A trend I’ve been noticing more and more is enterprise sales being done bottoms up. The typical approach is to offer a free trials or have some sort of freemium product. Each sign up is then treated as an inbound lead that is assigned an account manager. Within two weeks of signing up for New Relic I was contacted by an account manager who helped answer my questions and helped me get New Relic set up for Glossi. Working with him, we were able to get a longer trial period and a discounted price for when we’re ready to upgrade. HubSpot found that inbound leads cost 61% less than outbound leads. If having a strong SEO and Social Media presence drops acquisition costs that much imagine the drop caused by having a usable product. Although we’re a small, scrappy startup that’s quick to try new products and services, I believe this approach will become the standard way of selling SAAS in the enterprise. It’s much easier to get a person to try something new and if you can turn him into a fan, you’re one step closer to getting the company signed up.
An extreme case of this would be to initially build a product that’s focused on the consumer and only building out enterprise features when there’s a clear demand for them. A great example would be Dropbox, they initially focused exclusively on making a kick-ass experience for the consumer and only after nailing that down did they release the “Dropbox for Teams” plans. I don’t recall the history of GitHub but they may have done something similar - initially focusing on public and private repositories and then growing into the more enterprise friendly plans. This is a great approach for a product driven startup since you can focus on building your product without getting stuck in the twisted path of custom client work. But when your product and team are more fleshed out, you can focus on the additional revenue opportunities created by going after the enterprise.
An issue I’ve been trying to overcome is what I like to call the “build bias.” Whenever I’d run into a technical problem, I’d want to solve it on my own - whether it’s by writing some code or by installing and configuring various libraries and packages. I remember the time I needed to collect feedback for a website but instead of just using an off the shelf product like GetSatisfaction, I decided to create my own. Although I was able to get it working, it took me longer than expected to get it into a usable state and distracted me from the other improvements I wanted to make.
As a developer, it’s very easy to convince yourself to build from scratch every time you need something rather than using an existing solution. It’s exciting to work on something new and it’s annoying integrating someone else’s code. It’s even worse when they’re charging a few dollars a month for something that you can build in a few hours.
More often than not we underestimate the cost of building something of sufficient quality and don’t include the ongoing maintenance cost we’ll most likely be doing. More importantly, we are no longer focusing on the highest leverage activity. As they teach in business schools, you shouldn’t outsource your core competency but everything else is fair game. This is also supported by the lean startup approach which encourages getting your product to market as soon as possible so you can validate your market hypotheses. Why spend time building features when you don’t even know you have a marketable product? If it does turn out that you have a successful product you can always go back and develop your own solution then.
My new process is to first make sure that the feature is even needed. If it is, I check out the open source alternatives to see if anything can be used. If not, I look at the available paid solutions. For many small projects, it turns out that you can ride the trial/basic version enough to validate your idea. This approach has led Glossi to use MongoHQ to host my database, SendGrid as my email system, and GetSatisfaction as a feedback widget in addition to ton of open source libraries. With every new project, I’m offloading more and more of my auxiliary features to cloud based services and feel much more productive. Makes me wonder how many other services there are out there that can be leveraged.