So You Wanna Build a Software Startup?

See the world of entrepreneurship, sales, and marketing through the lens of a serial entrepreneur with near $1B in exits.

September 4th, 2018   |    By: Ritika Puri

Software startups, especially in their early stages, can be rough. As a founder, it’s easy to get lost in a world of opportunity. You could build anything — but you need to build just one thing. When you finally figure out what that one thing is, you know that you’re a million iterations away from that magical product/market fit moment.

“It’s interesting because I think there’s an obligation as an entrepreneur to always have to say that we’re killing it—but the reality is always, always, always very different. In the same day you’re taking over the world, then going bankrupt, then taking over the world, and then going bankrupt again. You’re going back and forth between and that low three or four times a day. It’s quite bizarre. Every positive thing can trigger the positive high. Every negative thing can trigger the negative high.”

You get caught up in a cycle of excitement, only to look up, see something negative, and convince yourself that you’re actually circling a drain. Today, everything works. Tomorrow, nothing works. Sometimes, you can’t even tell if you’re stuck or not.

“I think getting caught up in your own emotion is where the danger lies, and if you can observe the emotion happening—to keep some distance from it and go about your day realizing that it’s going to come again tomorrow—you’re in a better spot. If you think you’re going bankrupt, wait thirty minutes to see if you still feel that way. You’ll probably feel differently.”

After going through this process at Eloqua, he’s doing it again at the now four-year-old Nudge.ai in Toronto. Like his first software company,  he’s tapping into a new market with uncertainties that he can’t predict. In the following interview, he shares how he’s navigating it.

Steve Woods

What was the original vision for Eloqua? What did you set out to build, and what were some of the most important points of evolution along that journey?

Steve Woods: Our vision was not a product-oriented vision. We saw a transition in a function that is relevant to business. We made the observation that buying and selling were going to change.  So we started out in sales, building a live chat product.

It turns out, in 2000, people didn’t chat with anonymous web visitors on their website, so we added email marketing so you could see “Jane Smith, CEO” instead of “Visitor 123.”  Still no chatting. We built reporting to show early customers who they should have been chatting with the day before. Still no chatting, but they did send those names over to sales to call.  We built workflow to help handle that kind of a process, and voila, we were onto something. It wasn’t really a “pivot”, even though our first five iterations of the products were wrong. Eventually, what we built acquired the name “marketing automation.” All of a sudden, our company was in charge of defining a category.

Did you ever run into moments when people didn’t believe in you but later changed their minds?

SW: We had one very famous, long sales cycle. Back in 2000, we reached out to a sales rep at Salesforce whose name is Jill Rowley. She’s since then become very reputable and visible in the sales world. At the time she saw Eloqua and sent a note to Marc Benioff, CEO at Salesforce who said “this is great, let’s get that in here”.

A deal didn’t happen at the moment in time, but Jill ended up leaving Salesforce and joining Eloqua and took on the mission of making that statement true. She didn’t give up. She became one of our top salespeople for a decade and was dead-set on getting us into Salesforce. It took her 3,500 days, but she ultimately did it. Salesforce eventually became a very large, enterprise customer.

In any new space it is extremely hard to get people to change the way that they see the world.  We did that with marketing, and it moved from a very “creative” oriented field to a highly-measured, data-oriented discipline.  But, that process can take time – a decade in some cases.

What are some of the parallels do you see between the early days at Nudge AI and your early days at Eloqua?

SW: It goes back to the fundamentals of human relationships. Everyone has agreed for the last thousand years: human beings enjoy doing business with fellow humans. If you want to get an account, you need to get someone who will be your coach—who will push hard enough to get the deal closed.

But how do you know if someone is truly on your side?

That’s the gap that marketing automation leaves behind, that AI technology like Nudge closes. As with the early days with Eloqua, we started with the foundational challenge of sales: the thing that you need to do most—give people personal, 1:1 attention—is unmanageable. We saw an opportunity redefine this.

What if you could measure every single relationship and the strength of those relationships?

With this insight, sales teams could completely change the way they go to market and sell.

So what will be the role of AI in sales?

SW:  The role that you’ll want AI to play is to take the grunt work off your plate. AI is not a super intelligent organism yet. Right now, it’s really good at repetitive, pattern-oriented grunt work. And when you apply that to relationships, what that becomes is an ability to build and maintain relationships at scale—to see opportunities in those relationships that you would have otherwise missed.

Put that idea on pause for a second, and look at the role of the founder. The role of a founder is to deliver unfair levels of value to their organization. They need to come up with the right ideas, strategy, and access points into an organization. They need to raise venture capital and form strategic partnerships.

All of these things depend on relationships. If you’re heads down writing code or leaving voicemail, you’re not acting like a founder. You could be replaced by an engineer, business development representative, or robot.

The effort that a founder should put in should be predominantly focused on building relationships with people who have the opportunity to help in terms of skill, people, deal access, partnership access, and ideas. Junior employees and AI can automate the rest.

My view on AI, from the original question, is actually not to think about it. Don’t buy Nudge because there’s wonderful AI under the hood. That is an irrelevant reason to buy AI. It’s like buying a software platform in 2000, because it used for loops under the hood. Who cares? It doesn’t matter.

The question is does it get the job done? Buy Nudge because when that magical AI under the hood is tuned properly, we give you the ability to understand your network and help you build that network.

What do you think are going to be some pitfalls, of founders using AI?

SW: You need to go where the puck is going, not where it was. With AI, what that means is that you shouldn’t build infrastructure for your sales team based on what you’ve seen in the past. Build infrastructure for your sales team based on where you believe sales are going.

When you look at what’s capable now and what’s likely to be capable, a lot of the high-volume, automated methods that you see are going to continue to plummet in their effectiveness because there’s no cost to them so they are heavily abused.

The more they become automated, you get the whole sequence of, “Hey, did you get my email? Just following up. Just wanted to kick those to the top of your inbox.” That can all be automated by an rules-based system, and in many cases it is. Hence, it becomes less valuable and less effective.

If you have a large team of junior sales people doing that, you’re strategically in a bad spot. That can be replaced with automation, and even if you don’t replace it with automation, its effectiveness continues to plummet because it becomes something that just becomes noise and clutter. These sales reps need to learn to hold the hustle.

If you want to think about where the puck is going, find the things that are uniquely human. This is where we come back to the concept of relationships: trust, empathy, creativity, and familiarity. You need to find a way to scale what is, essentially, a non-differentiated repetitive exercise. You need to find ways of enabling your team to do this without the grunt work of research and looking for insights on buyers.  AI can be used to do the research, find the insights, and select the best ones. Humans should take it from there and use those insights to form relationships.

Any final thoughts that you’d like to share with fellow founders?

SW: The thing for any founder to remember is that every single other founder out there is presenting a highly sanitized, highly optimistic view of how well everything is going.

When you look internal to your business and all you see is panicking and struggle and things that need to be done and things that are not quite as good as you’re externally indicating that they are… just know that you’re not alone. Know that everyone else is going through similar challenges. Some will succeed. Some will fail. Find a few other founders that you can have those honest conversations with.

And don’t get too caught up in what everyone else presents to the outside world, because it’s not a reflection of the internal reality of any early stage business that this earth has ever seen.

About the Author

Ritika Puri

Ritika Puri is the Co-Founder of Storyhackers. She is a sociologist who writes about interesting people, processes, and ventures. Additionally, she is building a mixed martial arts curriculum.

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