A couple days ago I wrote about the Top 7 Entrepreneurial Lessons from Pardot. After the post, several people asked me to expand on the seven items with more detail.
Here are the top 7 entrepreneurial lessons learned from Pardot expanded:
7. Market timing matters: we started in March 2007, just before the Great Recession, and Software-as-a-Service went from hot to cold, along with most technology sectors. Our timing to start the business was perfect because we were forced to make things work in a difficult recession, and by 2010 we had a solid product, customer base, and team just in time for the market to explode. Several of the second tier competitors that had been in business for 7-10 years faded away as too much fatigue had set in for their founders and management teams.
6. Startups with the most money don’t always win: we didn’t raise money and we competed against a group of companies that had raised more than one quarter of a billion dollars, and we won the majority of our competitive deals. A couple of our competitors had raised more than $20MM in venture capital and virtually went away after 2-3 years. Internally, we constantly debated about raising money but in the end decided it didn’t make sense based on how fast we were already growing and our desire to control our own destiny.
5. Find the differentiators and deliver: early on we differentiated based on ease of use, no contracts, and a pricing model based on email volume with unlimited database size. We had the catalytic mechanism in place whereby we had to deliver value month in and month out since our customers could leave at any time. This forced us to be great at customer on boarding, support, and client advocacy.
4. Sell pain killers and not vitamins: after a customer successfully rolled the software out to their sales and marketing teams, we’d routinely hear feedback like “we don’t know how we functioned without the software” and “the sales guys absolutely love the data and insight.” Once it was clear the software was a must-have, we knew we had a pain killer and not a nice-to-have vitamin.
3. Embrace your constraints: not having a deep war chest of VC money forced us to be scrappier and efficient. One model we took to heart was how Toyota developed the Prius from the ground-up focused on middle class buyers that wanted a high MPG hybrid with four doors at a $22,000 price point. With the $22,000 price point as a fixed constraint that couldn’t budge, the business model and everything else had to be built around that. In a similar manner, we focused on the $1,000/month price point and built the whole business around that — from the inside sales process, on boarding, support, etc.
2. Focus, focus, focus: we said ‘no’ 100x more than we said ‘yes’ to requests for features, partnerships, white labeling the product, etc. As for customers, for years we were laser-focused on B2B companies or divisions with 20 – 200 total employees of which 5-50 were in sales and marketing as well as one full-time in-house marketing manager. By focusing on a narrow part of the market and saying ‘no’ most of the time, we were able to achieve significantly greater results.
1. Corporate culture wins: our maniacal desire to be the best place to work and the best place to be a customer combined with team members that were positive, self-starting, and supportive created an unbelievably strong corporate culture. At the end of the day, corporate culture is the only sustainable competitive advantage completely within the control of the entrepreneurs.
Pardot was an amazing experience and these seven entrepreneurial lessons from Pardot were invaluable.
What else? What are your thoughts on these entrepreneurial lessons and others?