David Cummings on Startups

Blog

  • Pardot’s Pricing Progression Through the Years

    The topic of pricing and request for advice on how to price a product comes up on a regular basis. I always like to share the Pardot pricing experience, including lessons learned. Pricing is something that is best treated as yet another experiment in the startup process with the caveat that all things equal, it’s better to start too high and come down.

    Here’s the early progression of pricing at Pardot:

    • $65 / user / month, minimum three users – At launch in late 2007, we priced the product based on Salesforce.com (how cool is it that Salesforce.com now owns Pardot?!?). The idea was that each marketing user that used the product would pay for a seat. Note: it didn’t do email marketing at the time, so there weren’t any email volume concerns.
    • $325 / account / month, unlimited users, unlimited contacts, with an allotment of 10,000 emails, 100,000 page views, and other modules (e.g. 10 landing pages), plus a required $2,500 quick start fee to set everything up. Email overages were billed separately. We quickly raised prices to $500 / month to reflect value and market dynamics.
    • $1,000 / account / month with the same characteristics as the previous offering but now a quick start package was included at no additional charge. By getting rid of the quick start fee, we were able to shorten the sales cycle, increase the average recurring revenue, and capture more of the value provided by the software. This was a major breakthrough for the business overall and this was the pricing for 3+ years of the business.
    • $1,000 / account / month for up to 30,000 contacts with unlimited emails and additional fees for more contacts. This became the standard in the industry and allowed vendors to capture value based on the size of the database such that accounts would grow as their marketing efforts grew. This change worked well and allowed us to grow the average size of an account.

    Pricing should adapt to the market and continually change over time. We didn’t get the pricing right originally, but we kept improving on it and built a great business.

    What else? What are your thoughts on Pardot’s pricing progression through the years?

  • The Coming Wave of Marketing Automation Adoption

    Being in the marketing automation world for five-and-a-half years with Pardot, it’s easy to think that everyone knows about the technology and has adopted it. Not so. When I talk to non-tech CEOs and entrepreneurs, very few have heard of marketing automation, let alone begun using it. Technology companies are the main users of the technology and it’s starting to spread rapidly.

    Think about all the companies that use a modern, web-based CRM, based on approximate customer count:

    • Salesforce.com: ~140,000
    • SugarCRM: ~10,000
    • Microsoft Dynamics CRM: ~40,000
    • Netsuite: ~13,000
    • Total: ~200,000 companies

    Now, look at the major marketing automation vendors based on approximate customer count:

    • Marketo: ~2,400
    • Pardot: ~1,900
    • Eloqua: ~1,500
    • HubSpot: ~1,800 (this is a guess as many of their customers use the blogging and SEO tools, with the marketing automation piece growing quickly)
    • Act On: ~1,400
    • Total: 9,000

    Note: customer counts are all educated guesses based on published information and industry knowledge.

    So, with roughly 200,000 companies using a modern, web-based CRM and only 9,000 using a B2B marketing automation system, there’s unbelievable room for growth. Marketing agencies and lead generation experts would do well to develop a marketing automation practice and get out ahead of the curve. Per adoption, we’re just about to cross the chasm into the early majority and the number of companies that use that software will explode.

    What else? What are your thoughts on the coming wave of marketing automation adoption?

  • Atlanta GigaOM Mobility Meetup Recap

    Tonight I had the opportunity to attend the Atlanta GigaOM Mobility Meetup at Opera in Midtown. Over 600 people registered for the event, showcasing the power of the GigaOM brand (6 million uniques a month) and the excitement around mobile in the Atlanta tech community. Even with one of the worst lightning and rain storms we’ve had this year, the entire event space was packed with people.

    Here are a few notes from the Atlanta GigaOM Mobility Meetup:

    • Atlanta has a strong mobility cluster anchored by AT&T Mobility, which is headquartered here
    • Mobile payments is a hot area and companies are eagerly awaiting adoption of NFC technology
    • Mobile marketing, especially with regards to personalized messaging, has significant opportunity
    • AirWatch, a mobile device management company in Atlanta, added 1,000 new employees last year and is growing fast

    I’m glad that GigaOM put on the event and I look forward to future programs.

    What else? What are some other takeaways from the Atlanta GigaOM Mobility Meetup?

  • Entrepreneurs Want Private Space Combined With Community

    When we started the Atlanta Tech Village we thought that there would be more demand for coworking space, with the idea that entrepreneurs and tech-related service providers wanted to be in large, open areas together. In reality, the initial private rooms sold out immediately — entrepreneurs want private space combined with community.

    Here are a few ideas around private space combined with community:

    • Entrepreneurship can be lonely, especially in the early days if things aren’t working out, so community is important
    • Absent coworkers, community provides for more social interactions
    • Private space provides more options for branding and customizing the furniture, pictures, etc
    • Private space makes it easier to lock things up and leave personal effects behind

    Of course, private space is more expensive than individual space if you don’t have the requisite number of people to fill the room, so it’s good to have a variety of options.

    What else? What are your thoughts on entrepreneurs wanting private space combined with community?

  • Get Potential Customers to “No” as Quickly as Possible

    Earlier today I was talking to an entrepreneur in the finding product/market fit stage of the startup adventure. He’s making progress collecting information but is still trying to understand if there’s a viable market. After hearing an update and sharing a few ideas, I recommended that he get to “no” with a bunch of potential customers as quickly as possible. The idea is that it’s often easier and faster to figure out if an idea isn’t viable, such that you can then move on. Too often, entrepreneurs take too long to kill an idea.

    Here are a few labor-intensive ideas to get in front of a number of people to determine viability for an idea:

    • Make a methodical plan to reach a certain type of person (e.g. take the last 100 people featured in the local business journal and contact them via phone)
    • Find a list of award winners (e.g. the Inc. 5000) and contact at least 500 companies on the list
    • Reach out to 100+ people that you know and ask for a referral to someone that could be a potential customer or could point you in the right direction

    Now, if this sounds like sales, it’s because it is sales. Most startup founders like building a product and don’t like selling. Whether it’s sales or customer discovery, the best thing to do is to get in front of as many people as possible, as quickly as possible.

    What else? What are your thoughts on getting potential customers to “no” as quickly as possible?

  • Cold Calling Doesn’t Scale Initially

    Paul Graham has his latest essay online titled Do Things that Don’t Scale. The idea is that many founders believe that every part of a startup should be scalable and automated right from the beginning. In reality, it’s better to get things going as quickly as possible, even if it’s manual and doesn’t scale.

    Early on in Hannon Hill, my first real company, we built a solid product, but had no customers. I knew how to build software while I had no idea how to build a customer acquisition machine. With limited resources, I started a very manual process: cold calling all 4,160 two year and four year colleges / universities in the United States.

    To start, I went over to the local Barnes & Noble in Buckhead and bought one of those massive books that listed all the colleges (geared towards high school seniors). Next, I had my brother, who was a student at Emory, post a job opening for a sales intern on the internal Emory website. Finally, I hired two students part-time to call every school, with the goal of scheduling an appointment for me to do a web demo. After much trial and error we developed a process that worked and today Hannon Hill has hundreds of school customers, many from cold calling.

    Paul Graham cites cold calling for B2B startups as an example of something not scalable for the founders. While it doesn’t scale for an individual, it does scale for many organizations.

    What else? What are your thoughts on doing things that don’t scale, including cold calling?

  • Experimenting with the Internet of Things

    As I sat down to write this post I noticed it was warm in the room. Not thinking twice, I loaded up my Nest iPhone app and promptly lowered the temperature for the area. That is, I took advantage of the Internet of Things — the idea that everyday objects become connected to the internet and can communicate in new ways.

    Here’s my current list of internet-enabled objects that were traditionally isolated:

    • Tesla Model S – From my iPhone I can control the car’s A/C, sunroof, charging, door locks, see how many miles of range is left on the battery, and see the GPS location overlaid on a map.
    • Nest – The thermostat is tracking our usage patterns to learn how we live so that it can optimize for our lifestyle while saving money on our energy bills. As a bonus, if we go on a trip and set the temperature to 80 while we’re gone, from my iPhone I can lower the temperature a few hours before we return so we get home to a cooler house.
    • Withings Scale – Every time I step on the scale it knows it’s me and records my weight, pulse, and other factors in the cloud so that I can see my progress on my iPhone anytime, anywhere.
    • Dropcam – With this internet-only video camera, I can have a two-way conversation with a person on my front porch via my iPhone anywhere in the world. If the baby is sleeping, I can go do yard work and keep an eye on him from anywhere around my house.

    The Internet of Things is going to have a profound impact on how we work and live. I’m excited to keep trying them out and experimenting.

    What else? What are your thoughts on the Internet of Things and what other objects do you have that are internet-enabled?

  • When Does the Millennial Workplace and Culture Become Standard

    Earlier today I was talking to a colleague about the environment at the Atlanta Tech Village and how it was the ideal place for Millennials. It’s not that we’re anti-establishment, but more so that we’re working on creating the best environment possible for how we want to work.

    Here are a few characteristics of the modern Millennial workplace and culture:

    • Creative and collaborative rooms, open spaces, and multiple work options (less private space and more communal space)
    • Tools to work whenever, wherever (thanks to the cloud and mobile technology)
    • Strong transparency and openness
    • Results only work environment
    • Focus on autonomy, mastery, and purpose

    Now, we’re likely in the first inning of this type of environment becoming more commonplace, but it’s going to happen.

    What else? When do you think the millennial workplace and culture will become more standard?

  • The Real-Time Entrepreneur

    As I was switching through different web apps and reports today, it struck me how real-time information is today as an entrepreneur. I had just published a new post on the Kevy blog titled Managing a SaaS Metrics Dashboard With Pardot (check it out for an example on how to use a marketing automation system to feed the top-of-the-funnel SaaS metrics). Right after hitting publish and sending out a couple tweets about it, I was immediately able to see clicks and prospects interacting with it. As an entrepreneur that loves results, it doesn’t get much better than that!

    Think about information from the most common apps:

    • Salesforce.com – Watch sales rep activities, opportunities, and deals
    • Pardot – Watch anonymous visitors, leads, and digital fingerprints
    • Google Analytics – Watch information on macro hits and visitors
    • GitHub – Watch pull requests and progress on the current sprint
    • Zendesk – Watch support tickets and customer interaction

    Of course, a dashboard with all the critical data in one place would be cool (like Geckoboard), but the fact that each system is there and can be left open in a browser tab makes it readily accessible. It’s great to be a real-time entrepreneur.

    What else? What are your thoughts on the real-time entrepreneur?

  • SaaS Metrics Dashboard With Inside Sales

    Previously I posted about a Killer SaaS KPIs Spreadsheet that I really liked. After digging into the spreadsheet more, I realized it was geared towards a self-service SaaS model where the prospect finds the service, signs up for a free trial, and then becomes a customer (or doesn’t). While this is a great model, I see most SaaS startups using some inside sales component where a sales rep holds the hand of a prospect and guides them through things. It’s a light touch model that still involves people helping people.

    So, I went in and changed several things and made an enhanced SaaS Metrics Dashboard Google Spreadsheet Template. Here are the changes I made:

    • Replaced “signups” with “leads”
    • Added a row for “Sales generated leads” to reflect leads that come from cold calls, partners, trade shows, direct emails, etc
    • Fixed the formulas throughout to support zeros for data (dividing by zero caused problems before)
    • Fixed the header and left column to make it easier when scrolling
    • Simplified some of the formatting

    Take a look at the new SaaS Metrics Dashboard Google Spreadsheet Template and give it a try — it’ll add value to most B2B SaaS startups.

    What else? What are your thoughts on the updated SaaS Metrics Dashboard Google Spreadsheet Template with support for inside sales?