How should B2B companies think about integration with legacy systems that an enterprise already has?

Yesterday I had the chance to talk to an entrepreneur and CEO  of a startup, in the CRM B2B space, who was building a sales productivity application for lead generation.

Over the last few years they have built the product, acquired 1400+ paying customers, and raised over $10 Million in funding.

The current product can be used as a SaaS application, standalone, and many customers continue to do so, but increasingly many sales teams are asking for an integration with Salesforce, their primary Sales Force Automation application.

The CEO reached out to me to ask for my opinion on other products in the market and the possibility to Go to market with them if the integration was completed.

In this particular case, the startup’s product was being used by the individual sales representative for personal productivity and to save time, the Salesforce CRM system was being used by the managers and Sales executives to track deals, team productivity and pipeline.

So, while there was an incentive to integrate, it would benefit company’s customers, and help their users be more productive, the likelihood of them really being displaced by another solution did not dramatically change because of this integration.

The CRM system was / is still the “system of record”, and that was not likely to be changed, but the startup’s product would live and die by individual sales representative’s ability to get value from it – a more tenuous position. The cost of integration was non-trivial as well.

I think most entrepreneurs in B2B face the challenges of “legacy” or “systems of transaction and record” in the enterprise – be it old, behind the firewall systems, or newer cloud based applications as well.

The main value(s) smaller SaaS companies see from integration are:

  1. Become a part of the process and system for a large company, ensuring annual commitments and increase the “switching” costs.
  2. Ability to increase their market opportunity by going to the installed base of customers of the legacy software solution to sell their product and showcase scenarios where it can enhance productivity for the customer.
  3. Speed time to market adoption by looking at Go to Market (GTM) opportunities with the legacy vendor so the installed base can be co-marketed to easily without friction.

Of these the, prioritization for the startup tends to be 3, then 1 and then 2.

For the customers, it usually tends to be 2, 1 and then 3.

For the legacy vendor the prioritization is not so clear.

If they are growing they dont see the GTM with the smaller vendor valuable at all.

If they are not growing, then having another product integrated into their existing install at a customers, furthers their “cost of switching” and ensures they will continue to be a customer, which is beneficial.

Many other criteria also are considered – if they think of the startups product as ancillary, or enhancing their product, they might actually prioritize it similar to how their customers do.

If, however the legacy vendor thinks of the product built by the startup as core, they might try to build or acquire the startup.

The key part is acknowledgement by the startup and partner that it is not always an obvious answer and in many cases the statement “Lets do what’s right for the customer” – is not well received by the party that perceives the outcome “less than optimal”.

If you were a smaller startup, integration is critical only if the user / customer demands it and your deal depends on it. I would go so far as to say don’t expect the legacy vendor to embrace you right away.

In fact, expect them to notice you, have internal discussions to “build it in-house” or “acquire” you before they decide to partner or “Go to Market” with you.

You can never go wrong if you start the answer to any question with the words…

“…Here is what I know from my customers -”

Every Thursday I spend 2 hours (4 -5 sessions of 30 min each) with new entrepreneurs to understand their market, product or give them some feedback, or help them with Go-To-Market, funding frameworks, etc.

During these sessions, I tend to hopefully ask a lot of questions and usually point them to a blog post for a framework I have already created that can help them think about the problem.

Which is the main reason I write blog posts – to help as many people with the questions they might have based on 2-3 instances of the same question that I get from other entrepreneurs.

Most entrepreneurs answer questions in 3-5 different ways, depending on their experience, background and how thoughtful they are.

The first, tend to be wanting to answer every question with a predetermined answer.  Regardless of the question asked, they will give me a standard response.

The next level tend to understand the nuance and maybe will try to “personalize” the standard answer to the question.

The best ones will begin with “Here is what I know from my customers …” and work backwards from there.

Regardless of the question.

I have found in my experience, that these entrepreneurs are the most experienced, most relevant and very fact based, with some anecdotes.

The vast majority of the rest who don’t base their answers on customer experiences, tend to be defensive, not very metrics or data driven, and rather dismissive.

Even questions about fund raising are customer first.

“Here is what we know from our customers. We are growing at 10% monthly. New customers are signing up but are finding issues in their ability to create templates is making it less productive immediately out of the box. To make it faster, we need to add template modules, which is an engineering effort.

Also our existing customers are opening 7% support requests monthly. So, we need 1 person in engineering and 1 in customer service. We’d like to grow at 20% monthly. So, we need a marketing person who understands SEO and SEM since most of our customers have learned about us via Search.

So with our existing team plus 3 additions for a 18 month period, to support and get to XXX customers, we need $750K in funding”.

Great answer.

Questions about hiring begin with customers as well.

“We are finding that customers are expecting the template module needs to be responsive, since most of our customers use mobile to start a campaign. Then they move to the web for sharing and administration. We also have 30 requests for new campaigns per week from each and every customer.

We will need someone that scales to 40K requests per minute, because our current customer and campaign metrics are trending in this direction. With our current architecture we chose Angular.JS since it was something we knew but also helps our customers by helping build the responsive design faster.

We need to hire someone that has scaled to this level, has an understanding of template management and with some experience with building B2B apps – which is what we are looking for in our JD”.

3 critical questions technology professionals have before moving back to India to a startup #SmartMove

Yesterday, Accel partners had an event in Seattle as a follow up to their events in San Francisco and the Bay area. This was a part education and part recruitment event for Indian technology professionals who want to move back to India to work at a startup.

As the Indian startup ecosystem matures, there is a critical need for talent, and what better place to seek it than the startup and technology hubs in the US, where there are a ton of Indians? The SF bay area, Seattle, New York are places where many young Indian technology folks have this ever secret (or not so secret) desire to move back to India.

The challenges, for these professionals, have always been 2 fold so far – a) seeking great quality of work – challenging, innovative and cutting-edge and b) getting fairly compensated for the same.

Or so I thought.

Turns out, the new millennial generation has other questions in mind. These recent entrants coming from India in the last 5-10 years and in their 30’s have very different questions they want to address than the ones the folks in their 40’s and 50’s had.

Which is not surprising, given that they have a more recent perspective on the things happening in India and have likely left for the states in the last few years, after the startup boom has taken over much of the new hiring in India.

Many of them have 3 interesting perspectives which I found out from my discussions with the 30+ people who attended the session yesterday. Some of them are things they learned from their friends, some they read on Facebook and Twitter and the rest they see during their annual visit to India to meet friends and family.

First, they believe that the “startup” boom is largely not real and there is one Flipkart (most of them think they will lose to Amazon in the long term or get bought by them).

Second they believe that the startups themselves are mostly copycats of US technology companies, with very little differentiation and innovation.

Finally they believe that the boom time for startups will be followed by a bust and at that time, in India, getting a job at a larger company, will be much harder.

These, while fair impressions from afar, they speak to how little the perception has changed among the Indian community for startups from India.

Perceptions aside, the main 3 questions I have gotten from younger entrepreneurs since I have moved back are the following:

  1. Which startup should I join? Most of them almost exclusively want to (not judging here) join a “stable startup” – which in itself is an oxymoron, BTW. Parse, through that statement, and the reality is they want a “stable” job at a smaller company than Wipro or Infosys, get paid very well and have a good upside, compared to working at a larger multi-national like Microsoft or Amazon in India. When you ask them what their interests are beyond making money and working on “cool tech”, you will end up getting specific areas of technology, such as drones, block chain, etc.
  2. Is the culture at the startup like an American / global company or still hierarchical like you will find in a large Indian company? Parse through that question, and what they are really asking is will I have the ability to influence decisions and make an impact on the direction and strategy or just be another employee at another startup. Another part of the same question, asked differently is “Will my experience here in the US be respected or will I be told, that’s great, but it does not work here in India”?
  3. What can I expect in terms of pay and benefits? There’s nothing to parse here. They want similar or “identical” pay to what they make here, with the benefits of being at home with family. Yesterday, Dinesh and Narayan from Accel gave them indications that they can expect from 40% – 60% of their pay they are making here in the US as their salary in Bangalore. Their benchmark was dependent on not salaries, but the “value” the employee would bring to the startup founders in India.

If you are an entrepreneur in India, at a later stage of your company and are looking to tap into talent from the US, especially it the areas of product management, engineering or marketing, I’d say these are the top 3 questions you will get – Why should I join your startup (vs. Flipkart, Myntra, Snapdeal etc.)? Will I have an impact in the direction an culture? Will you pay me well and will I have a great upside?

Which is not at all surprising, given that’s the same questions you’d get from Indian employees as well.

Except the employee from India, will likely have expectations of “bonus”, “perks” and a whole host of other benefits, which the US employees will take for granted, I suspect.

The employees from India, though, from my experience order the questions differently.

The first question is of the pay and benefits, the second of stability and the third of “location” – Koramangala vs. Indiranagar or Gurgaon vs. Greater Kailash or Andheri vs. Navi Mumbai is a big deal to them.

66 days to customer development

It has been proven by research that it takes 66 days to form a new habit (pdf version). That’s a long time. For entrepreneurs who are trying to do the first stage of customer development, the formation of the habit to keep talking to customers, hearing “no”, and breaking past the initial resistance to go back to product development instead of customer development is high.

Last week I had a chance to meet with 13 companies that were part of the new cohort at 9MileLabs, an accelerator program in Seattle, where I am an advisor.

The companies were meeting their mentors for a mixer and had a chance for the first time and each company had 1 minute to present what they did.

What I have observed is that thanks to the numerous demo days from accelerator programs and many “pitch sessions”, the overall quality of presentations has improved dramatically over the last 3-5 years.

Just listening and observing coached entrepreneurs is a great experience for those who are not part of any program, which gives them pointers on how they can refine their own pitch.

Over the course of the next few months, each of the startups will get a chance to pitch multiple times and refine their presentations, but I doubt the will really practice 66 times or do it 66 days in a row – not that it is possibly needed.

The thing that I think is the most interesting is the #1 question most of them had was

“How can we show positive traction with customer success when we are at the accelerator”?

The best way to do that I feel is a framework to make identifying, managing and acquiring customers a habit as much as coming in to work at the accelerator.

If that takes 66 days to do, then the best time to start is now, day 1.

If you have a ritual each morning, (similar to brushing your teeth on a personal basis), then I would start with the #1 research driven methodology to Growth Hacking for startups – review your metrics dashboard.

Then form a habit to break down your complex customer acquisition process into a simpler step first. If your sales process is multiple steps and you have to get customers over multiple weeks / months, I’d just start with the “fill the funnel for 66 days” first.

In my own example, it was closer 90 days, not 66 to blog daily.

Initially the bar was pretty high – I wanted to write at least 500 words, with one framework and build one tool that folks could use. It took me close to 45 minutes per post.

Now, 9 months later and after missing only < 5 days, it has become a habit. If I don’t exercise or write a blog post, it gnaws on me enough to feel guilty, that it has become a ritual.

The key is also to breakdown the habit of customer development into top of the funnel activities, moving along the funnel activities and closing activities.

Instead of doing them all together, I would focus on 1 week increments of moving a set of activities for repetition during that week to make the habit easier. Just focus on building the pipeline initially then nurturing, etc.

It would make more sense to do otherwise, but what I found is that becomes a “complex” habit and hard to repeat daily.

Similar to trying to lose weight, I would focus on one habit – eating less. Or more specifically eating less sugar first, and then working your way into other more complex habits.

Keeping up with the Unicorns – one of the key drivers of entrepreneurs stress in the last 2 years

There’s not a day that goes by without an entrepreneur reaching out to me fairly stressed – about investors, raising a round, getting customers or hiring people. I have written before about the 3 biggest causes of stress for entrepreneurs.

I highlighted that the #1 was one of “expectations” – from peers, employees, family, etc.

At that time another issue that folks raised was one of “work-life” balance as an entrepreneur. I tend to gloss over – primarily because I believe that if you wanted the balance and it was important to you, there would be other things you’d be doing.

In the last year, thought I am noticing that “Keeping up with the Unicorns” is becoming a bigger source of stress than anything else.

I could easily dismiss this as well – there will always be startups better than you, and there will be startups worse than you, so focus on your work alone.

That, though, is a big disservice.

It is hard not to “compare” yourself to others, because the “market” for funding and financing is what you are going up against.

When you approach an investor, they have limited time and maybe limited energy to spend on due diligence, understanding and working on your company.

They evaluate this against working on another company that’s not necessarily your “direct or indirect” competitor, but another deal they can do.

Which means, you are going up against consumer Internet companies, Marketplaces, eCommerce companies, even if you are a SaaS company.

That’s the job #1.

You are trying to make your opportunity the most attractive for the investor to spend time and effort on.

So that means you are really “competing” against other startups, not only your competitors.

Which is what causes you to “Keep up with the Unicorns”.

Meaning, if you want to get investor attention – which will go to their perception of the biggest and best opportunities, then you have to “compare yourself to others” in the funding market.

That’s the cause of stress.

I don’t really have a great answer to how not to stress about it, except, it is not worth stressing about.

I’d like to say focus on good execution and telling a great story.

That’s pithy though.

The trick I have seen the best entrepreneurs do is to be very selective on the investors they choose to pitch to – based on their background, their knowledge of the space and their ability to add a lot of value.

That means more homework on your part to find, source, identify, engage and then active the right investors.

That’s the best way to relive stress – much better preparation.

Crowdfunding Market – a primer for entrepreneurs

There are over 1300 CrowdFunding websites in the world, and they have helped raise $17 Billion in 2015. Of this $11 Billion was in Debt (Lending) and the rest was Equity.

For those that don’t follow this market – Crowd Funding is when you get individuals to lend / loan / invest money in other individuals / companies / projects.

I believe this market will be a key driver of global change in the next decade and beyond. In the last few years, it has already had a great impact in the market and I suspect it will continue to do so.

Even if you don’t invest in startups, projects of small opportunities, you might have heard of Kickstarter, Indegogo, Kiva, Angel List or Donors Choose.

Crowdfunding allows normal individuals to back projects they care about, issues they consider close to their heart, buy products they have a connection with.

Kickstarter alone for e.g. has helped raise over $2 Billion in funds for almost 100K projects over 6 years.

For entrepreneurs in technology startups, there are many options including AngelList, GoFundMe and Fundable.

While it is hard to pinpoint the exact number of people participating in crowd funding campaigns, it can be safely said to be in the range of 15 to about 20 Million worldwide.

North America dominates funding raised and funders with over $9 Billion committed and raised, followed by lending in Asia and then Europe by $3 Billion each. Africa and others, round up the remaining.

Businesses and Entrepreneurs raised the most money at about $6 Billion, social causes followed by film and arts.

Typically crowd funding makes up <0.1% of any person’s investments and is not a part of their “asset allocation” in any way according to research by Massolution.

While there is no software entrepreneur’s guide to the crowd funding market that’s great, which I could recommend, I’d highly encourage you to review this Inc Magazine overview.

Over the next few days I was going to spend more time sharing what I have learned talking to a lot of people in this market, understanding the entrepreneur, crowd funding sites and investor perspectives.

I’d love to understand your questions – if there are specific questions, please mention them in the comments below and I’ll make sure to address them.

Why bad news travels faster than good news

I have been reading many brain and chemical composition related articles recently during the evenings. One of them that intrigued me was –

“Why does bad news travel faster and wider than good news”.

The Columbia Journalism Review is one of the foremost when it comes to researching this particular sub area of brain function. Pew research did an extensive research paper on this as well.

“When an event is flagged as negative by the brain, it’s stored differently and more carefully by the hippocampus.  He likens the brain to Velcro for negative experiences and Teflon for positive or neutral ones.” Rick Hanson

Take a look at all the recent news about “Unicorns fading away”. The number of articles about “Culling of the herd” – not worth linking to, or The Web Summit (Conference in Dublin) controversy.

The number of shares on either article was 3X (Three Times) that of the articles that were positive to neutral about the same topic by the same publication.

What does that say about us as individuals?

I am neither a researcher nor a psychologist, so I cannot evaluate this objectively.

I do know that I read both the pieces negative and positive about Web Summit and came away immediately questioning the pieces that were overly positive, and also questioning the ones overly negative as well.

It has also been proven to be the same with good acts and bad acts.

It takes 5 positive actions to overcome one negative action.

The net of it is, for entrepreneurs, that you will get 5 times as likely “No’s” – at the very least – as many “Yes’s”.

That’s being overly simplistic. For most entrepreneur’s I know that number may vary from 10 to 100.

What is then the best way to counter this?

Developing compassion and practicing mindfulness counters the natural negative bias of the brain.

That’s my thought for the week.

The personal blog of Mukund Mohan

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