SaaS Customer Discovery: A Founder's Story on Learning the Hard Way
Tukan Das is the co-founder and CEO of LeadSift, a platform that mines publicly available social media data to help B2B businesses generate qualified leads.
LeadSift was founded in 2012 and to date has raised $1.8 million in funding. The company is based in Halifax, Nova Scotia in Canada.
This is a story about a couple of ‘data nerds' who were playing around with the Twitter and FourSquare APIs one day.
They discovered that there was a lot of social media data about people who were looking to buy something. So they decided to build a product and sell these ‘signals' to automotive brands.
It seemed like a winning idea. But they soon realized that it wasn't.
First, they weren't solving a customer problem. They were trying to find a market for a ‘cool idea'. And that is never easy to do.
Second, they didn't understand how automotive brands work. Ford isn't going to have a salesperson call you because of your tweet.
After a year of getting nowhere they pivoted. They started selling data to help consumer brands run better advertising campaigns.
They started to get customers and revenue. But their product wasn't sticky so revenue was unpredictable and customer churn high.
After two more years they decided to pivot again. But this time they interviewed many customers and kept searching for a real problem.
They didn't write a single line of code until they were confident that they'd found the right problem. And that approach paid off.
Today, they have a business that generates recurring revenue. And they are very close to hitting a million dollars a year.
This is a great story about persistence. And there are some valuable lessons on the importance of understanding your market.
TranscriptClick to view transcript
00:11 Welcome to another episode of The SaaS Podcast.
00:16 I'm your host Omer Khan and this is the show where I interview proven founders and industry experts who share their strategies and insights to help you build launch and grow your business.
00:29 This is a story about a couple of data nerds who were playing around with the Twitter and Foursquare APIs is one day. They discovered that there was a lot of social media data about people who were looking to buy something. So they decided to build a product and sell these signals to automotive brands. It seemed like a winning idea but soon they realized that it wasn't. First they were solving a customer problem. They were trying to find a market for a cool idea and that is never easy to do. Second they didn't understand how automotive brands work. Ford isn't going to have a salesperson call you because of your tweet after a year of getting nowhere. They pivoted. They started selling data to help consumer brands run better advertising campaigns. They started to get customers and revenue but their product wasn't sticky.
01:25 So revenue was unpredictable and customer churn was high. After two more years they decide to pivot again but this time they interviewed many customers and kept searching for a real problem. They didn't write a single line of code until they were confident that they'd found the right problem. And that approach paid off. Today they have a business that generates recurring revenue and they're very close to hitting a million dollars a year. This is a great story about persistence and there's a valuable lessons on the importance of understanding your market. So I hope you enjoy it. Before we get started, if you need help building launching or growing your software business then check out SaaS Club. It's premium membership site that I launched to help you get the insights the motivation and support you need to succeed. Registration for new members is closed right now.
02:18 I'm working with the group of founding members but you can join the wait list and I'll let you know when I start accepting new members again. Just go to saasclub.co, you can learn more there and join the waitlist. Also if you haven't grabbed a copy of my free productivity tool kit you can do so by going to theSaaSpodcast.com. The tool kit will teach you the habits hacks and tools used by successful founders and entrepreneurs. OK let's get on with the interview. Today's guest is the co-founder and CEO of LeadSift a platform that minds of publicly available social media data to help B2B businesses generate qualified leads leads. It was founded in 2012 and to date has raised 1.8 million dollars in funding. The company is based in Halifax Nova Scotia in Canada and so today I'd like to welcome to Tukan Das. Tukan welcome to the show.
03:22 Hey Omer thank you. How are you doing today. I'm
03:23 great. How are you. Pretty good thank you. I kind of want to ask you about Nova Scotia because I've never met anybody from Nova Scotia and it always kind of like whenever I've seen it in movies it's always seems like there's you know there's a cliff and a lighthouse. Not many but it's already like that right.
03:42 Which is which is pretty accurate. There are a lot of lighthouses. There are a lot of cliffs then we are right on the ocean right so. So that's that's a pretty fairly accurate description. But up some beautiful place and it's small and really pretty especially somewhere in fall months are spectacular.
04:02 People are super friendly.
04:03 Winter months are a little rough nothing crazy.
04:07 And yeah that's a great great place to visit especially for our summer and fall months.
04:14 So let's get inside your head a little bit. So what gets you out of bed to work on your business every day. You have a favorite quote or you know, tell us in your own words.
04:25 I mean, the reason what motivates me to get out of bed and get cranking would be the whole idea of the vision that we had for the trip and me and my co-founders started the business it was around mining on structured data. I should add vast amounts of unstructured data and find meaningful information like that was the whole thesis on genesis of starting this is a product of this business.
04:56 And the fact that we are still doing that and in mining data to find important pieces of information that businesses can use to help you know grow their revenue improve their customer service and improve their product. I think that's what motivates us, all of the co-founders and that's what gets me out of bed in terms of quotes, you know I'm a big sucker for reading up a lot of entrepreneurship books and blogs and I get a, hear a lot of quotes but one that particularly stuck with me and it's not from an entrepreneur but from this Professor Randy Pausch who wrote this book Last Lecture.
05:33 He said this something like, “We cannot change the cards we are dealt just how we play the hand”.
05:39 And I think that would be probably my my most favorite called so for people who aren't familiar, can you just explain what you mean by unstructured data?
05:52 And secondly why did you guys get so excited about that idea of mining
05:57 Yeah I thought I should have described it live in more by unstructured data, I mean anything that is not what you need in a specific set format like there is no well-defined format. So for example let's say you're you're reading Twitter it's pretty unstructured because there's there's no special formatting it's only 140 characters.
06:19 So anyone can type anything in any way or Facebook or a blog post or someone commenting on a forum or someone writing something on Wikipedia or anything on the web for that matter. It's all unstructured. It is not it's not something like an XML or or JSON format or any specific format. It's like free free text right. Anyone can write anything in any way. There is no notion of spelling, grammar, symbols, anything. So that's that's what unstructured data moves. So that's that's what we mean by unstructured. And the reason it got us excited was why it got that particular thing got us excited was our background myself and my co-founders backgrounds are all in computer science and more specifically in information retrieval and natural language processing.
07:09 So as as sort of data nerds we love mining and wrangling with data and whenever we were playing with data it is typically unstructured data.
07:19 That's where I guess excitement or the fun comes is you know you see a stream of unstructured data coming in. Can
07:26 you make sense of it and that making sense could be in figuring on the sentiment figuring out certain political or business trends in figuring out fraud in figuring out spam and figuring out mine intent, it could be anything but that's that's what what excites anybody who is doing any kind of you know data mining the design so that that's the reason we got excited with that.
07:51 So tell me about how you came up with the idea for Leetch But actually before we get to talk about the idea it just I kind of gave a little overview of it but just you know tell us your words what does the product do. Who are you trying to solve a problem for.
08:08 Yup. So the product is it is a sales intelligence platform that helps B2B software companies identify target accounts and prospects to go after not based on you know demographics or for more graphic data but more based on signals of intent and interest.
08:28 So that's that's really what the product that's what that means is basically if you are selling a B2B software where you have a sales team that is you know prospecting are reaching out to people.
08:38 Our software if you use our software you get a list of target accounts delivered directly into your CRM or your marketing automation every day saying these are the top 20 accounts that you should be prospecting because in the last 24 hours they were showing some signals of intent or interest. So that that's really what the product does. For now we are focusing very much towards the B2B SaaS market in North America and UK and typically we are selling into marketers. We're basically trying to find qualified leads to nurture or pass on to their sales team prospects so that they don't spend time researching and doing you know figuring on who to talk to when it's basically an automated stream that comes in every day in the morning saying hey these are the accounts that you should go after and you possibly get into those accounts.
09:27 So that's that's that's really who you're serving.
09:31 And so how would a what does a customer need to do to just kind of get set up like what. What information do they need to provide you before you can start giving them that sort of information.
09:44 Yeah, that's actually a good question. So the way we figure out a signal of intent in a B2B setting is actually based on how people are certain prospects are talking to their competitors complementary technologies or even you know industry news or industry event. So that's how we figure out you know who's potentially in market.
10:04 So for anyone to use our system our system takes three pieces of input sources they have to enter a list of their competitors or basically players in the ecosystem that he did that they want to monitor and track.
10:18 And if anyone anytime they see someone talking to them that's a signal for them to go after. The second information that they would have to enter is a list of key industry terms content topics or even you know industry events that they want to monitor.
10:31 And see who is showing interest in all those topics in advance and they want to get in front of.
10:35 And the third thing is that they find their buyer persona in the sense they would say you know do you want to go to marketers, do you have want to go to sales people or HR people within certain industries or of certain companies. So they define that and once we have that information we basically crawl the web, pick up these signals filter out the noise that don't match their buyer persona and keep the ones that match their buyer persona and send that information over to them every day.
11:01 Get it. OK. So let's let's talk about kind of this the beginning here and so where did the idea for this business come from.
11:10 Yes so the idea came from you know me and one of my co-founders we are playing around and back at that time you know we believe Twitter had opened up their API.
11:21 Couple other, Foursquare had their API. So we were just pulling in the data from the irAPI for free. And we were just using it for for trend identification I believe that's what we were doing just for fun right.
11:31 And and then one day it struck us as you know there's so much information about people looking to buy things that they were expressing directly or indirectly from these public forums or public social networks that we thought if we could figure this out by what this person is saying publicly this could be a great you know potential target leader opportunity for for a business to sell to these people.
12:01 So that's that's where really the idea came from. Initially our focus was when we first started the business in 2012 around November.
12:10 The idea was very much around helping a car company or a phone manufacturer identify people that were in market for a new car or new phone or a new credit card or a new you know house loan or whatever it was very much towards the consumer facing side of businesses. So that's that's how the idea started.
12:29 OK. So you play it. Are you playing around with the API as you know. Good developers do. And you know so this spark of this idea is born. Did you start to look in the market and and see if there were already companies out there doing this type of solving this type of problem.
12:51 Yes. Yes we are. I would say yes and no we didn't do an exhaustive search. There it was. It was very much like we did talk to a lot of customers and but we didn't do a lot of research. What we found was the way businesses use you know my mine intent to reach out to people is actually through Google.
13:16 That's that's that's where intent is sort of fulfilled if you make Google if you look at it it is an intent fulfillment engine where basically if you need a new product you go to Google and you search for it and Google suggests results mixed with sponsored or paid ads that you click and you get there. So
13:35 from a business perspective businesses always want to bid for he would like a car or a phone. So anytime someone searching for it their data is shown their ad is shown which is fulfilling the intended consumer might have had. But what we found was intent was not generated on our on on on on Google. Intent was generated on you know when people are having conversations and it was generated and people talking about in a blog or a social social network that's where intent was generated. And there was no easy way to fulfill that intent. People would go to Google to fulfill it by typing in their result. There was no one was capturing that intent on these platforms back then. So that's that's that's what we found out actually.
14:21 OK. And so how did you guys get started in terms of building building the product and were you still sort of at the stage of let's just play around and see where this goes or when you sort of came up with that idea. You kind of you know you already had the. You know let's kind of figure out how to make this into a business.
14:43 Yeah. So we we we really didn't have. An idea of build it make it into a business what we did was in Halifax's this thing event that happens every year it's called a demo camp where we're basically logo startups you know once a year go up and get a five minute pitch.
14:58 The only thing is you have to have a real working demo. You cannot just go with a PowerPoint.
15:05 So we hacked something together where we were showing how we could help local businesses in Halifax sell more leads pizza or more cars or something based on conversations or signals we are picking up within Halifax from people looking to buy a car or a new phone or asking for pizza for example.
15:21 So we did the demo there and then just just to show off what we had built without thinking of the future too much of building a business.
15:29 But then what happened after the demo came was there were a few people that actually came up and said Is this functional because you know I have a search engine optimization company and I can use some leads or people looking for a new building in SEO or consultancy or something like that.
15:44 So thats when we caught you know what we built for a fun hack project actually has real implications to businesses. Thats when we started thinking about it then what we did was we were all working at that time at other jobs we were doing it on the evening and week and.
16:01 Our time start off. We went to an accelerator program here in Atlanta Canada where basically they help.
16:08 It's not an it's not like Y Combinator and there's no funding there's no equity actually go through it. It helps you become investor ready. So once we went through it we did a lot of customer discovery, customer development, market research and things like that and we started to form up the idea. We came up with the name and all those things and that's when we thought there might be something there it might be actually a big business.
16:29 And then in 2012 I believe that on August we quit our jobs. We didn't have any funding or anything we just said you know I think we should go for it. I think there is is interest and I think there's a big market because any business that you talk to are going on or one thing that in need us as leads. So if he can solve that in a meaningful and scalable way you have something powerful.
16:53 So that's that's that's how we started the business. Unfortunately right around that time we secured some venture capital financing. And that's how we got started.
17:05 So I assume there were any issues with with building the product right. So that that was one area of strength for you guys have a all technical cofounders.
17:05 Yes that's it. Yup.
17:18 But what about in terms of going out and finding customers like who was doing that.
17:22 Yeah no definitely. So this is something that I found this product is again this is my take on it. Building a product is more than you know building a technology product. It needs to have the technology which needs to work but product is more more than that it needs to be you know a simple way to access and use a technology positioning it, marketing it.
17:47 All of that involves a product. So we were very good at building the technology we didn't never we didn't have any problem in writing those machine learning algorithms to pick up intent signals you hosting it on a web server putting an interface and everything but we I think we struggled with product which we included actually getting customers feedback and then iterating on it. So the way we decided to go to market was right after we'd raise capital. One of the first things that we told our investors were we now need you know a salesperson. And the reason being you know while we have this idea and MVP, a salesforce and can go solid and while we go back. And write code back to our comfort zone. So that's how we decided. We said we didn't really understand too much of the marketing on the sales funnel. The whole sales process. Let's get a sales person senior you know, experienced sales person who just go sell it.
18:50 So that's that's how we decided to go about selling the product we thought to sell.
18:54 You know we're all all hindsight is 20-20 but we thought you know sales persons typically have their roll of decks and they can sell to them and or they can reach out to people or people will come to all of us and just work like one of the big things product people or tech people always think is you know if you build it they will come.
19:16 That's that's so not true.
19:17 And that's that I think we really suffered from that problem. We thought you know we built it and we're going to come.
19:24 So. So did you hire a sales person.
19:27 Yes we did.
19:27 And how did that work out up that that didn't work out very well. And the reason it didn't work out very well was is this our product was not what mature. Hell I mean there wasn't a very well-defined product was a glorified MVP and where we wanted or expected the salesperson to just go sell it which is and sell to and even that we were selling to large enterprises so we are going after the Fortune 500 for 10,000 companies and the big agencies with this half baked product which is just an iteration on an idea and without really testing the market. And you know when you hire a sales person you would have traditional compensation model and all those things. But it just doesn't work because you're you are. Forget product market fit. You don't even have a proper product you have an idea that you're built on. So so that that that did not work out very well and that that created some challenges because and no no discredit to the sales person I think that the best salesperson cannot sell it because the product is not there sellable what we needed to do rather was we should have done a more closed loop iteration where we would no one of us might sell them.
20:43 The CEO probably should have done more customer discovery and I had a very bareboned product with smaller customers not like a Ford but a local dealership and iterated on that. And then from there on expanded on it. But we just went straight after these these giants and that was a challenge.
21:01 Yeah I was going to ask you that. How did you go from helping to assemble pizza in Halifax to a Fortune 500. So.
21:09 So we did some customer discovery what we found and was we we initially right at the demo cam days we thought it would be helpful for local businesses. Right. So we went and spoke to dozens of local businesses.
21:24 Now in Nova Scotia and what we found out was, A) they were not savvy enough they didn't they were not on our social networks they were not doing you know social selling or anything like that.
21:34 And so that was the challenge so they didn't know how to nurture or do any of those things. B) They said they would not be able to pay more than $19 a month. Some would say 19 isn't too much, 9.99 is something that is okay 9 bucks.
21:47 And we quickly realized that's not the market that we could build and scale out we would it would be a completely different value proposition.
21:56 So we said all right if if we cannot sell to a local car dealership or a local you know pizza store for example go to the brands themselves. So rather than going to a local dealership Let's go to Chrysler for example or Ford or Jaguar or whoever and sell them to the direct VPs of marketing Director of Social and Brands and these organizations and that's what we try to do.
22:21 OK. So what did they in terms of the first year of of having the product out there having the salesperson where you're not really kind of getting the results you hoped for. Where were you by the end of the first year in terms of you know customers and sort of evolution of the product.
22:44 So end of the first year we had. About five customers one of them being the largest electronic manufacturer they were using us for for selling their new phone you know engaging with people and they were very happy.
22:59 But obviously five customers in a year is not a lock.
23:03 And and the sales cycle was was brutal because we would go to these larger brands.
23:10 And what we found out was 95% these brands used to you know move us, direct us over to that agency of record who would then who would then we would work with. And that was a very lengthy process. So so so we we we struggled with that and that's when we were like How can we like what can we do to change that in.
23:36 And you know these large like the Ford for example we'd go to Ford and say hey you know we know there are 20,000 people in in North America that are looking to buy a new car today.
23:47 We know who they are on Twitter and Facebook and Instagram and we can give you those users. You can then follow up with them on Twitter for example or Facebook or Instagram and and talk to them and sell the product. And when we were talking to these large brands they're like we don't do these kind of proactive selling on social channels. We do customer support. But we will never proactively sell out this we sell to these people.
24:15 It was would be very much our whole strategy is ad driven. We put an ad in front of them build brand awareness or direct response and then get them to come to our dealership or fill out a request for test drive and stuff like that.
24:28 That's the process we go to. We don't reach out to individually to people and sell a car. It just that just never happens. So that was one of the challenges that that of the big learning we learned in the first year.
24:42 Yeah. I would be interested if you ever kind of you know ended up getting an e-mail from Ford saying hey you know we saw you on Twitter. You want one of my car. Are out. So that that never works.
24:57 And they will never do it. But to be honest with you there were few companies that were actually doing it that were using our data to sell sell it that we do not send you an email. But they would reach out to you on the platform and engage with you.
25:11 And in a very funny and humorous way I would say you know someone was posted you know buying a BMW or Audi and one of their competitors was a client of ours reached out to them and say may we suggest you change up the options a little bit.
25:31 And that was a very funny way of saying it. And that guy actually ended up buying from the partner from the third third company that reached out to them.
25:40 So it was it was it was great. It works. The problem is it's not scalable. They get there's 20,000 people talking or buying a new car. There is no way you can have a team of people that are sitting down and just reaching out to them one by one.
25:54 That's not the model they are. Right. So that was that was the big challenge that and faced.
26:00 OK. So just kind of recap your. So you're all technical co-founders. You don't have any sales experience hiring a salesperson. Didn't really work out like he expected and at the end of the first year you had about five customers.
26:23 So things things weren't looking great at that point.
26:31 And so. So eventually you guys ended up pivoting and make some major changes to the product and the direction you are going in. So how long did you continue down this path before you decided to pivot.
26:50 We couldn't do it for two more years. And we we actually did a mini pivot in there where I guess, I use I use the other word repositioning.
27:00 And basically what what we did was so he figured out you know when working with these large brands they would not do one to one sales on any platform. That's not how them are. It's very much brand driven. And so we said all right how would we do this. How would rather than changing our pitch and building technology that goes and says you know not only do we know there are 20,000 people looking to buy a new car today. We actually know that 11 percent of them are actually parents that are looking to buy an SUV or a minivan and they love watching Orange Is The New Black on Netflix for example. So we we try to profile that line audience using using technology that we built. So that's that's how we sort of reposition. And then the play was, you use data for ad targeting rather than following up with them individually.
27:53 So for example if you have a new smartphone launch and you're targeting the tech audience so you can say you know this is the audience that is interested in a smartphone in their hand. What do you call that like the techy Toms or something like that.
28:08 So you go after that audience put an ad in front of them versus if you if you are launching a new truck rather than putting an ad in front of your truck for everybody when you put this truck ad two people will likely in the market to buy a car and more likely to be interested in truck. So you put an ad in front of them. So that's where we pivoted.
28:26 So we basically went from one to one social sales to basically market intelligence and highly targeted ad campaigns. That's. That's that's why we play with it too. And that. We did it for. We did that for a couple of years and it was it was good business. The number of customers increased revenue increased a lot. We got a strategic investment from from sales force. You know we. So that was good.
28:55 And we did we did that till end of 2015. So 2014-2015 we focused on that. But even with that one of the big things that we learned was two things. A) Even still when we were trying to sell into the brands they would move us to the agency to work with them because that's the model. So we can never directly work with the customer and be the bigger challenge was whenever we worked with agencies or in the space wherever it's it's an ad play it's very campaign driven in the sense you know they would have a big car launch or small launch or something they would leverage our data or run the ad targeted campaigns and then they would go away and come back six months later for another event or a campaign to run.
29:45 So they would not have a record we would not have a reckoning revenue from these guys. They would not sign up for an annual contract because they don't know how the campaigns are run. So they will not pay for it.
29:54 So even though we worked with pretty much all the big names out there household names in North America it was not a recurring sticky model. So that that's what we continued for two years.
30:07 OK till you came to this corner I would be doing
30:10 OK. So. And then what drove this this pivot to where you are today.
30:18 Yeah. So you explain I mean the recurring revenue was that really the biggest driver that you would just like hey you know we need to kind of you know we need to have predictable revenue coming in and we need to provide something that is going to solve a continuous problem that people have rather than you know you might have a big campaign next fall.
30:42 And so I come back and use you guys then. That's about it.
30:46 It's us to be honest with you the combination of that and the second thing that you mentioned is that having the same recurring problem solving it for customers. So I'll tell you this story what triggered this for us the pivot. So Q4 of 2015 we had one of our strongest quarters. We booked a lot of revenue. We had three major companies selling and we had the board meeting and I was super happy in presenting at the end of the at the end of this presentation.
31:12 I said you know this is all great. This is a growth forecast and all those things. But one thing that I wonder is my engineering team or my product team. So I'm very happy going on to be good and I don't know what should I do. And that's when our board chairman Damian Steele from Omers he said something very interesting. He said you know the problem is is not that your team's engine team is not happy and motivated the problem is why are the de-motivated. And it is because you do not have one specific use case for your customers that you are serving they all have different. Requests of data that your engineering team is building. So you're sort of becoming like a services business where you provide data in an ad hoc fashion. If you're an engineer at us as a software company you would like to be working on a product that is serving the solving the same problem or similar problem for thousands of customers were repeated matter not just have ad hoc requests and say hey let's build this let's try that let's do this.
32:20 And that's when sort of the the the penny dropped for us and we're like oh shit this is actually makes and that is a problem and we look at our customer base and we looked at the use cases they were all over the place. There were there were there was very little overlap in the use case and the data and off of our intelligence. So that's when we sort of said All right I think there are there were there were that when there were three options for us to be honest with you we did not want to be a zombie startup we didn't want to just continue the you know growing like that or be a services business. We knew that was something that was clear in our mind. So we said you know there are three options. One is whatever money we have in the bank. Let let's give it back what investors and call it quits. Second option was there were a couple of companies. That were interested in acquiring us. I would say it would be more on acquire hire could be a nice press but it's not. It's not an outcome that we would be happy with. And the third option was basically you know figuring it out there getting something out with that with the money left in bank and give it a go.
33:28 So we how much money did you have left in the bank.
33:31 We had one year's worth of runway. OK. Yeah. That was already 26 you are under. So that's what we had. We had money till December 2016 and we basically said you know we are going to go with the third option. That's what I basically told internally and we agreed you know we have one fight left. So let's go for it. We asked the investors and thankfully all our investors unanimously said don't worry about it go for this let's figure let's see you know. So. So that's what we did. And then we went about doing building the business the right way meaning what we did was.
34:07 Rather than building a product first and hoping people would come to us. What we did was we took the mentality is like we not going to build anything. We're going to do discovery. Figure out if there is a need for it if they will pay for it. Only then will build incrementally. So what we did was we interviewed 80 marketers, brand marketers that we were working with and said hey this is what we're thinking of building cause around the same space.
34:34 Would you use it in what we gather from the data was that whatever solution we came up with or suggested it was nice to have. They were like Yeah this is good. You know it's not it's not really pain point that's what they were screaming out at indirectly. And so we were we were sort of lost at that point. We didn't know because we were only thinking of the consumer facing war. Right. We were always thinking how can I help the brand manager of Pepsi or Head of Social and at Chrysler or stuff like that.
35:02 We were not thinking it from anywhere else because that's a world we were living in.
35:05 But again fortunately in the end of December January we had a BDR person as an intern whose job was to do outbound prospecting for us and he was basically building a list reaching out to people to book meetings for myself and our sales person.
35:24 And and I was just chatting with him one afternoon and I said man what are some of the challenges you are facing. Is there something that you.
35:32 What does your day look like. And then he went to the board and he drew this big pie chart where he said these are his jobs that he does.
35:39 These are the things he has with doing those jobs and these are the gains he can potentially have.
35:44 And that's that was was that's when the light bulb went on for us and really hard.
35:50 So this guy has this problem what if we solved that problem for him first with our technology. So
35:56 rather than finding people who are looking to buy a car if he could find out people that are looking to buy specific software B2B software can be helpful. So that was our hypothesis. And then what we did was we did it in a very data-driven way this time. So we said we'll interview 40 or 50 people I forget the number and if 80 percent of them say that this is a pain point for them only then will go to the next step. So we interviewed 50 people and definitely 80 percent of them said yes getting relevant targeted leads every day for them is the number one pinpoint for them. So. So that was a first check then what we did was right now we have gotten cleared.
36:35 First thing let's go back to some of those people and let's get three of them to sign a contract to pay a certain value for our services. If we did it for them.
36:45 So we went back to them and said you know we I think we have an early prototype we are built. And we'd like you to pay a fee to try it out and pay a very nominal fee. It was just really like just to show that they have skin in the game the dollar value was not important. So
37:00 we got actually three people saying yeah we'll we'll try it out and we'll pay you X amount of dollars.
37:05 We actually did but the scary thing is we actually haven't had built anything at that point. But the thesis was we have a solution that would give them everyday 10 leads up up to 10 leads. I remember up to 10 leads in an spreadsheet e-mailed to them every day and they pay and they signed up.
37:23 So that's that's when we said you know this is this is looking interesting. We didn't know if this was it but it was more promising than what we had before. So we signed up three customers but the problem was we didn't have a product. So we basically did it manually it says six seven people and all of us spent all day all like all the time manually going to blogs forums social networks groups and job posting sites I don't even remember to pick up on signals and manually give them these kinds of leads delivered to them every day via our spreadsheet or for a few months.
37:59 This will be a very counter intuitive thing for any developer to do or even want to do.
38:09 Hundred percent, hundred percent but here's a crazy thing though they all of ou developers are are happy doing this. Dan they were building things on a whim. So one of the challenges that we face before is and I'm pretty sure we are not the only company I'm pretty sure other companies have had the same problem.
38:25 When you were a bunch of good smart engineers and data scientists you know I would go on a sales call in our last product or head of sales would go to a product and say you know this customer or prospect said if we only added this source or if we added this you know compared a profit they would buy it and we would hire all the engineering teams they would spend two months building that adding this new source and all that fancy widget.
38:50 And then after two months when we went back the customer the customer was like yeah that's great. Thanks for building it. But we don't have the budget. Let's talk next year. So that was so crushing for our ingenuity. So they were happier doing something manually even though it sucked for them. But they were happier doing manually knowing that we are learning how customers are going to use it because if we knew how how they would use it we can always automate that manual step and that's exactly what we did. That's that's exactly the process we went through where in March when we first started selling this product from the 16 it was 100 percent manual by by June. It was probably 70 percent manual 30 percent automated. And by November it was hundred percent automated. So they would happen even though it was a tough thing for them to do. But they were happier doing this in an incremental manner knowing they would anything that they built would be directly used by customers not just something I thought would be cool. So now that was the journey.
39:57 What was what was different about this product that you built this time around because from what you're describing it doesn't sound that different from the products that you are building in year one which was really about OK let's mine data.
40:11 You know social media data and help generate leads for people. So how is the product different.
40:17 And also was it was it a different set of customers that you were focusing on that helped you to make this shift.
40:28 Yeah 100% so the big difference with with this product was we we built this new product to be sales intelligence. As with us being the number one customer we were the first customer and till date we had the biggest customer of this product. So we would depend on this every day because this was a painpoint when we had and the last product where we were providing marketing intelligence and audience, buyer audience for large brands. We were so disconnected from it right. Like I didn't really care about the higher consumer trends who are in market to buy a new car or something like that. So that was that was a that was the big single biggest difference this was solving a pain point that we had every single day. Secondly the beauty of it is and that's why we kept the name the name of the company the same Leadsift was we were sifting through data vast amounts of unstructured data to find out signals of intent.
41:25 The big difference being previously it was more for consumer facing products versus this time it was more for software products. And there's two interesting key differences here. First is people talking about a consumer facing product whether they need a new phone or a car or a house or even a PDA. They explicitly talk about it or are there were more direct signals of intent so they would say no I'm going car shopping.
41:54 So so that is a great signal saying this person is definitely the market and from different attributes we could figure out what kind of car and all those things. But in a B2B setting the challenge was quite never say oh I need a new marketing automation software. Ever. No one talks like that. Right. So the way to pick up on these signals were very very very interesting.
42:14 And that's when we looked at competitors. So we had to change the technology teach the teachers will do the same it's still mining for intent but it's how you mine for intent. That's different. And B what we found out was in a B2C setting there is no nurturing goods or stores don't nurture and your needs or a car dealership they don't. That model doesn't happen. They will not send you nurture campaigns or stuff like that.
42:40 But in a B2B specifically B2B softer lead nurturing is very well-known and there are very sophisticated methods of doing it in a marketing automation and all those things.
42:52 So they were already doing nurturing. When you talk or need nurturing it's always B2B. So
42:57 it was we better fit for them than a car dealership or even Jaguar for example or a Ford.
43:04 So so that that's that. That was a big difference of this product. Both the technology and the market that we were going after.
43:12 Okay great. So. So it was like three years of basically thing how to build the business the right way and the product right away. Absolutely. OK. So so this time you know you've got you doing the customer development you're getting good feedback from people you've got some people to you know pay you and put some you know get some skin in the game as you described. And then you guys start building the product and transition from being a 100 percent manual to gradually 100 percent automated. And more importantly as you said you are now using the product yourself because this was a you know obviously a powerful way for you to generate leads. So. So when you when you for yourself you generated these leads What were you doing to go and acquire more customers for lead sift.
44:12 So it was a pretty straightforward process our process what we realized was we didn't have a lot of branding and awareness so there wasn't a lot of inbound and we didn't have a lot of budget to be buying or ad campaigns or anything like that.
44:25 So we had to rely on the outbound process ourselves because we were sort of starting from scratch and the process was pretty straightforward. I
44:34 was the only sales guy and basically everyday at 9:00 a.m. Eastern in my inbox Kiem a list of target accounts that our system collected from the past 24 hours by looking at people that were talking to our competitors are talking about you know account based marketing lead generation upon when booking an outbound and all those things like a few key words and things that we're tracking.
44:58 So basically we got like I got that list. What I did was I clean that list a little bit. Make sure that everything looks good. Uploaded them into a tool called outreach Ohio had a personalized outbound e-mail sequence where we were basically crafted the message we super relevant with the customer. We basically send all these emails and our sales processes we send all these emails. We book meetings from there from the meetings. We do demos and from the demos typically within one or two calls we we close the deals. Obviously we don't close every one but most of them close within three to four weeks of us having the first touch.
45:39 OK. Very important question for you here. Sure. Most technical people most developers myself included would much rather prefer to do in marketing just let's let's figure out how to do content marketing let's build a blog let's do all of these things so we don't have to go and have a sales conversation with anybody. So why were you willing to do that.
46:09 Yeah well one thing though or I fundamentally believe is you know you find greatness when you're in out of your comfort zone when you're uncomfortable.
46:20 So that's one thing I think that's kind of cliched but that's that's true. Right so I had to get out of my comfort zone of doing sales doing demos getting rejected and then going back again and following up on all those. So that's one. The second most important thing is and I I believe in Inbound and Hubspot those guys are great.
46:38 But the reality is if you are an early stage startup without a lot of meme or you know branding behind it you can keep writing quality content till the cows come home. You're not going to get that kind of list when you're in traffic. It just doesn't happen unless you are spending money on on distributing it. You can create all the content you want you're not and you will get inbound. Don't get me wrong but not at the level that you want to get to this customer discone and fast iteration. So you still need to create content for you know customer education and all that but you still need to find a way to get in front of a lot more customers having chats with them. So that's why that's why for us and I think for a lot of. B2B SaaS companies in early stage they definitely rely on outbound prospecting.
47:30 Mind you there are some companies where the price point is like $5 a month. Right. It's a self-serve option. In that case yes you don't need the sales. I mean obviously we'll never have a sales force people will come in fill out a form and go in. In our case or in any cases where you have a sales person doing a demo right you cannot just rely on inbound especially in the early stages when you are as well known as a HubSpot or a market or whoever. We know that when you are sure you have so much traffic so many brand awareness events PR and all that it won't going to happen. But early on I think you'd have to do targeted outbound prospecting.
48:08 Okay. So tell me a little bit about where the business is today in terms of you know the numbers that you can share with us.
48:14 Yes so the business is going really good. It's been. About 17 months that we've been working on this new product. So we started from scratch. We are at about 105 customers some of the fastest growing SaaS businesses are customers of ours are starting from Loker, Vidyard. We also ask Yext some of the big names. Old customer of ours being successful we are growing the business. I say to laugh. Last I saw I was about 13 percent month over month. We are growing the business. We have one sales force and we are growing the sales team to increase. So we have sort of figured out a repeatable scaleable model for our sales.
48:58 So we want to grow that we are growing that we are we are very close to reaching the I guess in use of 1 million annual revenue mark.
49:08 And because our team has been pretty nice you're actually very close to profitability and also a great point. So that's what the business is awesome.
49:18 Thank you.
49:19 Yeah that's that's that's really I love the story the ears especially the fact that you went through a process for three years to get to you know the right business and the right product. It's so often so easy to you know kind of give up when things aren't kind of going the way you want them to go. And I think it's kind of why when I ask people about you know one of the kind of most important attributes of an entrepreneur. People will talk about you know persistence so grit or the ability to kind of push through these times because. As someone once said to me I said that a lot of the times when you're about to give up you're just around the corner from getting to where you need to but you know most of us will give up before we get there.
50:16 I 100 percent agree and I've been fortunate that I have had great co-founders and team members that have that have sort of believed in the religion and are stuck or stuck around and supported investors.
50:29 So I still think there is a long long way to go. But like the way we are building the business I am proud of the way we're doing the business. We are building sort of like a brick by brick and we're setting one customer off and they're learning from it changing the product iterating on it taking it to the customers and it feels like we are building a real business not not a fluke.
50:52 One quick question on that is how much does somebody need to be selling their SAS software for for them for it to make sense for them to use somebody like Leitz.
51:05 So what we have seen is any. So our sweet spot is companies that have their annual contract valued between $5000 to$60000. And that's the sweet spot. If you're if your deal size is that much it makes sense for them to do outbound prospecting. Getting a team of people who are reaching out working meetings and then doing demos and all that. And as as all to optimize that process an optimum and that process they should they should use them. So that's that's the way we look at it. And. So any Basically if anybody is doing any form of our prospecting lose their deal size is not like $10. It's it's it's around you know three to five thousand dollars and really we can definitely help.
51:54 Okay great. All right let's get on to the lightning round I'm going to ask you a series of questions just try to answer them as quickly as you can. I'll try. All right what's the best piece of business advice that you ever received?
52:07 It was it was very early on I received an invoice from one of our investors and adviser and he said you know you will get a lot of advice from a lot of people but end of the day it's your call. So don't let anyone run the business. You make the right call take all the advice you know you take it and soak it in. Let me make a call. Final call yours. No. Don't listen to anyone else. You have to make the right call.
52:32 What book would you recommend to our audience and why?
52:36 I would highly recommend, The Hard Thing About Hard Things like Ben Horowitz. I think it has a lot of real life advice and and examples from how difficult or running a business is. And from the front row seat I think it's one of the best books I've read actually.
52:56 Yeah. What's one attribute or characteristic in your mind of a successful entrepreneur?
53:02 I think there's two. One is persistence. Second is empathy. I think you need both of them. You need to be ruthlessly persistent about you know what you want to achieve and not give up. And they seem to be empathetic towards the your team members and every other stakeholder. So I think those are the two things I would say.
53:23 What's your favorite personal productivity tool or habit?
53:28 So I use I use Slack. That's a good tool and I was using sticky notes really to do what I needed to do. I've switched now to Trello to keep track of things that I have to get done in a day.
53:44 Great. What's new all crazy business idea you'd love to pursue if you had the extra time.
53:50 You know I always come up with ideas but because I am doing leads it's all my ideas are needed to mine to my field. And what we're doing. So there are a few interesting things. One one of them particularly that we're looking very closely is. So right now we help companies identify target accounts to go after.
54:12 But let's say I'm selling to Pepsi for example and I'm selling it to marketing within Pepsi What is it is a way to score the people within the marketing department of Pepsi and saying you know these are the this is the person that you should reach at first within Pepsi. Compare to the other places based on some some some attributes of people who lead scoring.
54:33 It's going is very much at the level of an account. What if he could do lead scoring at the level of a person. And that's what we're looking at actually.
54:40 That's interesting. All right. What's interesting or fun fact about you that most people don't know?
54:51 I don't know what could be a fun fact, interesting fact is I am originally from India. I don't know if that's interesting. I'm a huge fan. I'd probably the biggest fan of Jon Stewart. That's that's an interesting fact. I'm a Jon Stewart fan.
55:04 And finally what's one of your most important passions outside of your work/
55:08 Lately it has been hiking so I've been to because the weather is nice and so many beautiful trails and hikes. I've been I've been doing that a lot.
55:18 Awesome. Thank you for joining me today. I enjoyed the conversation and I loved hearing your story on how you guys kind of started from one day playing around with Foursquare and Twitter API as to where you are today and the sort of the the roller coaster ride that you've had. Now if people want to find out more about lead sift they can go to the leadsift.com and if they want to get in touch with you what's the best way for them to do that.
55:47 They can send me an email at firstname.lastname@example.org, tha's T-A-D-S@leadsift.com. My Twitter handle is @tdas Twitter and LinkedIn just said search for Tukan Das. I'm happy to chat with you guys. If there is any advice or feedback that I can give to you as their own sales process, outbound, prospecting, in an early stage or even in the middle stage I'm all here to help.
56:19 Awesome.That's great. Thanks has been a pleasure.
56:21 Thank you. Thank you Omer. Bye bye!
56:25 All right. I hope you enjoyed the interview. You can get to the show notes as usual by going to theSaaSpodcast.com if you need help building launching and growing your SaaS business. Go check out sace club at SaaSClub.co, registration for new members isn't open right now but you can join the waitlist and I'll let you know when registration does open up again. And if you want to show your support for the show then consider leaving a review on iTunes. I love to read those reviews and it really makes a difference in terms of helping the show get discovered by more people and inspiring me to keep creating this free content for you. So if you're not already in iTunes just go to theSaaSpodcast.com and click the iTunes button and that will get you to the right place where you can leave a rating and review. So thanks for that. Thanks for listening. Until next time take care.
- “The Hard Thing About Hard Things” by Ben Horowitz