Wildcat’s CEO Interview Blog Series features in-depth interviews with CEOs who have successfully traversed the Traction Gap. In each blog, we focus on the CEOs’ experience during one phase of the Traction Gap journey.
We sat down with Movable Ink’s Founder and CEO, Vivek Sharma, and Veeva’s co-founder and president, Matt Wallach to discuss their experiences getting to Initial Product Release (IPR).
IPR is when a startup’s product first becomes available to the public and target users. At this stage, the startup is on the hunt for market and customer validation metrics that demonstrate the viability of the product (or service) in the marketplace.
Wildcat’s Traction Gap Principles at IPR
Product: Don’t build everything. Obsess about the things that users really rely on and actually use. Develop a market-first mindset and process.
Revenue: Focus on a subset of a market, then expand outward from there.
Team: Hire only the best people, preferably those you’ve worked with previously.
Systems: Keep your systems incredibly lightweight at this stage.
A simple method for vetting and validating the market is your product demo. At Veeva, Matt found their demo to be a huge asset. During the 90 days leading up to the product launch, he provided demos every day. “I had a demo ready to go at the start of every single phone call,” said Matt, “and whether they expected to see a demo or not, they saw a demo!” Demos weren’t reserved for prospective customers only. “I knew people in the industry that I thought would become partners. I got them excited with demos because it was a disruptive technology.”
Focusing on their first customers was also key at Veeva. Rather than trying to gather as many customers as possible, they focused on making their early ones very happy, letting those customer experiences influence others in the market. “We just delighted the hell out of those first six customers,” said Matt, “and we had references within eight months of starting the company.”
Eventually this led to securing their biggest deal at the time. The big players were confident because so many of their more junior industry partners were raving about Veeva. “This is something in industry cloud companies,” said Matt, “reference selling; because you’re in one industry. People see each other, they leave and go to different companies.” Eventually, as it starts to explode, you have to slow down a little in terms of new releases, but you’ve already got the momentum and credibility to be more flexible.
In Movable Ink’s early days, Vivek knew it was critical to find the right market fit for its email marketing product. “If you are selling to the wrong market, it can lead to disaster,” said Vivek. After securing their first major deals, Vivek decided to not waste time on smaller companies and instead focus only on larger enterprises.
Getting Movable Ink’s Initial Product Release off the ground and past the ‘idea stage’ was the result of a larger strategic approach Vivek wanted to take to build a product-focused company. “A good product that fills an actual market need and provides tangible value to the customer is what ultimately differentiates a company, said Vivek. “Great product-focused companies have a short- mid- and long-term vision and creating a strong, clear and flexible product roadmap from the start was key for Movable Ink.”
As part of the product roadmap, Vivek and the founding team spent plenty of time thinking about, challenging, and validating every assumption they had and adjusting their strategy based on market feedback. This process included building a product with the most valuable features, getting that into the hands of potential clients to demo, and then get adjusting based on feedback.
Veeva realized a critical aspect of revenue was coming up with a pricing strategy early which Matt says, “doesn’t get enough attention by entrepreneurs, especially in a subscription business where you never get that back. We’ve been in business 10 years, we’ve never increased anyone’s subscription on any product ever and we’ve had three releases a year, making the thing better but we don’t charge more for it. If we create a new module or a new product, we’ll charge for that, but within the products that you’ve licensed, they get way better without us increasing the price.”
Another critical aspect of revenue for early startups is developing a sales strategy. From the start, Movable Ink was creating a new market category within email and digital marketing, and Vivek knew they needed to immediately invest in a direct sales team to help educate its potential and new customers on the value of Movable Ink’s software. “The good news is that over time, our customers felt that we were solving an important problem and ascribed a higher value to it,” said Vivek. “Software can commoditize quickly, but it is possible to reverse this through rapid innovation and building a ‘moat’ or barrier to protect your business from competitive forces.”
With SaaS companies, pricing needs to be simple, understandable, and logical. For Movable Ink, CPM on email opens ended up being the perfect solution. It was easy to understand and aligned with value being created when an email is opened. “After our initial product release, we were able to increase prices based on the value and ROI our product provided to our customers,” said Vivek. “Our pricing model and investment in our sales team from the start forged a path to unlocking enterprise value.”
On their journey toward IPR, what did Veeva learn about structuring a team? They learned to get creative with interviewing. Matt took an approach that “goes all the way back and follows them through their career to try to figure out what motivates this person and is Veeva going to be a good place for them.” Keep an eye out for those with real work ethic; almost everyone at Veeva, Matt said, “had to get a job when they were 14.” Self-motivation matters almost above all else.
Movable Ink also learned some valuable lessons about structuring a team. Number one, find someone who is a great complement to one’s skills. “In the early days only two things matter: building the tech and selling,” said Vivek. “Be relentless in searching your network for a person that matches on three key qualities: intelligence, tenacity, and chemistry.” Two to three founders is ideal. Solo founding can be a daunting journey for a first-time entrepreneur. More than three founders can hamper speedy decision making and give rise to more founder conflicts.
In the early stages of a startup, systems are simple and should help you stay on track of your finances.
Low burn rate is critical to managing limited funds. Vivek explained that Movable Ink was able to keep the burn rate “next to nothing, because I learned from a previous business that the biggest early expenses were our own cost of living.” This meant not paying himself or his partner Michael a salary, leaning on contacts to find free office space, getting a law firm that would defer legal costs, and lining up free web hosting. On their way to IPR, Movable Ink’s monthly burden was a mere $700.
At this stage, startups should also be utilizing systems for “selling”. At Movable Ink, Vivek built a tight pitch deck that he used for every meeting, and more importantly, after each meeting he would “kill things in the deck or add new things to the deck” based on the feedback he received. When Vivek shared the pitch deck with some of Movable Ink’s larger first potential customers, they were very positive. The product was still in its early stages, and big companies wanted evidence that it actually worked before they would make the jump to becoming a user.
CEO Takeaways at IPR
A demo can be a great way to create an early feedback loop.
Focus hard on making the first customers successful and go for quality over quantity.
Get your pricing nailed, early.
Consider your sales strategy way earlier than you think you need to.
Be capital-efficient with your team. No lazy hires.
Take the interview process seriously and learn to spot a strong work ethic.
Keep burn rate as low as humanly possible.
Get together an awesome pitch deck and keep evolving it.
Movable Ink is a provider of a visual experience platform that enables more than 650 enterprise brands to personalize content at the moment of engagement across email, web, and display. With Movable Ink, digital marketers can free their data from silos to generate intelligent creative with millions of unique variations based on consumer context and behavior, third-party insights, and business logic.
Veeva Systems is a provider of cloud-based business solutions for the global life sciences industry. It was founded in 2007 and went public in 2013. As of March 28, 2018, it had a market capitalization of $10 billion.