SaaS company home-grown in India could potentially reach critical mass
In this series, Sramana Mitra shares chapters from her book Vision India 2020, that outlines 45 interesting ideas for start-up companies with the potential to become billion-dollar enterprises. These articles are written as business fiction, as if we’re in 2020, reflecting back on building these businesses over the previous decade. We hope to spark ideas for building successful start-ups of your own.
It was clear to me in 2008 that India’s journey forward as a center of excellence in software would not gain legitimacy without a home-grown, on-demand software-as-a- service company that reached critical mass.
Market research firm IDC forecasted in 2009 that “the harsh economic climate will actually accelerate the growth prospects for the SaaS model as vendors position offerings as right-sized, zero-CAPEX alternatives to on-premise applications. Buyers will opt for easy-to-use subscription services which meter current use, not future capacity, and vendors and partners will look for new products and recurring revenue streams. As such, IDC has increased its SaaS growth projection for 2009 from 36% growth to 40.5% growth over 2008.” IDC also predicted that by the end of 2009, 76% of US organizations will use at least one SaaS-delivered application for business use, and the percentage of US firms which plan to spend at least 25% of their IT budgets on SaaS applications will increase from 23% in 2008 to nearly 45% in 2010.
To me this also read like a forecast for how the Indian IT services industry would lose significance as their bread and butter – complex software integration projects at large enterprises – started diminishing in scope. India, I thought, needed to leverage the SaaS wave, not get washed away by it.
Convert was founded to be India’s flagship SaaS company.
However, SaaS was quickly becoming an increasingly crowded space – over 500 companies saturated the sector, addressing various slivers of business functions. Enterprises and small–medium businesses were eagerly adopting these solutions, but the sheer number of vendors and fragmented services was fast approaching an unmanageable scale. Even a relatively small business had to manage 25 different SaaS applications within its sales and marketing function. There was Salesforce.com, Zoho, and NetSuite for contact management; iContact, aWeber, and ConstantContact for e-mail marketing; InsideView for opportunity intelligence; LucidEra for business intelligence; Genius for opportunity alerts; Jigsaw for business contact data; Hoovers for business information; Xactly for sales compensation; Apptus for contract management; EchoSign for contract signing; Webex, DimDim, ON24, and Citrix for webinars and online demos; and numerous other technologies for sales and marketing organizations to navigate.
On top of this, the very disciplines of sales and marketing had evolved such that online marketing, especially search engine marketing (both paid and organic), had become an incredibly powerful lead-generation mechanism essential to the workflow of any marketing strategy. This added another layer of tools and technologies, like Marin Software for paid search optimization and Enquisite for organic search engine optimization.
And guess what? This suite of tools and technologies cost a substantial amount of money, and as disjointed as they were, integration was a real hassle. Data existed in disparate systems, with no visibility from one to the next. Even when some vendors had the foresight to integrate the offerings with partner systems, the salesperson’s desktop remained a mess.
Beyond this, there was also a total lack of functionality even among market leaders. iContact, for example, offered an e-mail marketing system that worked only with opt-in e-mail lists, paying no attention to the fact that such lists needed to be built. Productivity requirements were poorly understood as well. A salesperson who needed to e-mail 50 prospects fitting a certain sales cycle criteria continued to have to do a tremendous amount of manual work, customizing each e-mail by hand.
Every time I ramped a new consulting client’s marketing and sales, I wished I had a preconfigured box of tools – a fully integrated and configured technology suite structured according to my own methodology for bringing products to market. So, in Convert, we set out to build this preconfigured methodology “box.”
Together, the fragmented CRM applications made up the overall customer relationship management (CRM) market. Gartner predicted that the SaaS market would reach $8 billion in 2009, a 22% increase from 2008 revenue of $6.6 billion. And Datamonitor estimated the 2008 on-demand CRM market at $1.7 billion, forecasting it to achieve a compound annual growth rate of 17.4% from 2007 through 2013.
CRM was a relatively old industry, and experienced executives and product managers from this industry were abundant. It was easy for us to recruit both a CEO and an executive team with deep domain expertise to translate the Convert investment thesis into reality. My friend Tony Scott, a longtime executive recruiter in Silicon Valley, worked closely with me to find an excellent team with experience at Oracle, Siebel, Salesforce.com, and a host of other Valley startups. We specifically went for executives who had both large company and startup experience to ensure that we planted the right DNA to kick things off, but also guide us as we scaled.
In 2010, Convert’s SaaS suite was launched. It was a culmination of generations of experiments in sales automation and customer relationship management innovation, but built within one integrated architecture and, most importantly, accessible through a very affordable pricing structure. In fact, the Convert sales and marketing methodology and associated SaaS suite was available for free until the number of contacts in the database exceeded 1,000 records. It included a wide range, from early lead generation, prospecting, SEM/SEO, e-mail marketing, to contact and opportunity management, forecasting and funnel management capabilities, built-in business intelligence, social media connectors, Web crawlers, rich media presentation environments, and all sorts of cutting-edge functionality like opportunity alerts and triggers that had just then come into play. In short, Convert was the most comprehensive suite of sales and marketing solutions on the market.
But it was not just technology; it was a methodology, emanating from the core philosophy that marketing exists to generate sales and that targeted, tightly segmented marketing, rather than spray and pray, is what generates the best results. I had already written a book called Positioning: How to Test, Validate, and Bring Your Ideas to Market as part of the Entrepreneur Journeys series in which I discussed at length my insights on strategic marketing. Convert’s methodology closely followed those guiding principles.
And ours was, by design, the least expensive solution on the market. In one stop, customers could access the entire suite of tools, technologies, and data they would otherwise be forced to pursue through 25 different vendors, at 25 times the price.
We offered more than a contact management shell that depended on customers for its effectiveness to get populated. We provided a shell already stuffed with data – especially leads, that critical incentive which makes every salesperson’s mouth salivate. We had also built in mechanisms to induce account managers to insert additional data to get, in return, additional leads, thereby addressing CRM’s eternal complaint around sales reps’ unwillingness to populate the databases.
Finally, our product design was very much Apple-esque, with a diligent focus on usability, integrating seamlessly with social media, Twitter, Facebook, LinkedIn, and others. Clicking on the name of a contact instantly opened a window with his or her social media profiles and touch points, as well as suggestions on who might be able to provide the best referral into the prospect.
By 2012, we had 4,000 customers and 30,000 users. By 2015, the number of customers went up to 32,000 and the number of users to 400,000. And in 2020, the number has reached 100,000 customers and two million users. Revenue climbed from $15 million in 2012 to $200 million in 2015, and it is forecasted to touch a billion dollars this year. And in doing so, we wiped Siebel (by then, a part of Oracle) from the face of the earth and destroyed Salesforce.com with our pricing structure. In fact, it was in Salesforce.com’s customer base that we found our initial adoption. Michael Arrington at TechCrunch saw our product suite and value proposition – and our desire to take on Siebel and Salesforce.com – and wrote about us early on, saying, “Finally, the fragmented CRM space receives a thorough consolidation and democratization in the hands of Convert.” Arrington, at the time, was extremely influential with a readership of 7.5 million unique visitors and 20 million page views a month, and he loved the David versus Goliath story. His coverage triggered huge PR in online media, and the following month, CIO magazine ran a feature on us. Soon, every CIO wanted to evaluate us, eyeing the sizable cost-shaving opportunity.
Yes, we converted. We converted marketing and sales aficionados around the world. And we converted thousands of our competitors’ customers by offering a total cost of ownership (TCO) advantage previously unmatched in the industry. But most importantly, we converted our customers’ dollar investments into volumes of quantifiable business. And for that, our customers have rewarded us handsomely.