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SaaS - Enterprise & SMB B2B

Will a startup only focused cloud accounting software work that also provides metrics for the startup? What financial metrics would startups use?

5

Answers

Tom Williams

Clarity's top expert on all things startup

Recently launched Subleger http://subledger.com/ is trying to do some or all of what you describe. It doesn't mean that there isn't room for others but consider that many early-stage companies don't have complex revenue in-flow so the core of what you're describing (converting or merging income into other operational metrics) might not have a wide appeal especially for startups. Hopefully you get some good answers here but really whatever anyone (myself included) says here is far less valuable than asking startup CEOs what their financial painpoints are with respect to reconciling their app's internal metrics with revenue and expenses. Finally, the question "is the market big enough" is too open-ended to answer for you. Big enough for what? To attract significant outside funding? Maybe not big enough. But to build a great income for you and a few others? Perhaps! Happy to discuss this with you further to help you in your evaluation of the opportunity but as I say, best thing to do is canvass the potential market first.

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Ali Maadelat

President at The Lorenz Marketing Group

It depends on exactly what your situation is. Anyone who offers you a one-size-fits-all "solution" is just blowing smoke and will make you lose a lot of money. Even two companies in the same industry will have a different "best way" to improve their marketing. Remember, marketing is an INVESTMENT when done properly, but an expense of done incorrectly or without the proper skills. Feel free to do some research on me and, if you're interested, I'm more than happy to discuss this with you personally.

Tom Masiero

Clarity Expert

Make sure your long term strategy is tied into your short terms tactics. Tactic - method or technique to achieve a immediate short term gain, run ads, sales calls etc. Strategy- A carefully defined detailed plan to achieve a long term goal. The overall position you would like to achieve. So not knowing your long term strategy.. I would venture to focus on having your core customers drive that growth. Referral programs for existing members to recruit new members get discounts / months off etc. (Think Dropbox) Run a contest based around your current members that would naturally invite them to share that experience. This article by Ben Chestnut founder of Mailchimp really embraces the strategy of laser focusing in on current customers. http://tinyletter.com/ben/letters

Laurel Mintz

Founder at Elevate My Brand

Creating a beautiful visual deck that shows the branding of the company, prior successes and of course core numbers on who your target audience is, how broad the reach is and how that creates benefit for the sponsor is key!

Venkatesh Rao

Principal at Ribbonfarm Consulting

None. There are two basic reasons to get business insurance. First, if you're making enough money that you're worth suing. That does not apply in this case. Second, if your clients require you to have insurance before accepting you as a vendor for certain services. Most large companies will require service vendors to fulfill certain liability requirements. But for a SaaS offering, especially if the pricing model is a low subscription, you won't trigger the conditions that have their purchasing department demanding you get insurance. It applies more to vendors who are either offering personalized services (like consultants) or service providers who bill very large dollar amounts. So get insurance when you first start making pots of money OR when a first large enterprise client makes it a condition of working with you. Don't waste money before that.

Clay Hebert

I help people and brands tell their best story.

Instead of repeating the wisdom of others, I'll link to it below. Here is a great blog post on hiring your first salesperson: http://tomtunguz.com/when-to-hire-a-salesperson Also, Mark Suster has written a ton of great post on his blog about startup sales. http://www.bothsidesofthetable.com/on-selling/

Jason Cohen

Founder at WP Engine

Scaling using freelancers is better (at first) than scaling with employees. Either way, you need to avoid the trap of being a mid-sized consulting company. Here's an article of mine detailing the math behind this trap, and some challenges you'll face, and also a list of ways to combat this trap: http://blog.asmartbear.com/consulting-company-accounting.html

Tom Williams

Clarity's top expert on all things startup

I'd say the best source of ideas on more effective referral programs are to ask your referral sources. Even surveying them with a very simple survey could not only provide some added insights but also reinforce your gratitude for their continued loyalty. What you might be under-estimating is how good the IT Service firms referring you look when they're able to get their clients a great web development outfit on time and on budget, or at least, I presume this to be the case ;) There are so many bad web shops out there, that just having a reliable referral source might be value enough. Also, if referrals are being made by only a handful of employees inside these IT service firms, you might consider just spending the fee on a great regular dinner or lunch. High-touch relationship building is often more effective as a lubricant to further business amongst service providers than elaborate referral / incentive programs. Happy to talk to you further about how to evaluate your options.

Razvan Girmacea

CEO & SEO Monitor Backlinks, CEO Competitors App

What worked great for me is to watch what competitors are building and to reach out where I could to get a review myself. So focus on building a great product and ask people to review it.

Jared Iverson

Startup Law. Capital raiser. Sales. Founder.

I'll keep try to keep this answer brief, but there are several factors and nuances that can be discussed in more depth. Where you decide to incorporate partly depends on what your future goals are with your company. Companies that plan to seek venture capital or go public typically choose Delaware as the state of incorporation, and usually choose a C-Corp. Delaware has a very well developed body of law surrounding corporate governance and that provides comfort and more certainty to future VC investors. If you're not planning to seek VC money any time soon, an LLC is a smart decision because of the tax benefits it can provide to you as the owner. It sounds like you want to grow your company on your own without outside financing. If that's the case, I would recommend forming your LLC in California. Regarding California vs. Delaware, one benefit to forming your LLC in California is that you can avoid paying a registered agent fee which can cost anywhere from $100-200 a year. If you plan to seek venture capital down the road, you can reincorporate in Delaware.

Chris Clark

V.P. Internet Marketing at Bonfyre App

You need to consider good, old fashion SEO. Do some basic keyword research to understand how people might be searching for your app - or what it offers - and adjust or develop web content targeted for that search. If you're able to get rankings for these searches, you'll begin to see the increases and I would even recommend setting up a direct link to the store with analytics tracking to see how many leads that you're sending. Also, it's not free, but advertising is something you should also consider. Apple launched a simple platform - http://advertising.apple.com/tools/iad-workbench/ - a few months back and there are several other app networks that you can use. Best, Clark

Andrew McGrath

Founder at Checkout 51

Can you describe the data in the table? I can think of a few solutions, most if which are based on the data you are storing. For example, chances are when you have large tables you are probably not doing any summarization of your data. If possible pre-compute the result and spit out the answer from a shorter table or cache (a cache which is generate at the time of the summary being generated, only useful if you often request this data shortly after it being created - doesn't sound like you needed to do this though) Another alternative would to be consider archiving of data. Is all the data required all the time? If not then consider a means of removing data you don't need (after x period of time) or switching to a new shard / table periodically. The other, more obvious, I would mention are to reconsider your existing indexes or partitioning your tables, if you have not done this already. You can start manually sharding tables across servers based on a hash of some kind but your Db is still relatively small (assuming you can summarize some of your data) and should not need this yet.

Tom Williams

Clarity's top expert on all things startup

Simple question: Simple answer. Yes.

Tom Williams

Clarity's top expert on all things startup

It depends on a number of factors but I'd boil it down to two key things to start: 1) What is your real cost to provide a free plan or trial? 2) Who exactly is your customer and what are they used to paying and who and how do they pay today? When you say "online workforce marketplace" it sounds as though you're placing virtual workers. If that's the case, or if you're paying for the supply side of the marketplace, the question is how much can you subsidize demand? Depending on where you're at in the process, I'd also question how much you can learn about the viability of your marketplace by offering a free version, assuming again, that free is actually a real cost to you. I was part of a SaaS project that started charging people for early access based mostly on just a good landing page (we clearly stated they were pre-paying) and were amazed at the response. I've also run a SaaS product that offered free trials and realized that the support costs and hand-holding and selling required to convert from free trial to paid wasn't worth it, this despite the product's significant average ARR. You might be better off providing a "more information" sign-up form (to capture more leads) and let them ask for a free trial while only showing your paid options. I've been amazed at the lead capture potential from a simple "have questions? Click here and we'll contact you" This is all the generalized advice I can offer based on the limited information I have, but happy to dive-in further if you'd like on a call.

Razvan Girmacea

CEO & SEO Monitor Backlinks, CEO Competitors App

Those updates are great because it made white hat SEO guys focus on what we know it always worked in the long term and elimiated the competition that tried to get in front with fast black hat tactiques.

Razvan Girmacea

CEO & SEO Monitor Backlinks, CEO Competitors App

I don't use a lot of tools for my startup, just this ones: -intercom.io - really great to schedule automated messages and it can be synced with your database and have custom fields. Very easy to setup -Google Apps (analytics,gmail, webmaster tools) -Monitor Backlinks (my own startup) to build links to my website Disclaimer: I am the CEO & Founder of Monitor Backlinks

Search Engine Optimization

Why is Social SEO important?

4

Answers

Jeremy Gregg

3-time TEDx speaker. Nonprofit Guru. $40M+ raised.

Several thoughts... First, search engines are changing their valuation of sites that have a significant amount of likes/tweets/plus-ones/etc. From the perspective of the search engine, these validations are actually far more relevant/valuable than "backlinks" (which is an older way of increasing your SEO rankings by getting other Web sites to post links back to you). Second, to ensure that you are capturing as much of this Social SEO as possible, you need to make your Web site "social optimized" so that your visitors can easily share it. This includes embedding share buttons and ensuring that your meta tags include the right descriptions/photos for sharing (i.e. so that the right images and words appear in the description of your page when people share it on Facebook). This way, you can capture as much Social SEO as possible. Third, it is important to encourage visitors (as well as your team) to share your site often. Yes, this will help with the SEO rankings, but more importantly it will expose your brand to the friends/audiences of those who share it. In this way, you can transform customers into salespeople for you. All that said ... if your only purpose in pursuing this is to get higher placement in Google, forget about it. Search ranking is an only an outcome. The deeper purpose should be to focus on building relationships with customers through which they are invited to be a part of your brand (in this case, by sharing your site with their friends/followers). If you focus on that, the rest will follow.

Martin Zhel

Conversion rate optimization expert

Are we speaking only about SEO here or about all the ways to generate traffic to a website? If we're speaking about SEO the best way is to start blogging and by this I mean as much as possible. Every single blog post is a new content, a new page that can be found by the search engines (and your customers as well). You might also think about creating ebooks. You will not only generate traffic with them but also leads which you can nurture to become your customers. Start building your communities on Facebook, Twitter, LinkedIn, Google+, Pinterest and share your blog posts there. Engage in conversations and provide value to others. Use social sharing websites like Reddit, Stumbleupon and Digg. A great tool for linkbuilding and PR/Social media exposure is BuzzStream http://www.buzzstream.com/ You might want to check it out. Let me know if you need any more help with building traffic to your website.

I've used AngelList. To be honest, I've had better luck with local connections outside of the industry. My experience with it (which is biased) is that depending on the industry you want to invest in, AngelList only serves those who already have investors or angels. In my humble opinion, to get in on the ground floor your need to attend conferences, talk to young people, see what new thing their friends think are cool. Again this is dependant on the industry your in, for example-- mining companies often won't be found on angel list. Every one who creates an app though... You'll find em there.

Tom Williams

Clarity's top expert on all things startup

Congratulations on the credentials you've earned to date and I admire your ambition. I started my first company at 13 and was hired by Apple (in part because I had started my company first) by 15. Especially in today's economy, I would suggest that you seriously explore learning to program. There are excellent online programming courses offered by a number of reputable vendors. However, if that seems too daunting, you might look at other IT related services. For example, offering local IT support services (targeting senior citizens) helping fix things that you might already know how to do. Best of luck in your ventures and happy to help if I can.

Jason Cohen

Founder at WP Engine

Growing up from 1+subs to a team like you're saying is a classic problem in consulting. The financial math is not in your favor until you get a consistent team. Here's an article of mine detailing the issues and also detailing solutions: http://blog.asmartbear.com/consulting-company-accounting.html Having said that, I would also say you're trying to do too many things at once with not enough resources, which means the chance of being successful with each one is diminished. For example, you could focus on consulting revenue so you can build up your bench, so that you truly can self-fund the development of a product without distraction. Or you could focus on product, investing time/money there with consulting only to pay for that, even using subs for that, until the revenue there gets to the point that it's scaling (which will be hard, as you can already see). Building a product or a successful consultancy is individually very hard -- most fail. So trying to do both at the same time means you'll almost certainly fail. Which is a shame, because that's "failure due to time-management / strategy" as opposed to actual market forces. i.e. something fixable! I hope some of this helps, although I agree with you that talking through the details would probably be more helpful. The specific details of your situation matter.

Jason Cohen

Founder at WP Engine

Watch all of Paul Kenny's videos from the Business of Software conference. Perfection, and easy to understand. Then remember this last trick: Honesty wins.

Michel Rbeiz

@StateStreet

You will find a lot of different views on equity split. I haven't found a silver bullet. My preference/experience is for: 1. Unequal shares because one person needs to be the ultimate decision maker (even if it's 1% difference). I have found that I have never had to use that card because we are always rational about this (and I think us being rational is driven because we don't want a person to always pull that card cause it's a shitty card to pull) 2. When it comes to how much equity, I like Paul Graham's approach best: if I started the business by myself, I would own 100% of the equity; if xxx joined me, he/she would increase my chances of success by 40% (40% is just an example) at this moment in time. Therefore, I should give him/her 40% of the company (http://paulgraham.com/equity.html) 3. In terms of range, it could go between (15-49%) depending on the level of skill. But anything less than 15%, I would personally not feel like a cofounder 4. Regarding salary and the fact that you will pay him/her, that's tricky but a simple way to think about it: If an outside investor were to invest the equivalent of a salary at this exact moment into the startup, what % of the company would they get? (this may lowball it if you think the valuation is high but then again if you think you could get a high valuation for a company with no MVP, then you should go raise money) One extra thing for you to noodle on: given you are not technical, I would make sure a friend you trust (and who's technical) help you evaluate the skill of your (potential) cofounder. It will help stay calibrated given you really like this person.

Tom Williams

Clarity's top expert on all things startup

This is really way too vague to provide a helpful answer. I'd suggest you resubmit the question and describe (in general terms) what you're trying to sell and to whom.

Tom Williams

Clarity's top expert on all things startup

Red Flags in early discussions: 1) Request to see a "business plan" (indicates lack of sophistication in early stage tech investing) 2) Talks to much about themselves or their firm (good investors should be 95% about understanding you and your business) 3) Talks negatively about anyone: This is a signal that they're unprofessional. 4) Seems distracted in conversation with you: Any evidence that they don't value your time is a negative signal in that they are either power-tripping or are simply not likely to be helpful. 5) Asks you "dumb questions." This is different in each case but you should feel that they are not asking questions which seem ignorant or reveal a lack of understanding of your business and industry.

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