Our first step in this 2011 offshore is the capital: Hanoi. With a population close to 7 million people, it is the second largest city in the country.
Archives For October 2011
When giving the same pitch over and over, you quickly settle into a specific way of delivering a line, and then say it so often it becomes second nature. Most conversations I have with investors or the press really just involve stringing together a series of well-rehearsed snippets that address pretty much any question I could ever be asked. One of those snippets starts with:
“Now, I don’t read many ‘pop business books’ (air quotes), but there’s one I really swear by called the Innovator’s Dilemma.”
However, never one to pass up an opportunity to disagree with Mr. Jobs, I should mention that I took away a different lesson. Granted, I haven’t read his biography so I’m going off of other reports. But I’ve heard his opinion summarized as:
“Over-focus on profit is the problem, and the solution is to focus on the product.”
Granted, that’s watered down to a nice-sounding but highly ambiguous statement, so I don’t really know what he meant by that in practice (or if he’d have even agreed with that summary). But despite what he may or may not of have thought, I’d say the pursuit of profit isn’t itself the problem. Profit isn’t some happy accident that can only be pursued out of the corner of your eye. Rather, it’s how you pursue that profit that causes the dilemma.
Specifically, if your profit depends on continuously abandoning your core to move up market, you’ll eventually hit the top and be incapable of going back down. This is the inevitable fate of any (successful) organization with a direct salesforce that:
- Is compensated through commissions, and
- Sells to leads gathered from outside the core userbase.
Indeed, if your salespeople are encouraged to always go out and get the “next biggest deal” — and are given free reign to get it from anywhere — how else could they possibly accomplish that goal without abandoning the core market? If there aren’t an equal number of people pushing the product down into smaller markets, naturally you’re going to find yourself drawn into inexorably bigger markets. An organization like this can’t help but use their current market position as a stepping stone to move somewhere else, which as the book explains, is a fantastic rocket ride up to the top followed by disruption from below — typically by another rocket using the same strategy, and then another after that. It seems the cycle of life.
Mr. Jobs broke the cycle by (apparently) decoupling product focus from sales. And luckily he’s a genius with the intuitive vision to predict where the money was, so it paid off.
But I think that’s a risky gamble that could have gone the other way. Apple bet it all on black (or brushed aluminum, in this case), and it paid off handsomely. But don’t forget that it didn’t pay off so well a couple decades back when he tried the exact same strategy: Apple was only able to have this stunning rebound because of its previous tragic decline.
So I feel there’s got to be some other way to break the cycle — some way that doesn’t require going “all in” on the gut instincts of a genius at the helm. Some way to build an organization based on repeatable, customer-focused development that can be accomplished by mere mortals instead of an endless game of “double or nothing” played by the gods.
If product isn’t the answer, and sales isn’t the problem, then where else to look? And that’s where I lay the blame at something surprisingly benign: the lead source.
Nobody talks much about lead sources. “Leads” — the people at which you point your salesforce — are just assumed to come from the same places other companies get them. SEM and SEO to landing pages, going to conferences and gathering business cards, channel partners, affiliate programs, buying contact lists from the many, many people who sell them, etc. And you might argue that all these leads come from such a diverse array of sources that you’re naturally inoculated against myopia. But all those sources have one thing in common: none of those people actually use your product.
So if your salespeople are always talking with people who don’t use your product, and are always incentivized to start with the biggest first, then they can’t help but pull you away from the needs of all the smaller people who already do use your product.
(This is aggravated further by outside sales typically talking with the “decision maker” — a person whose likelihood of actually using the product they’re buying decreases as the company size increases.)
All of this inexorably shifts your customerbase’s center of gravity up market, day after day, such that even if you’re in the most customer-focused organization, you can’t help but realize “our customers are getting bigger, that’s where our resources should go”. This inevitably de-prioritizes the initial customers who got you where you are, in favor of the bigger customers that you’re always trying to get. It’s a vicious cycle; it’s a dilemma.
But what if you could somehow keep your center of gravity stable? What if instead of building new features, you just kept your organization focused on improving the features you already have, for the same people who already use them? It means you have a lot fewer features. And require fewer engineers. And have less to support, all of which is higher quality. Wouldn’t it be great if you could do this, and still achieve your growth and profit goals?
There are some obvious ways to try. One way is to just not take on larger customers — maintain a laser focus in a particular customer segment, always resisting the urge to move upmarket. That’s one way. But I wouldn’t recommend it — in any market, upmarket is where the money’s at. The margins are thicker, the opportunities bigger, the names sexier, etc. Any company that has no interest in going up market is one that intends to be overrun (or at best, acquired) by someone who does.
Another obvious way to do it is to have two teams: one focused on moving up, and another on moving down, such that you always balance out your growth. And that might work, if they’re very carefully balanced. But that seems impractical to manage, so again, I wouldn’t recommend it.
A third option, and the one I would recommend, is to focus your sales effort on people who already use the product. This way you avoid shifting the center of balance and create an organization focused on increasing engagement amongst existing users. This approach addresses the core deficiency of the lead source itself: the fact that new leads don’t use the product.
Now you could argue “Of course they don’t use the product; if they did then sales wouldn’t need to talk with them.” If the only way to use your product is to buy it, then that’s quite right! But as we know, that needn’t be the case. The internet is full of services that offer huge value at absolutely no cost. Services that have millions of “users” who aren’t yet “customers”. People who already use the product, even if they haven’t yet bought it.
What I’m describing of course is the classic “freemium” model: give away basic functionality for free such that some users will decide to upgrade. This isn’t terribly new.
But what is new is applying the freemium model in a space where the “deal size” is big enough to enable a sales team to make postive-ROI sales (where the cost of the sale is exceeded by its revenue). This isn’t Farmville — no salesperson is going to earn a commission by convincing you to buy a purple cow. And this isn’t a consumer product that encourages you to upgrade to a $10/mo plan. This is an enterprise product, with customers having hundreds or thousands or more employees. And using the existing users within an organization to serve as leads into converting the organization overall.
Ultimately, the primary purpose of sales is to drive up market. And it’s a slow, steady march taking on new customer segments as you firm up support in existing segments. But this process is only destabilizing if doing so distracts from the core userbase. If the sales leads are instead drawn from the core userbase, however, then the only way to increase leads (and thus increase sales) is to also grow the core userbase from which the leads are drawn. So long as your leads some from your active userbase, then you simply can’t lose touch with it. This makes the entire organization — from the most senior salesperson selling the largest deal, to the most junior support person talking with individual freemium users — play for the same team, aligned toward the same goals.
In a sense, the whole company is spinning up the same flywheel. It doesn’t matter who pushes, where, or how hard: the bottom-up adoption curve allows everyone to contribute to top-line sales success, no matter where they are in the organization.
This is how you solve the innovators dilemma, without sacrificing the move up market, and without losing touch with the core.
At the very least, this is the strategy that Expensify is using, and it seems to be working pretty well for us.
Note: If you’re interested, consider joining our “Salesforce of the Future!“
If you know anything about Expensify, you’ve probably heard our CEO David Barrett speak about the “bottom up adoption curve“. As a freemium service, Expensify has seen exceptional bottom up adoption among small businesses – especially those where employees actively seek out alternatives to expense reporting “solutions” that REALLY suck. And in a big way, employees continue to “sell” Expensify with great success across all manner of small business.
Throughout our journey, we’ve kept one ear open to the employees selling our product, and the other to the accounting and finance departments that have had to implement us. Through this approach, our product is poised to command an extensive presence among medium-sized businesses. And so, with the stage set and the curtains drawn, Expensify is in the first act and first scene of building out a salesforce of the future!
What do we mean by salesforce of the future? That’s a pretty nebulous statement, no? Yes, great point! You’re impressing us already!
In answer, the interesting thing about sales at Expensify is that your job will be just as much about selling our product as it will be supporting the diverse group of individuals, employees, managers and accountants that use our product. Thus, we’re looking for people who can speak in the parlance of accounting and finance departments, and who also have a knack for navigating the ins and outs of a deceptively intricate product – and masterfully so.
Can you troubleshoot on the fly? Great! Are you flexible in solving any given problem? Even better!
Our salesforce of the future will also be very comfortable leveraging various sales tools, including our internal lead generation database and unique online demos, to manage and seek out high value leads.
Important Notice: this isn’t a cold calling job. You will speak with people who have a genuine – sometimes fanatical – interest in our product. Yes we’re talking about expense reports, but people love us. Just check out what people tweet about us!
Finally, and most importantly from your perspective, we will aggressively promote the best among our team. Impress us and you’ll reap clear benefits, both financially and for your career.
1. Did you ever have a summer sales job when you were in high school? What did you sell, and what was your personal take on the product? How did you sell it?
2. If you were given free reign to choose the optimal set of sales tools, what would they be and how would they optimize your sales approach? (Feel free to list actual sales tools you’ve used, or fictitious ones. You’ve got free reign).
3. Pretend you had a month to do whatever you wanted. What would you do? And would this be sufficient time to accomplish the goals you set out to achieve?
4. What do you want to do with your life, and how is Expensify a step toward those long-term goals?
Thanks and we look forward to hearing from you!
The distance between San Francisco and Hanoi is 7,300.67 miles (or for the people who use real units: 11,748.97 km).
So it is a long flight, with a least one stop. Be sure to bring something to not be bored to death during the flight, the airport waiting time, and other delays.
Zhenya was the first to arrive (October 2), Kevin followed (October 4), then Matt and Jason (October 5), Witold and me (October 6), Nate and Giorgio (October 8), David and Kirk (October 19), and finally Tom (October 24).
I flew with Korean Airline. I departed SFO ( San Francisco Airport ), to ICN ( Seoul Incheon Airport ). It is a 12 hours flight, mostly during the night, and above the water, so I didn’t get many awesome views from the sky. Well except for take off …
When I arrived at ICN, I was of course totally jet lagged, tired, and grumpy. But ICN is an awesome airport: gigantic, quiet, clean, modern. And it was also my first contact with Asia! After leaving the plane, I had to go through a random and stupid security test which took forever.
After that, I walked randomly in the airport trying to find Witold. We flew on different airlines, with only a 20 min gap between our flights.
Parts of the airport were full of people and others very quiet and peaceful. Like every airport, it’s full of stores selling beauty stuff, electronics and fast food.
I finally found Witold in front of his next flight gate. A few minutes later it was time to grab my flight from Seoul to Hanoi.
Once arrived in Hanoi, we had to pass the border. You can buy your visa their if you don’t have one. It is cheaper this way. I bought mine in San Francisco, but Witold bought his at the border.
The next step was to get a taxi to go to the Old Quarter, find a hotel, and finally get some sleep!
Pictures From Thomas Genin
Expensify tries to be a cutting-edge company. We use awesome new technology and try to detect the new tendencies of the world of the expense report. But Expensify also tries to do some innovation on the side of the “team spirit building”.
One of these initiative is the annual offshore. Every year, Expensify spends one month abroad. This tradition was born in the previous start-up of the “oldest” team member and has been naturally repeated for the Expensify adventure.
What do you mean by offshore?
It is pretty straight forward: the team goes to work in another country. By the team I mean the whole team: CEO, CFO, engineers and non-technical employees.
We spent a few hours to discuss the choice of the destination. The requirements were pretty simple: a “cheap” country with decent access to the Internet, if possible a country that nobody has visited yet, awesome weather and an easy-to-get visa. The two finalists were Argentina and Vietnam. After a terrible debate, Vietnam was the winner.
So we booked airplane tickets to Hanoi, with a return date 30 days later. And over the course of a week, we were all in Vietnam!
This post is just the first one a series of post which will explain our trip and its great moments.