Let’s talk about how you can close more deals.
First and foremost, I think most people think that prospecting, following up, doing sales calls, and closing deals can be pretty daunting, right? Most people don’t like to think of sales. “Oh, I’m just not good at sales” is something I hear all the time.
In fact, I’m still like that, to this day. I tend to avoid wanting to do sales calls, but you kind of have to if you’re running a company, especially in the early days. You have to close the deals. In the agency situation, like with Single Grain, if it’s a big deal, I’m going to come in and close it myself.
But the question is—how do you go about closing deals if you’re just starting out?
If you’re starting out, I think that the one thing you have to realize is that you have to look at your sales activity. How many deals is it going to take for you, or how many calls do you have to make, to eventually close a deal? Then you can work backwards.
Make a list of your sales activities. What you can do is figure out, on average, how many proposals you have to send before you close a deal. For example, let’s say I close at 25%. That means that I need to send out four proposals to close one deal.
Well, how many discovery calls do I need to get on to eventually get to one proposal? Let’s say 1 in 10 calls that I get on actually results in a closed deal. So, to close four deals, I need to speak with 40 people over discovery calls. But how many prospects do I need to reach out to in order to get one discovery call? Let’s say 5% of my total calls will lead to discovery calls. In this case, that means I need to reach out to 800 prospects every month to get four closed deals.
There are about 20 weekdays in one month, right? That means each and every day I need to reach out to 40 brand new people and then we also need to follow up with old clients or prospects, too.
Now, let’s say you’re starting out fresh and you don’t really know how you’re going to end up converting. Let’s say you are actually not that good at closing yet. In fact, let’s say you convert at 10%. You convert 10% of your proposals into a closed deal, 10% of your discovery calls will turn into proposals, and 5% of your prospecting will turn into actual discovery calls.
That means that instead of having to reach 800 per month, you actually have to reach 2,000 per month. That means you effectively have to send 100 messages per day. Which is why prospecting is hard.
One book I would recommend reading is The Ultimate Sales Machine. In this book, there’s a concept called your “dream 100.” In other words, who are your 100 dream clients?
Well, you can prospect for them by setting filters with SaaS sales software (like LinkedIn), or you could have sales development representatives reaching out. More likely, it’s going to be you doing it. Ideally, it’s you and your business partner tag teaming your ideal leads with hand-to-hand combat techniques.
I would also recommend reading From Impossible To Inevitable: How Hyper-Growth Companies Create Predictable Revenue by Jason Lemkin and Aaron Ross.
Jason Lemkin is the founder of SaaStr, which is one of the biggest software as a service (SaaS) conferences in San Francisco. I’d recommend reading that book and all of Jason’s articles on software as a service.
Those two books are going to be gold for you, especially if you’re first starting out with sales. Then you just keep doing it over time and you’re going to get used to it.
Learn More: The Sales Process that Grew EchoSign to $100M in Revenues with Jason Lemkin
I would also recommend supplementing your sales efforts with things like inbound marketing where you’re building goodwill with people over time.
You’re doing YouTube videos, you’re doing Facebook Lives, you’re creating a lot of content out there. You’re going out there, you’re speaking at events, you’re doing podcasts, and you’re creating all this content. That’s going to take a lot of time to get that going, but ideally you get that going so that a couple years from now, you’re not going to have to rely completely on sales and ads.
Related Content: How to Create a Content Marketing Strategy if You Are a Beginner
Thankfully, the majority of the leads that we get are from inbound marketing. We get them from podcasts and we get them from doing things like this. Yes, actually doing Facebook Lives like this and rebroadcasting these or re-targeting our audience helps a lot of people who are on the fence make a decision and commit to work with us.
You can definitely do the prospecting thing, but you can see that having to send out 100 brand new emails per day and trying to personalize each and every one of them can get really tiring. So as soon as you can, I would recommend delegating the prospecting to two other people so that you can compare them side by side, and then perhaps you can focus on closing your best prospects.
Eventually, you can hand off the closing to the other people, too. At that point, you just have to focus on growing the business and making the right hires.
There are so many different tools out there. Use tools like SalesforceIQ or some kind of CRM, like HubSpot CRM. I highly recommend using Mixmax to follow up with people automatically. You can see who’s opening emails, when they open it, where they open it from, how many times they open it, etc.
Long story short, everyone I’ve interviewed on Growth Everywhere gets their first 100 and even 1,000 customers by doing hand-to-hand combat.
This post was adapted from Eric’s Facebook Live videos: Growth 90 – DAILY live broadcasts with Eric Siu on marketing and entrepreneurship. Watch the video version of this post:
Today I’m talking to Max Altschuler, CEO of Sales Hacker and author of the new book Hacking Sales. Max’s sales career began at the early days of Udemy, where he had to figure out how to grow the company by 20% each month without spending much money or using a lot of resources. Since then, he’s become a master of using technology to hack sales, and he tells us how he’s used this knowledge to build a successful business based on helping sales professionals do their jobs.
A background in startup sales meant hacking wherever possible to boost growth
As the sole person responsible for growing the instructor side of Udemy’s online education marketplace and the classic startup problem of having no money to do it, Max had to find a way to generate revenue using fewer resources than the vast majority of sales teams did.
He figured the only way to do it was to hack his way through it, so with technology, he built up an amazing virtual outsourced SDR (sales development rep) team to help get Udemy through their A-round and B-round of funding.
After his success there, he left for a company called Attorney Fee (now LegalZoom Local) where he was responsible for growth in a similar way.
Then, he started Sales Hacker Inc.
At first, it was nothing more than a meet up, and when he left Attorney Fee, it developed into a conference.
After the huge success of the conference and the realization that despite sales being everywhere, there weren’t any college courses, education or real content on sales, Max realized what he wanted to do.
Within the last 2-3 years, says Max, companies have really started to develop technology for sales people. With Sales Hacker, Max plans to ride that wave and be one of the key players pulling the trend forward, and playing a big part of the conversation while showcasing new tools and educating companies and startups on how to embrace technology in the sales process.
Sales Hacker conference vs. SaaStr conference
When Jason Lemkin asked for Max’s help with The SaaStr Annual conference, Max recognized that working with sales technology as a part of Sales Hacker and SaaS companies were very closely tied, that it only made sense to get involved.
But since Jason’s conference was four to five times bigger that the Sales Hacker conference, the scale and the fact that they only had a five-person team to turn fantasy ideas into something practical and doable was interesting and a bit tougher.
But even though the conference was so huge and involved a lot of hard work, Max says it had the highest-quality attendee list he’d ever seen at an event. There were CEOs and executives from some of the fastest-growing companies, great VC-backed entrepreneurs, and everyone was incredibly open to quality conversation.
Exactly why conferences are worth the headache
Putting on a conference is a task with a very hard deadline, all kinds of potential problems, and lots of personalities, vendors, and live technical difficulties to deal with.
But even though it can be incredibly stressful, Max says it’s worth it – especially for the business model he’s trying to set up with Sales Hacker.
At it’s core, Sales Hacker is a full-service media company that does publications, hot conferences, and meet ups in 30 cities all over the world. The idea is to build a community from the events and get high-level people involved.
With the community behind it, Sales Hacker can be a company that is about conversation and helping its community members in different ways. Already, lots of doors have opened, and they’ve had to pick and choose which opportunities to pursue to grow their business.
Why Sales Hacker is so focused on building it’s own community-based brand
With their own brand, they’ll be able to do whatever they want with it.
As an example, Max cites Jason Lemkin who built the SaaStr brand. While other VCs are running around chasing deals, because of the SaaStr brand he built, Jason can sit back, relax, and get access to invest in some of the best companies who often give him better deals and terms just because of his brand.
At their conferences, they don’t sell out their attendee lists or let sponsors pay for speaking spots. Instead, they do things that speak to the core of building an authentic community people can trust.
A few of the things they’ve been able to do because of their branding so far include:
Backing things up a bit: authenticity from the beginning
In the beginning, Sales Hacker meetings were an invite-only ordeal – sort of like a private mastermind group. It started with four guys meeting together each moth to hack things out and figuring out how to make the sales process better.
They were figuring out things around building lists and managing virtual assistants, and over time, they invited more and more people in their networks who were doing interesting things in sales. By their last meet up, they had 20 people, and Max says the reason it was able to grow that much via an invite-only process was because it was authentic and genuine.
Keeping the events genuine and useful
Because panels tend to be a handful of people rambling and saying the same things, Max isn’t a fan of them because he feels they’re inauthentic and devoid of actionable information for an audience. So he doesn’t use panels in the events he hosts.
Instead, he prefers to give one speaker a set amount of stage time to really go deep into one topic.
For example, at the Sales Hacker series events, they usually have three 20-minute spots with one over-arching topic. And for their conferences, they’ll line up 10 different 30-minute sessions with some Q&A to follow.
He says having just one person zoom in on a topic helps people a lot more and provides for a great Q&A afterwards.
The biggest struggle in growing Sales Hacker as a business
According to Max, everything in a startup is a circle of, “We want to do that thing and do it really well, but we need to hire someone to do it. We can’t do it until we hire them, but we can’t hire them until we do it.”
Essentially: growing pains.
As an entrepreneur and a sales guy, he says he’s impatient and wants to move extremely fast. In reality, he’s happy with the speed they’re going, but is always striving for more.
Hacking Sales – the book
Max says that Hacking Sales is all about building up the sales process from the early-stage startup perspective, and is written for sales reps and entrepreneurs. It’s a how-to playbook on the entire sales process, and each step has tips and hacks behind it that you can use to optimize your sales. It also showcases 200 different sales tools you can use to automate your sales process.
The idea of the book is to help sales professionals and entrepreneurs do what Max did in his days at Udemy and Attorney Fee: get high-velocity sales as quickly as possible, because especially in a startup, time is money. It helps readers generate more revenue while using less resources and time.
Advice to his 21-year-old self
“Put your head down and work hard.”
Max says a lot of people get into SaaS and sales wanting to network and read TechCrunch all day. According to him, that’s all a waste of time if you’re not actually getting any work done.
He also suggests being transparent and writing about everything you do. He says it’s really not possible that anyone could copy you – no one will be able to out-execute you at your own process.
Max says that he really looks up to his father because, “He’s a happy guy, he’s done so much, and if I can be that successful when I’m his age, I’d be pretty happy with it.”
Max’s dad was the kid reading stock quotes at age 13 and who became a stock broker turned financial advisor. Max says he’s also always been really good at sales because he’s genuine, authentic, has a high level of empathy, and people trust him.
One productivity hack
To boost your productivity, Max suggests spending the time to find and hire a good virtual assistant, and train them to do all of your menial tasks.
Beyond doing things like scheduling, he says a lot of virtual assistants are so professional and smart that they can work directly in tools like SalesLoft, ToutApp and Yesware to take care of even some of your higher-level work.
One must-read book
Max recommends the 48 Laws of Power because it’s full of great stores and teaches you a lot about strategy.
He says he finds most business books boring, but this one is a fun read and is actionable.
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In today’s interview we’re talking to Ian White who is the CTO and Co-Founder of Sailthru, an online personalization technology he and his team had to bootstrap for two years while no one believed in it. Now they’re doing low seven-figure business deals and seeing much more success. Today, Ian will talk about the importance of hiring technical talent, adjusting to changes, and what you should do when a member of your team is no longer a good fit.
Keypoint Takeaways: Running with a good idea & starting a company at the worst possible time
After explaining how he met Neil Capel who would eventually become a fellow founder and CEO of Sailthru, Ian gets to the point of where they discovered the online personalization needs through the problems they faced with the various companies they worked for.
Recollecting their thought process at the time, Ian said, “What if we had a technology that could truly personalize one-to-one communications on an individual basis? What if we could do that, not just in email, but we could pull together a user’s data from on-site, their whole click stream activity? … If we could pull all of this together and form a unified picture of each individual, then the way you communicate with those people could be totally personalized and individualized.”
They figured out how to start doing it and got to work launching their company in September 2008: in the exact same week that Lehman Brothers crashed and the country was in an economic depression.
They had to bootstrap for two years until they raised their first round of funding in June 2010, and since then have grown to 170 employees with offices in New York City, San Francisco, Los Angeles, and London.
A growing company means changing dynamics
“Growth, technology: these things inherently mean change,” says Ian. “And one of the things you just have to do is keep being responsive to change.”
In the beginning, when a team grows by as little as 10 people, there needs to be a fundamental difference in how the company works because more people means you need more process and more structure. A 3-person company made up of just the founders is vastly different from a 25-person company.
As your company scales, it’s important that you don’t get too attached to one way of working or one idea you want to work on. If things don’t work, then Ian’s advice is to “Kill ’em quick and double down on the ideas that do work, and try to be data-driven about these types of decisions.”
When one team member’s role is no longer a good fit for the company
At the end of the day, you have to make the right decision for your business. But having tough conversations about reallocating someone’s talent in the company or letting them go shouldn’t come as a surprise to anyone.
“People know when their role isn’t right,” says Ian. They can feel that they’re not performing like they used to and not helping the company in the way they want. You should always strive to place people in position where they’ll succeed, but when the time comes to pull the plug, you just have to do it.
Great customer satisfaction is key to retention
For the last four years, Sailthru has served big names like AOL and Huffington Post.
According to Ian, the key to this is paying attention to the core meaning of SaaS.
SaaS = Software + Service
A software product that can solve problems that other softwares can’t is a great thing. But what goes hand-in-hand with that is caring about your customers and providing great service. Having a great customer success team in place can really help the company survive, especially in times when the product falls down.
“We look at ourselves as strategic partners for our customers,” says Ian. “Fundamentally, we’re driving massive revenue for our customers: their success is our success.”
Finding great technical talent when you’re not an expert
Automation and personalization predictions are some of the coolest features of Sailthru. Being able to figure out how to do that stuff is data science at the intersection of mathematical modeling, machine learning, and having the setup that’s capable of processing vast amounts of data.
But you’ve got to have people figure all this stuff out for you. “Software is a human capital business,” says Ian, “and having the best talent wins.”
Given the example of hiring a data scientist, Ian said he had to personally interview around 20 people to find the right person for the role. And even though he’s not a data scientist himself, he said he knows enough to have a conversation with someone to be able to evaluate their level of expertise.
A technical company’s founding team should be all technical
A core technical team is important, especially when hiring technical talent. It can be difficult to evaluate potential hires to find the right people who can work to grow your company in the best way.
Ian says it’s at least important to be able to speak technical language, even if you’re not an expert in the area you’re hiring for. “Nobody has every piece of technical knowledge,” he says, “it’s too big. But if you speak the language of technology and you understand how to think about mathematical, engineering problems then you can speak the language of somebody even if they know a specific technology that you don’t.”
The ins and outs of pricing psychology
“I actually find pricing really fascinating,” says Ian, “because it’s a technical problem, it’s a business problem, it’s a sales problem, it’s a psychology problem, it’s a messaging and marketing problem. Price is a signal that embeds so many different things.”
Though Sailthru started at a $30/month minimum, they’ve raised their prices.
By experimenting with different approaches, Sailthru now uses a user-based pricing model, but charges at a premium because they know their product offers far more for in comparison to the competition.
Hustling to the top
Sailthru got their first customers by the sheer hustle of using their networks, making connections, and working hard to get their product into the hands of the right people. They didn’t do much of the free trial strategy, because people are always ready to say nice things about free stuff. Instead, they found charging a fair price up front gave them the real feedback they needed to iterate their product and make it what it needed to be.
From there, they grew by constantly adapting their company to the changes that came with growth and learning along the way.[spoiler title=’Transcript’ collapse_link=’true’]
Eric: Hi everyone. Welcome to this week’s edition of Growth Everywhere where we interview entrepreneurs and bring you business and personal growth tips. Today we have Ian White CTO and co-founder of Sailthru. Ian how are you?
Ian: I’m great. How are you doing?
Eric: Good. Thanks for being on the show. Why don’t you tell us a little about your background first and then we can jump into the company.
Ian: Absolutely. Sailthru really came out of a meeting between [INAUDIBLE 00:00:28] and my co-founder Neil Cable. I’ve been programming my whole life. I’ve been building things since I was 10 years old. Went to Brown, started in computer science and theater. I had a background in both and I moved to New York City. When I moved to New York in 2005 the texting was really in its infancy. There was a little bit of a hangover from the dot.com era. I moved into the city and one of the first people I met was Neil who was a CTO at a company called Money Media. It was a financial publishing company, later sold to the Financial Times. We worked together there for a year or two. We had the problem there that all the users, it was financial publishing for folks in the mutual fund industry, and they would get content everyday sent to them at the beginning of the day, it had to emailed right on time, and we wanted to make the content that people got, specific to that individual, but there wasn’t a great way to do that. We used an email vendor for that which was not a very sophisticated vendor, the APIs kind of sucked. So, we had that challenge, but we solved a lot of interesting scaling problems at that company. Then we worked together at a few other different companies. We were at a company called Music Nation which was a startup which didn’t really work out so well, but it was while we were there that we came up with the initial idea that became Sailthru which was; what if we had a technology that truly personalize one to one communication on an individual basis. What if we could do that not just in email, but we could pull together a user’s data from onsite, their whole click stream activity, what are they clicking on, what they are looking at on the site. Later on we added mobile to the equation, and of course shopping cart activity; what are people buying, what are they adding to their cart. If we could pull all this together and form a unified picture of each individual, then the way you communicate with those people could be totally personalized and individualized. It’s really the set of technologies that are available now for personalization for big data, for building interest profiles on users. It’s just different than the capabilities 15, 20 years ago. We were able to build a communications personalization platform natively on top of new sets of technology. I used MongoDB as a really great one for time data store when we were sort of building out the product. At the same time I had been over at Business Insider. I was just technical person over there. I built out the initial tech infrastructure for them. That was a sister company of MongoDB. I started using MongoDB in production there. I think I was the first person at MongoDB to use MongoDB in production. I was able to use my experience with Mongo, specifically it’s a real time capabilities, to build out the infrastructure behind Sailsthru.
Basically we incorporated the company in the fall of 2008. We’d been working on the prototype and bootstrapping. We incorporated the company. In the same week, we incorporated the company, Neil got married, and Niemen Brother’s crashed.
Eric: Oh. Fantastic.
Ian: So, it was a busy week in September. It was basically probably the worst time to start a company in the last several years for sure. Certainly since the first dot.com bust. We really had to bootstrap for a little while. But in some ways that was good because it allowed us to really focus on building out the product, building out the capabilities of the product, making it better, starting to get those early customers and advocates that believed in the technology, but knew that what we had at that time wasn’t that sophisticated in terms of the full capabilities, but we iterated really fast, took a lot of feedback, and really drove forward. At that time, sending an email, every piece of content in that email is completely personalized and recommended for the user. There was a lot of skepticism frankly. People were, “We have email editors who; their job is to go in and pick which content goes where. We know better than an algorithm. Humans are always going to pick out the best story.” Well, humans can be good at picking out the best story or the best product, but not for every single individual person. Proving out the technology and proving out the use case through AB testing and demonstrating the type of list and type of results that we were seeing was really important in those early days, and just building out the tech.
2009 came and went. It was a real time of growing and building. Towards the end of 2009 it was—I feel like, in New York where you started to see the whole environment start to accelerate and start to pick up. Its 2014 now. I’d say when you really look at the growth of New York tech, it’s been like the last five years is really kind of the arc of it, getting more and more activity every year. By the end of 2009, beginning in 2010 we were in a positions to start raising some money—
Eric: You guys bootstrapped for two years?
Ian: We bootstrapped for two years, yes. Basically, we talked to a lot of great New York investors, raised a seed round of one million in June of 2010. [INAUDIBLE 00:07:37] and led but there were seven different great VC firms involved on that C round. That capital really helped us in terms of accelerating the growth of the business. It allowed us to hire our first account managers, our first sales reps, and really be able to just accelerate what we were doing. That period from 2010 on, in the last four years we’ve just grown massively. We’ve gone from the founders to about 170 employees. We have offices in four cities, including L.A. where you are right now. We have an office in L.A., San Francisco, and London, I’m actually heading out to the London office this Sunday, and we’re headquartered out of New York City. Most of the company, most of the staff is here in New York. This is where our engineering is headquartered and this is where most of the activity takes place. But all those remote satellite offices are very significant as well. They’re all about maybe 10 folks per office.
Eric: Got it. Can you talk about that experience bootstrapping in 2008 to growing to 170 employees? What does that story look like?
Ian: When I look back at the last six years its almost many different companies. When a company is growing as fast as Sailthru has over the last several years, things change really quickly and the dynamics of just a couple people in a room verses a slightly larger team of maybe 10 to 15 people—10 to 15 people, totally different company for [INAUDIBLE 00:09:39]. Then you take it up to 25, 30 and that’s a fundamental difference too because at 10 or 15 everybody knows what everybody else is doing. You get to 25, 30, you need a little more process, a little more structure. You continue scaling that and at every step of the way you have to keep questioning your current process and keep changing it.[00:10:05]
People whose roles and skills make sense at one environment might not make sense at another, maybe not in the same role. You just have to—growth, technology, these things inherently mean change. One of the things you just have to do is keeping responsive to change. There’s a lot of different challenges. I could talk about the growth of the tech team, especially from my perspective, but really, all across the company it’s been about eight different companies and there have been a lot of people who have been with us the whole way, but it just keeps changing and you have to really be responsive to just what the current challenges of the situation are.
A SAAS company, it starts to take on some momentum. It’s like a boulder rolling down the hill. You generate more recurring revenue. That drives the success the business. You can scale, you can grow when you have that customer base that is loyal, that sticks with you, that you’re building on top of. But those early days when you’re bootstrapping it’s really just about finding that product market fit at all because you have a product vision, you have something you’re trying to build, and you put it in customer’s hands and you start to see what works. In the early days, certainly from a technology and products standpoint, we would try out lots of different ideas and see what would work. It becomes very important to not get too attached to the ideas that don’t work out, kill them quick, then double down on the ideas that do work. Trying to be data driven about those types of decisions, but in SAAS with B2B you know your customers. You sit in a room with your customers, you’re on a call to your customers and you can hear from them directly about what their pain points are and how your software that you’re building can either help them or is not meeting their needs. As much as you try to make decisions on the most objective sort of set of framework that you can, a lot of it is really just synthesizing what they’re saying, what their problem is, and how rapidly can you deliver something that solves that problem. It really is the 80/20, especially in the early days. There’s a lot of ways you can deliver a feature or a result with a very high power to weight ratio, where you can develop something and it can really swing a big impact for a customer.
At the same time when you’re small and you’re dealing with customers—we have some just fantastic brands. Four years ago we were working with Huffington Post and AOL, they’re still clients today of course, but especially for us as a very small company you don’t want to let a customer or a single customer dictate your entire strategy. It’s really important to find the right balance between what are the things that— sort of synthesize and hear what they’re saying and fit that into the larger vision. This sort of all make sense?
Eric: It does make sense. One thing that really hit a point; I’ve talked to a few founders on this show and someone that’s a fit in a certain point that is no longer is a fit at another point—I read this article in Harvard Business Review where Netflix, before they were sending CDs and then some people just weren’t a fit when they moved into the streaming world. How do you have these conversations? Can you give me a story or an example where you’ve had these tough conversations with people?[00:14:53]
Ian: It should never be a surprise if someone isn’t right for a particular point in the company. I don’t want to talk about a specific individuals or anything of that nature, but what I’ve found is people know when their role isn’t right. When people are in the right role everything is executing, results are happening, you can set objectives, and hit those objectives. When people are just sort of not there everybody can feel it. What you try to do is put people in the position where they’re going to succeed. That’s just what you do. With a startup, with a high growth company, everybody’s going to grow and I’ve seen some individuals who have been with this company grow so much over the last few years. But you have to do what’s best for the business.
Eric: Okay. Now, 170 employees and what do revenues or number of users look like today.
Ian: I can’t talk about revenue. We’re a private company. We don’t disclose that. We’ve got about 400 customers. We have deal size that goes into the low seven figures. I can tell you that our revenue growth has been very large. We were number 30 on the Inc. 5000 last year, and the second fastest growing company in New York on that ranking. We’ll do more revenue this year than the prior three years combined.
Eric: Nice. You have Huffington Post and AOL for the last four years. That’s crazy retention. What do you think you guys do that stands out in terms of retaining customers?
Ian: SAAS stands for software as a service, and there’s really two components to that; software and service. I think providing good software that solves problems that other technologies can’t do is really important. Your need to differentiate a product in the market is inherently sticky. But what comes with that is providing great service and caring about your customers. That’s everything, making sure our customers success team is right for any SAAS business. I think is a really critical component. When you have a great customer success team and when there have been times when the product has fallen down, the customer success team can really help make things work for the customer. I think our customers are loyal to us because we provide unique value and because they trust us. Fundamentally we’re driving results. We’re driving massive revenue for our customers. Their success is our success and vice versa. We look at ourselves as strategic partners for all of our customers. The account management will do a strategic review with every single one of our customers and look at their metrics, look at the KPIs, look at the drive through the platform, look at how can we work together to build a personalized marketing strategy that is going to drive your revenue or drive user engagement. I think customers really appreciate that.
Eric: Got it. By trade I’m an internet marketer and the stuff that you’re talking about right now sounds like it’s a great marketing automation. Do you do anything in that world?
Ian: Yes. Absolutely. Automation is a big piece of the platform. What we really do is; we ingest this tremendous amount of data in real time. Every page that’s happening in real time in all of our client’s sites, that goes to a [INAUDIBLE 00:19:17] in real time. Every purchase or shopping cart activity we now have an IOS and Android mobile app. All that data flows into Sailthru and you can chain events and triggers to any of those events that are flowing into the system. You can take action on anything that goes on and set up a series of automation. You can say, “Okay, if this event happens and this criteria’s fulfilled, take this action.” and then what’s really cool is we just introduced Site Lines [ph 00:19:52] our predications product so you can take action not just on the events that are happening in real time, but you can take actions on predictions using machine learning models of what users are likely to do.[00:20:04]
You can basically say, “This user, you Eric, you’re really actually likely to opt out. We’ve made a prediction today and we predict that you’re in the top 0.1% of users who are most likely to opt out because we’re sending you too much email. We’re sending you too much volume of messages. We send you another email there’s a high probability you’re going to turn out and you’re going to be gone.” So, what you can actually do using our tech automatically is just say, “All right, the users who are in that high K tile are very likely to opt out, just don’t send to them. Then the predictive model we’ll start to even out the flow of the user naturally because the probability of the user to opt out declines and you automatically have predictive cadence automation. It’s really cool stuff. I get excited about it when I’m talking about it.
Eric: Where does someone go to learn about predictive cadence or whatever the stuff you’re talking about right now, it’s going to be super important, it already is super important, so how does someone learn this stuff?
Ian: I guess there’s learning about it from a marketing point of view, or what it’s capable of doing. There’s learning the technology behind it.
Eric: That part.
Ian: The technology behind it really comes from data science. Data science is such an overused buzz word I guess, but it really does represent a very specific set of skills, the intersection of mathematical modeling and machine learning, and having an architecture that’s capable of synthesizing and processing all this data. I think, certainly for any company that’s in our type of space, building a really strong data science infrastructure is important, and a team because software is a human capital business. Having the best talent wins.
Eric: You and you your co-founder, initially when you guys first started, you start to get bigger to 100 -170 employees. How do you find out whether the person, like a data scientist that you’re hiring actually knows what they’re talking about when you yourself, you’re not an expert in that field?
Ian: I’m certainly not an expert, but I know enough to have a conversation with somebody and be able to evaluate their level of expertise. When we hired our chief data scientist through Germa Stanley [ph 00:23:01] I probably personally interviewed at least 20 people for the role. We found the right person based on technical evaluation and also personal evaluation. I think the important thing, if you build technology, you can’t know everything. Nobody has every piece of technical knowledge. It’s too big. If you speak the language of technology and you understand how to think about mathematical engineering problems, than you can speak the language of somebody even if they know a specific technology that you don’t know. What becomes really challenging in tech is when somebody who doesn’t actually have a technical background tries to evaluate technical folks. That’s why it’s so critical to have a technical founder and we were really fortunate in our case because we have three technical founders. Neil, the CEO is himself a former CTO of many different companies. Chris our VP of engineering is just a brilliant OPs guy. When your building software I think it’s really important for the founding team to all be strong in software, in technology. If you’re building an internet business where the business is fundamentally not software, like you a pure player e-commerce and you sell fashion online, then I think it becomes much more important to have somebody on the founding team who has really great expertise in that industry. But technology, you’re got to be technical. It’s just essential.
Eric: Got it. Going back to the data scientist question, you’ve interviewed 20 people, everyone’s trying to hire data scientists nowadays, where do you go to find this talent?
Ian: We did a routine search for that, although, the person we hired we wound up getting through referral actually. We interviewed a very strong candidate for a different role who loved the company and really wanted to join us. It didn’t work out for various reasons, but he actually referred us Germ [ph 00:25:43]. Thanks to him. He knows who he is.
Eric: You talked about the three founding—your cofounder being, you guys both being technical. At one point do two technical co-founders decide, “You go do this, I’m going to go head up operations divisions and keeping cash in the bank.”?
Ian: It was always clear that Neil would be on the business and sales side. But the reality, especially in the early days, everybody does a little of everything. But Neil really just—he would be the person I could bounce ideas off of because of his level of expertise. We really speak the same language. Especially in the early days—this is why it’s so important to have a pre-existing relationship of some kind with your co-founder. If you just sort of paired up to get into YC [ph 00:26:49] or something, I don’t know, I can only speak for myself, I don’t think I would be able to go on a seven year and more journey with somebody who I just paired up with—you know what I mean. You need that trust and that shared communication where you’re on the same page. Especially in those early days when we just have to move really fast the fact that we could both think about the product and what it required in the same way, Neil would be the person who was more meeting with customers, meeting with prospects, he was playing the role of head of sales and head of products. Being able for him to be able to relay that back to me from the field, of course I’d been meeting with customers too, but we had that split in the nature of responsibilities. It’s important for it to be clear like, He’s a CEO, I’m a CTO. Ultimately if we disagree about something it’s Neil’s call and I’m find with that. We have that shared trust and respect. If I disagree, that’s fine, we’re going to on with our lives. It’s better to make a decision than to not make a decision because nobody wanted to be clear about it.
Eric: Got it. Okay. You guys started in 2008 and now you guys are closing figures in the low seven figures. How did you guys discuss pricing? What’s the psychology behind that?
Ian: Our original pricing was a minimum of $30 a month and it’s a lot more than that now. Pricing is really hard. I actually find pricing really fascinating because it’s a technical problem, it’s a business problem, it’s a sales problem, its psychology problem, and it’s a messaging and marketing problem. Price is a single that imbeds so many different things. You want to charge something that’s going to make sense to customers. You want to charge something that is going to line up with the value that you’re providing. We tried a few different models. We now look at it as a user based model because at the end of the day the most important thing that Sailthru does is store your data about users in a platform with the means to act on it, unify all your user data, give you the means to act on it. So, pricing on that number of end users that you have makes the most sense, but you have to look at the market, you have to look at what the competitors, that you’re up against deals for, are doing.[00:30:10]
We’re often up against deals with legacy email providers. They don’t do all the stuff that Sailthru does so we charge at a premium to them, but we want to make sure that our pricing is not going to be way off the mark to the point where the prospect is going to say, “Wait a second. There’s a lot of visits over here.” and this is just a completely different paradigm.
When you’re entering any kind of market you’re either a premium product that provides unique value and you charge a higher price point, or you’re the chief disruptive product and you charge at a lower price point. You don’t really want to be caught in the middle. Understanding where you sit in that market dynamic. We’re a premium product. We’re the best in our space at what we do. We charge for that value. Does that make sense?
Eric: Totally makes sense. Maybe you need—I think I’ve purchased a few pricing psychology books and I think I’ll have to put these in the notes. Do you have any books like that? You guys read anything like that?
Ian: Actually I have not read a book specifically about the psychology of pricing. I read a lot about the topic. Do you have a recommendation of your own?
Eric: I forgot what it was. I purchase so many books. I have a stack of Amazon books on it. There’s unopened right now, but I’ll put it in the notes and let you know too. I think there’s a really good one. Moving on here you guys have 400 customers now. How did you guys, I’m going to call these mostly enterprise customers, how did you guys get the first, let’s say, 20, 30 customers?
Ian: Sheer hustle. If you have an unproven product that you’re still working on, finding the product market fit, you just have to go out there and knock down doors. One thing that helped was we were able to use companies that we knew personally. Like, “Hey. Try out our product.” Give it a shot. Those kind of early customers were really helpful because they’re friendly folks who will give you feedback. But you have to be providing value. It doesn’t matter if you’re friendly with somebody. If you’re product isn’t any good and it isn’t providing value, nobody’s going to use it. It really boiled down to just using our networks and context and getting the product to the right people. But from there you think about the adoptive curve, what’s the most important thing in the early adopters stage is references; word of mouth. To this day the best leads you’ll get are from referrals from our customers. We just had—on Wednesday we did our first ever customer conference, Sailthru Lift 2014, which is a huge milestone for the company. One of the things that was amazing about it was getting so many of our customers in one place, talking to each other about all the great things that they’re achieving using Sailthru. Building that type of community and loyalty around a product is just so important. It doesn’t stop being important as you scale. If anything it’s more important, but certainly in those early days you need those early reference customers who love the product and will get on the phone with people and talk about how much they love the product. That’s really important.
Eric: Got it. When you gave these away in the early days did you give them away for free or did you start charging them off the bat?
Ian: The very first prototypes might have been free. We charge very early on because—it’s a better test. When you can—people will always accept free shit, right? But if your say, “Here use this instead of what you’re using. We’re going to charge you a fair price for it.” Now you know if what you built is actually valuable or not. We were charging paying customers from very early on.
Eric: Got it. Switching gears a little bit. Going back to 2008 to know. What’s one big struggle you faced while growing the business?
Ian: I think the fundamental struggle is always hiring the right talent and putting them in a great position to succeed. That never stops. It’s always a challenge, especially hiring technical talent. So many great startups, so many great companies, and you want to keep the bar high and hire the best talent you can find. We’ve gotten a lot better at it over the years. That’s always the biggest challenge, making sure you’ve got the winning team.
Eric: Okay. You talked a little earlier you’ve gotten referrals, there’s also, we’ll call them recruiting firms, what else do you guys do to keep that hiring pipeline going?
Ian: We use a lot of different tools. I think we hired an in-house recruiter maybe earlier on than some people would think—it was probably when we were about 20 or 25 employees we hired our first full time in-house recruiter. That was a good move. I would recommend that again. I think we hired a second recruiter not long after that actually. Today we’ve got a larger talent team. We have a dedicated technical recruiter, all of those pieces. External recruiters are what they are. There’s some good ones to work with. There’s some not as good ones. But nobody is going to be able to sell the company, understand what the company needs, present the vision and the culture as well as somebody who’s there every day and understands it. That’s why having a full-time recruiter, I think, is really valuable. And there’s no substitute for founders or leadership being directly involve in the recruiting process. Now, it become challenging as you scale. I’m not on the phone screens anymore, but I do meet with almost every engineer that we hire, or if I don’t Chris does, because we want to make sure that we’re presenting the business and the vision of the company in the best way possible so that, even if we don’t hire that person, we want them walking away feeling like, “This is a great place to work.” because it really is. This is the best company I’ve ever worked with. I’m a little biased. It shows the candidate commitment. I just think it’s important. If you’re a leader at a startup recruiting is a big part of your job. I just is. It’s a pain in the ass sometimes. It can suck. Interviews are not always fun, but it’s really important.
Eric: Couldn’t agree more. Maybe I can get a check list from you after the interview. Moving on. What’s one piece of advice you’d give your 25 year old self?[00:39:04]
Ian: Oh man. My 25 year old self. Gosh that’s hard. I just think, “Be ready for change and believe in yourself. Believe in your own ability.” Nobody in this world really knows what they’re doing. Everybody is learning every day and just learning new things. I think when I was 25 I still felt like a kid. I felt there were so many people out there who were smarter and more experienced than me, and better, and I just didn’t know anything. To some extent that was true, but you have within yourself a lot more resources than you always believe you have. Everybody who’s ever achieved something great has struggled with doubt and uncertainty. Getting comfortable with that uncertainty and then just going on to do what you’re going to do anyway is one of the most important things. There have been so many ups and downs during this journey I’ve been on. Any startup is like this. There are days when you’re on top of the world and there are days when it looks like everything’s falling in under you. Being able to ride that out with some real belief in yourself is what’s important. Over the years I’ve gained more of that confidence that I definitely didn’t have it when I was 25
Eric: I love it. I love that quote, “Nobody knows what they’re doing.” I think that’s actually pretty true. Final question from my side. What’s one must read book you’d recommend to the audience?
Ian: I’m going to recommend a blog actually because I think SaaStr is the best S-A-A-S-T-R-E.
Eric: Jason Lemkin’s blog.
Ian: I love his blog. I read it. When I discovered it a year or two back I reread all the archives and he was talking about all these things we had experienced and gone through and I was like, “Oh yeah.” I continue to read his stuff because I think it’s great. A book that people should read; I’m reading Peter Theil’s book right now and I really like it. I don’t know if that’s the one book.
Eric: “Zero to One”?
Ian: “Zero to One”, yes. I just enjoy it. I enjoy anybody who’s a contrarian and thinks about things a little bit differently. I always enjoy and interesting point of view on the industry. That’s what I’m reading right now and enjoying it.
Ian: So many different books that I’ve read in my past. I can’t pick one.
Eric: Zero to One is a great book, and SaaStre. I call it Saastrength because it’s like str, but anyway. Everyone this is Ian White from Sailthru. Make sure to check out Sailthru. It sounds like there doing some cool stuff. Ian I think there’s a lot more stuff to talk about in the future, but for now we’re out of time. Ian, thanks so much for joining us.
Ian: Absolutely. Thanks a lot Eric.[/spoiler]
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