Iterating in a Startup – Part Three

After initially building a small business SaaS product and subsequently licensing it to a larger company, we had finally settled into building the product that would ultimately be successful — a mid-market web content management system. Of course, at the time, we had no idea if it would be successful. What we did know was that robust website management applications were complex and there was no clear winner in the mid-market.

We spent one year building the application in a vacuum — a luxury made possible by the pre-paid royalties we were receiving. Steve Blank and his book Four Steps to the Epiphany argue for customer-driven development whereby you build the product after you have customers telling you what they want. Not knowing any better, we didn’t operate according to his model.  However, we did have customers of our previous product and we knew some of the things they wanted. We also knew what functionality we wanted to manage our own site. I’m a big believer in eating your own dog food.

We launched our new content management system on April 15, 2003 at the Internet World trade show in San Jose, CA and promptly won the Best of Show award. The outlook for the new product was bright. Unfortunately, a good product launch doesn’t always equal sales.

After working non-stop trying to sell the new application, we only managed to sell one license by the end of 2003. Now, selling one server license for $30,000 (the price for our new product) sure felt much better than selling many of the previous, smaller product. But selling only one over the course of six months was discouraging.

With version one of the product complete, an award under our belt, and our first full-price client (we had given several licenses away for free to get early users), the next major phase in the company was learning how to sell and market the product. Lead generation was the first area we focused on and continuously iterated. We tried these different tactics:

  • Cold calling
  • Channel development through partners
  • Pay-per-click ads

Stay tuned for part four to learn what worked and what didn’t work.

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