solving them. They engage the customer before, during and after each release cycle to ensure what they build is what the customer wants.

Delight the customer

Solving the customer pain point is not just enough but doing it in a manner that the customer loves it is what counts. The customer interact with a company and its products in various ways and various times. The post-sale customer experience is even more important than the pre-sale experience. How the product satisfies the needs, how accessible the company is (customer service) and how involved the user community is play a major role in enriching the customer experience.

These according to Scott, will create a loyal customer base for life and continue to generate word of mouth. When Scott asked Bill Gates what the main reason to acquire Intuit (in the mid 90s) is, Bill responded by saying that they could replicate everything that Intuit did but not the word of mouth. No wonder, Microsoft pulled out of personal money management market.

I’ve been spending a day or two a week over at the TechStars Boston office, and so far it’s been a ton of fun. I think that the TechStars teams are building some potentially very cool applications attacking real markets. After having interacted with a number of the teams, I’ve decided to post my ideas on how they can get even more out of the program. Keep in mind that these tips, plus $3.50, will get you a coffee at Starbucks. (In other words they might not be worth that much! And they are in no particular order.)

Tips for the TechStars Boston people:

1. LinkedIn is your friend, and if you’re smart you’ll be LinkedIn buddies with every single mentor you meet. This way, if you need to try to reach someone in a particular industry/field/company you’ll be able to see into the mentors’ networks. Remember that you can search in your nearby networks for specific companies or job titles/descriptions. I’m willing to bet that many of the mentors will be happy to make intro’s to people in their network, and LinkedIn will give you the ability to know who knows who where.
2. Carry your business cards, because I get the feeling there will be very interesting/relevant people wandering around the halls here in Cambridge over the next few weeks - even if you don’t have a real chat with someone you will probably want to get their contact info, and giving them your card is an easy to get them to reciprocate with theirs. Of course, I like the sexy little Moo cards, but as the Baydin and Localytics guys have pointed out, I’m a bit of a walking Atlas portfolio company advertisement.
3. Start promoting yourself on Twitter. I’ll follow you on Twitter, and I’m sure many of the other mentors and TechStars entrepreneurs will. You’ll probably find that members of the local and tech media will want to follow you too because of your association with the program.
4. I want to hear your pitch. Hit me with it as often as you can! Since the pitches keep changing I want to keep up to date on your thoughts.
5. Be aggressive in asking the mentors if they want to get your weekly progress update emails. These updates make people feel like they have a stake in what you are doing.
6. Bother Shawn a lot. Try to get intros out of him, even to people who aren’t mentors. Need an expert in a particular field? See if he can help, or at least point you to a mentor who may have a contact or two.
7. Start thinking about your funding needs. I may be bringing this up before the TechStars organizers want me to, but the program will be over before you know it. How are you going to continue to fund the business?
8. Do you want to hire any of the mentors? (Ok, this is the most controversial thing I’m going to say.) Some of these mentors are real tech-community rockstars. Some of them are legit leaders. Some of them may bring loads of venture capital to any company that they join. Do you think that you could get any of them as the CEO of your company? Or as a head of marketing, engineering or something? If your team has holes and you think one or more of the mentors would be the ideal person to fill them, start gently courting them now. Coffee chats, email updates, asking for intros to people in their network who you can impress and learn from - carefully get this moving.

Good luck to all the awesome entrepreneurs at TechStars this year!

It’s becoming increasingly clear that the generic advertising based web 2.0 business models are struggling, and I am wondering if lead gen business models are a much more effective model for the current downturn. Some of my partners are saying that 100 million in the new 10 million, as in a startup now needs 100 million monthly views to generate venture style revenue returns based off of a pure advertising based business model. While this is a bit of a cynical joke, there does seem to be statistically valid slipping in online CPMs, particularly around untargeted display advertisements. Targeting definitely helps, and some startups that I interact with are earning $25 to $60 CPMs… however, these are for highly desirable user groups. If you really think your startup has better targeting but doesn’t have huge users maybe you should consider using lead generation to do the monetization yourself.*

My general thought process is as follows:

1. Targeting requires work and advertisers can be lazy. Read the rest of this entry »
   

In an earlier post Prasad Thammineni makes a thesis for why startups should blog. He also asks the question, “Do VCs care if startups have a blog?” As a venture capitalist, I would say, “yes, a startup blog is not a bad idea.”

I will ignore the obvious reasons to blog, such as search engine goodness, brand building, etc. Instead, I’ll focus on why your startup blog matters to a VC.

If you are trying to raise venture capital, a blog isn’t a bad idea because:

1. A VC might find YOU via your blog. This is true - VCs just don’t sit on their butts and wait for new investments to walk in the door. In fact, some VCs actually know how to use Google… and during our research into your space might we just might stumble across your thoughts and then contact you.  
2. Thought leadership/PR. If you are a really well known blogger in your space then you will potentially get quoted in press articles and/or asked to speak at events. Since most VCs can read (and a few can even listen) there is a chance that they will be so intrigued by what you’ve said that they reach out to you. Read the rest of this entry »