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The Best Thing That Can Happen to a Startup

Posted by Bob Warfield on January 16, 2009

What’s the best thing that can happen to a startup?

More sales?  Yes, but, any given sale is just an incremental step forward.  There is no leverage in that.  You have to get more sales, but how do you make it easier?

Another round of funding?  Again, slightly less tactical than another sale depending on how you spend the money, but still tactical (sorry, VC guys!). 

The best thing that can happen to a startup is an event that is broadly leveraged.  Something that makes raising rounds and making more sales easier.  Across the board. 

For startups, that usually boils down to some form of validation.  Some event that dramatically increases the “believability” of what the startup is selling.  There are a lot of different kinds of validation, and my own startup, Helpstream, has been blessed with several of them. 

One of the most obvious forms of validation is happy customers.   The first thing any startup has to do is get an interesting collection of customers happy enough that they’re willing to tell others about it through references and ultimately referrals.  Reaching a stage of have at least a dozen referencible customers is an important stage in the development of any new business.   Over time, validation through happy customers scales into particular communities.  At first it is enough to have happy customers.  Then you want a collection of happy customers that are all in a related business, and hence part of a community.  I’ve watched a number of companies grow through the strategy of targeting these kinds of communities.  For example, at my last company, Callidus, we followed this track of getting three or four referencible customers in a particular market and always found it became easier to sell to that market after that point.  Three or four banks and the next 10 banks are easier.  Likewise with insurance companies, manufacturers, or whatever means you want to use to segment you markets.  The reason?  Because you’re actually targeting communities by targeting similar companies.  You are learning to talk their talk and walk their walk.  You’re gaining an understanding for how they think about the business problem you solve.  And you’re injecting your messages into their daily world where they talk with others in the same industry.  It’s a powerful technique, and I’m happy to say we’re onto that second stage at Helpstream where we have a critical mass of general references so now we’re trying to create segment-specific references.  In a couple of segments we’ve also had enough success that we’re starting to see the tipping point of easier sales.

Another form of validation is partnership.  Startups often benefit from partnership with a larger company when it comes to validation.  In Helpstream’s case, we’re part of the Oracle Inner Circle partner program for CRM.  It’s been great.  We are exposed to deals we wouldn’t otherwise see because Oracle brings us into them.  We also have the credibility that the association with Oracle brings.  There are a number of other partnership opportunities in the offing for Helpstream, and we’re very excited about them because they will bring further validation for what we’re doing.

The last type of validation is perhaps even more interesting, because its something that happens that is completely beyond the startup’s control.  Some startups fear it for this reason, but in my experience, it has always been a wonderful thing if the startup was prepared to take advantage of it.  I’m referring to the case where a big player suddenly starts saying some of the same things your startup has been saying all along.  Helpstream’s story has always been about Community-Based Customer Service.  We uniquely combine the new tools of Community and Social Media, with the tried and true Customer Service tools of Case Management and Knowledge Bases.  The deep integration of these has been absolutely unique to Helpstream, and very powerful.  We’ve gotten a lot of endorsement from forward thinking analysts for this approach.  Paul Greenberg, for example, was kind enough to say:

this is one of the best crafted CRM 2.0 applications I’ve seen to date. Period. End of sentence and definitive statement.

While I’m on the subject of comments like Paul’s, I will point out that recognition by press and analysts is another important validation step.  But now we have yet another exciting form of validation in the form of Big Player Salesforce.com starting to talk more about how communities fit with customer service in conjunction with their Service Cloud offering.  It’s a pretty cool product, but there’s nothing about it that would cause a customer to choose that product over Helpstream’s, so we think it’s awesome that they’re pushing it.  That’s the best possible way for them to help us out by validating the basic concept that Communities and Social Media are important to customer service.

Why is that so great?  There are two reasons.  First, because Salesforce made the announcement, a whole raft of people were suddenly talking about Communities and Customer Service.  I’ll provide a list at the end of the interesting articles I saw.  Second, because its newsworthy, Helpstream has a chance to join that conversation and a whole bunch of folks are interested in hearing from us that weren’t necessarily clued in before.  Those are both hugely valuable to a startup.  They make it a lot easier for us to get the word out, so we’re delighted.  BTW, Salesforce are not the only ones.  Oracle has been talking a lot about Social CRM, and that also helps us tremendously, especially since we have a partnership with them and can be a part of helping them deliver that vision.

I’ve also been with a company that didn’t get the validation of a big player in the market.  That’s tough, because its up to the startup to spend all the money and do all the heavy lifting to get the word out.  That makes growth a lot more expensive and may ultimately cap the size of the market if the small company leading the market can’t reach a critical mass of buzz and attention.

So, I’m feeling pretty good as the New Year starts to unfold.  We’ve had a lot of validation at Helpstream.  Momentum is definitely way up.  And there’s more to come!

Related Articles

Just to give an idea how much press was suddenly generated by Salesforce’s Service Cloud announcement, here were just the links that came through my feed reader:

CRM News:  Great quotes by John Ragsdale, President of the SSPA.  John is a seasoned analyst of the space who has commented on Helpstream in the past.

Larry Dignan:  One of my favorite bloggers, Larry has a good overview of the Service Cloud offering.

MyCustomer.com:  Includes an amusing quote from NetSuite, welcoming Salesforce to the Cloud where, “they’ve been for years.”  The quote is amusing, but there is little on NetSuite’s web site to suggest its true.  They have a pretty basic Old School on SaaS customer service product.  At least it doesn’t read to me anything like what we say about Helpstream on our web site.

TechCrunchIT:  TechCrunch is always a good news source, and they’re no exception here.  That first screen shot of the Service Cloud gives a great flavor for what it really is.  They’ve basically created a simple mashup that lets you view these different sources out on the web as either Knowledge, Ideas, or Cases.  It’s an interesting model, but I find it somewhat strained to force everything through one of those three buckets when some of these things just need to be viewed as what they really are.

GigaOm:  Alistair Croll sees Service Cloud as CRM 2.0 more than Customer Service.  He has a point.  I have a hard time imagining that most Customer Service Representatives want to go looking for a lot more inputs that they need to deal with and be measured on.  It’s a little more plausible to me that a marketing organization would use this tool to track what others are saying about them, although even then it seems like there are better ways to go about that.

3 Responses to “The Best Thing That Can Happen to a Startup”

  1. […] I’m referring to the case where a big player suddenly starts saying some of the same things your startup has been saying all along. smoothspan.wordpress.com… […]

  2. rnugent said

    Bob, thanks for restoring my sanity! What little of it there is… Running start up is filled with activities that one could easily view as the Big Scary Event if one is not careful. Having a perspective like this helps. A lot!
    Ray

  3. marketthat said

    I see a lot of start ups where just about everything is new to them. They are good at their trade but that is just 50% of the project. They have to get the head around the rules of business, find lead, sell themselves and get the money in.

    It takes 18 month to 3 years before they have enough experience to break through the barriers, getting that word of mouth leverage. Much of this is having the confidence to get out there and go do it.

    You are on the button regarding sales with lots of work coming it take off one of the pressures and then adds a few more.

    I saw a client after a really successful day. He said it was great to have the work and yet it meant 2 days in the workshop that he did not have. It is all about balance and planning.

    Good article

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