I would strongly encourage everybody who competes with Expensify to study Roman Stanek’s latest article, “Forget Virality, Selling Enterprise Software Is Still Old School”. To everyone else, I’d offer an opposing view: Enterprise sales is undergoing the most radical shakeup since the turn of the century, and today’s experiments will be tomorrow’s best practices.
Indeed, we often forget that today’s “best practices” were once the radical experiments of their day. Rewind any great business and you’ll usually find a crazy, high-risk, totally radical startup. And all the things that are said about today’s startups were said about theirs, too — by people whose names we’ve long forgotten.
Furthermore, those startups generally got started doing things in a completely different way than they do it today. Far from being great companies birthed whole, the backstories of today’s giants involve involve twists, turns, one-time opportunities, and unexpected constraints. They involve radical experiments. Contrary to what the old school teaches, the great companies of today pivoted in their day. A lot.
For example, take the two greatest SaaS enterprise companies: Salesforce and Concur. Both are held up as paradigms of enterprise sales, and are often highlighted as examples of how it’s always been done (and presumably, always will be). But their real histories are far more nuanced than they’re summarized to be.
Did you know that Salesforce initially launched with an activity-based pricing model, where the first two seats were perpetually free? It was designed to get critical mass in a company to soften it up for an inside sales call — and it worked great. This was their sales model up to about $17 million in sales, until the dot-com crash wiped out fundraising opportunities right at a moment when they had high customer churn combined with a major spend on inside sales, creating a cashflow nightmare. For this reason they switched away from activity-based monthly billing to prepaid annual contracts: to get more cash up front to fund the business recognizing that the price of capital had spiked when they needed it most. This permanently changed the pricing model, and thus the compensation and lead generation models, and basically every other model of the company to what we know it to be today.
And did you know that Concur’s first product was a desktop expense reporting application modeled off of Quicken, sold directly to individual salespeople to — once again — soften up the enterprise to an inside sales call? And that this model worked great? This continued until Concur was competing with American Express on a major deal — a leading Detroit auto maker. I don’t know that the details of that situation are public, but here’s what happened next: American Express cancelled their expense reporting application, purchased a 25 percent stake in Concur, and then began selling Concur directly to their enormous range of commercial card customers. This instantly shifted Concur’s sales strategy to the current (now “classic”) approach of top-down sales to large enterprises. But it sure wasn’t where they started, and they’ve struggled to go back downmarket ever since.
Even more interesting than the “large enterprise” space are the clever techniques used to lock up the “small enterprise” — a world where classic acquisition techniques just don’t work at all. Take Intuit, which holds something like 84 percent retail market share of small business accounting with its QuickBooks product. But that’s only of “retail” market share — it ignores that most very small businesses still use Excel for their accounting, not choosing to buy any accounting package.
Furthermore, 85 percent of that QuickBooks business came “word of mouth” — not through some big marketing campaign — a number that’s held true from the start to today. And most of the revenue from QuickBooks comes not from QuickBooks itself, but secondary financial services. QuickBooks establishes a priceless channel to sell more profitable SMB accounting products that can’t be effectively sold in any other way. So the story of QuickBooks, one of the greatest and most widely used accounting packages in the world, isn’t as clear as it seems at first glance.
Weirder still, the inspiration for QuickBooks came when they were getting a bunch of requests to add invoicing to Quicken: a personal finance product. (Side note: Quicken inspired both the world’s leading invoicing and expense reporting applications… hmm…) Intuit then built QuickBooks and tried to sell it directly to accountants who at the time, had no interest whatsoever. Accountants are very tech savvy, but not exactly early adopters. So instead, they just bundled QuickBooks with Quicken, reaching out directly to the small business owners who made those feature requests — and then those business owners forced their accountants to adopt. Today, Intuit is generally recognized as the only party to “own” the accounting channel, but they came at it via a totally radical approach that its competitors seem to have forgotten (which is probably why Intuit has had such firm footing for decades, despite legions of challengers).
Enterprise sales is undergoing the most radical shakeup since the turn of the century, and today’s radical experiments will be tomorrow’s best practices. However, let’s not forget that today’s best practices were once radical experiments themselves — and that many of today’s experiments are old ideas retried under new conditions. The world is a complex place; ideas come and go, and sometimes old ideas lay new roots in a different market with evolved technology.
If there’s one lesson that the old school continuously fails to teach, it is stop listening to the so-called (and self-styled) experts. Do your own research, talk to the original sources, and just go out and build your crazy thing. You’ll probably fail, maybe a lot. But eventually you won’t, and your insane ideas might someday become commonplace. The line between genius and stupidity is very, very faint and often only visible in the rear-view mirror.
Don’t be afraid of failure. Be afraid of not trying. Salesforce, Concur and Intuit weren’t, and now we can’t imagine a world without them.
David Barrett is the founder of Expensify, the lead engineer of Red Swoosh (acquired by Akamai, from which I was dramatically fired), and all around alpha geek. I started programming when I was 6 and it has been my primary activity ever since, with a brief hiatus for world travel, technical writing, project management, and now running Expensify. I’m married to an opera singer, and have without question the cutest beagle known to man. http://twitter.com/expensify http://twitter.com/quinthar UDPATE - I’m desperate to hire...
David Barrett founded Expensify in May 2008; Witold Stankiewicz joined him in August 2008, and together they launched an Alpha product at TechCrunch 50, taking home the “DemoPit 2nd Place” prize. In March 2009, they launched a Beta version and demoed it at FinovateStartup 2009. Expensify’s mission? Help people create expense reports that don’t suck! In May 2009, Expensify raised $1M, hired some additional engineers, and went to Istanbul for a month in order to write the award-winning Salesforce.com...