THE STARTUP CHAT

[0:00:00]

Steli Efti: Hey this is Steli Efti. And this is Hiten Shah. Today’s episode of the startup chat we’re gonna talk about self serve versus non self serve in sas. Alright? So here’s for those who might not know the definitions just to make sure we have, yeah, no confusion in the you know there’s sass applications out there where the customer can sign up for a trial and then decide to upgrade put in their payment information and buy the product, all on their own, quote unquote. On their own, right? and we can challenge how the self serve, the self serve model really is, but they do that basically without a salesperson needing to reach out and sell them and get their credit card information push them to buy the product. So thats one model and then the other model is where you have an actual sales process or a sales person reach out communicate trial user, reach out to the salesperson, ask a bunch of questions, so you have some human interaction that leads to the upgrade and the paid account, and so there’s those two models on the world, there was a time I feel like, you might know this better as a sass historian, and an active member in creating sass history, there was a time where sass was looked at like golden era of software products that will bought by people versus sold to people. And where sales teams will. Where all we need to do is like build these tools for the masses and allow them to buy it on their own. And that that model would be kind of a lot more scalable. A lot more economical. Then the old model of selling software that was heavily marketing and sales focused. Today, so then there was a time where B2B feels to me like where a lot of B2B sass companies realize “well, we do want to go up market and we do want to sell it to larger customers” so having sales people and having having investment and marketing skills is probably necessary and will make a big difference so some sales become a bigger topic in Sass, and now I find this discussion to be re-emerging but in a different – with a different flavour and twist now it’s not called self-serve versus non-self-serve. It’s will the future of sales be automated? Or be a chat bot, or be AI, or be, you know these little intercom or drift, the chat windows that pop up at the right moment to communicate with your customers versus having an evil salesperson call, interact or reach out or send an email so kind of automation, AI, bots, these things have been kind of a new flavor on an old topic which is can we remove humans from the act of. Buying and selling software, and when you build your SAAS company should you try to build it in a model that doesn’t include humans that have to do any kind of selling to the buyers, right? Is that, would you, this is my summarized history and the way that I frame the debate and the discussion, but up to here if there’s any blind spots or anything that you would add to that comp

 

[0:03:24]

Hiten Shah: Yea, I see everybody debating this a lot and I’m just gonna spin it around for you and just say like it to me, like people used to just use this self service versus, you know, let’s call it full service to be nice about it. Or free, you know, demo requests. And they used to use it to get leads and it was the best way to get leads because you didn’t need people to, and this is for sales leads. You didn’t need people to sign up for your product and use it. You just needed the lead so you could sell them on it. I still some people doing this model, but there’s a bunch of reasons to do the model and a bunch of reasons not to do the model. You know, for me, I don’t know. I always thought of it, at least in today’s world, much more oriented around like- who’s your target customer and using that angle. So, I would actually ask your thoughts on that because, you know, some customers just want to use it and try it and never want to talk to you while others really want to talk to you and learn more about the product

 

[0:04:30]

Steli Efti: Yeah, so I think traditionally, um… I think traditionally we’ve divided the group…We’ve tended to say that the larger the customer, especially when we talk about enterprise customers, These costumers are used to be talking to somebody to make the buying decision and they will even look for a button that says contact sales which seems like an evil button for another group, lets say you know an engineer looking for a piece of software to buy online there’s a button on a website that says with sales, that doesn’t seem like an appealing call to action. For many engineering people out there but for like a an executive in a large enterprise company that’s actually an appealing (inaudible) that’s actually what they’re looking for in a pricing page often times. So traditionally I think we would just say the larger the customer the more normal it is for them to want to talk to a salesperson, to buy, it’s the way they’ve learned to buy software and buy products, it’s what they’re most comfortable with, they don’t necessarily want to sign up for trial and play around with a product and discover everything about it themselves. They don’t wanna read or you’ll copy on all you’re pages and google your (inaudible) database and search for the things their curious about to actually wanna talk to somebody and have that person service them with all the answers and with the material and with everything they need to make a decision so that was I think the traditional divide. And that’s still true today. The larger customers will tend to want to buy products usually with more human touch more human interaction. Obviously it depends on your, everything depends on you customer. How do they like to buy software? How do they discover products? What are they used to? How are you competitors successively selling a product? All of these things should matter and should play into the the decision on how you want to do things, your price point oftentimes will determine what you can or cannot afford to do. Right? In terms of servicing people, not just on the sales side but also on the marketing side and also on the support side. Can you offer 24 hour phone support? Right? How quick is your turnaround time in terms of real support that you give. If you charge people a dollar a decade, for your software, you’re gonna be fairly limited on what you’re, what you can afford to offer. In terms of human touch and human servicing. But, so your customer base is a big part of it. I think the size of your customer will often times play a big part of it. But I’ll add something to this and I think that that’s that’s a component that a lot of times people will look as they think about the future of people buying things. I do love automation, and I do love, you know, I do love technology as a productivity enabler and as a way to improve life and to remove friction and things like that. I honestly do. But I think humans, as long as humans make the buying decisions, I think once we build software and that software is responsible for making buying decisions for our companies, once were at that point, software will be the ideal you know, delivery method to selling our software right. Once once a computer is mine then a computer can sell and the computers can talk to each other and figure everything out logically, but as long as humans are involved in the decision making process theres gonna be friction. Humans struggle with decisions. Humans are emotional it doesn’t matter how much rational facts they want to aquire before they make a decision there’s always goin as long as you have humans involved in buying things. They will like to. There will be some amount of humans required to be selling things to them, because humans like to be talking to other humans humans like to be buying things from other humans. And I think that, especially the tech community like us we underestimate how valuable and powerful the human touch and the human interaction can be to people. And, and over estimate how the efficiency of automating things and having ai and bots how that is going to how quickly that is going to replace the need for human touch and servicing software or selling software to other people. So that’s another thing that I would throw in there is the more, the more difficult the buying decision is around your software product the more necessary it is probably going to be for you to have humans that answer questions and help remove some of that friction and help in the decision making process with the other teams.

 

[0:09:28]

Hiten Shah: Yea, so because you went into it, I’m going to ask you where is the value of this technology, these bots and these software and what’s the, how is it going to help with the human connection

 

[0:09:45]

Steli Efti: Yeah, that’s a good question and honestly I don’t know. I’m sure that the biggest wins in the future will be ones that I’m not considering today. I think judging from the past if you look at if you look at the phone as a big, a massive productivity boost in terms of sales in marketing and allowing a human to interact with other humans none restricted by their location and then emails of massive productivity boost as a tool that allowed them to communicate (inaudible) and to communicate one too many I think that technology will allow us to in, hopefully, in the future allow the individual human to increase their productivity with tasks. That today are fairly mechanical. I’ll give you one example. That’s still a big productivity killer and something that I know that there’s are a lot of solutions out there but none of them are really that great yet. Ah, which is scheduling. Like scheduling the time for humans to come together and interact is still a massive, a lot of sales people the amount of time they’ll spend going back and forth with crossback to find the time to talk and then the prospects forgetting their time or being late or being a no show and then having to or having something else come up so they have to reschedule there a lot of scheduling time you monitor productivity that gets killed that way that hopefully something that will go away because there is no value in the two of us trying to figure out when the best time in our account is to talk. That is not where the value is created in the human interaction so my hope is that, that type of stuff will go away. A lot of this stupid type of like sending tens of thousands of emails and annoying a ton of people to get a few of them to respond. Hopefully, some of that high volume, low quality activity will go away and we’ll have less activity and higher quality. Because there’s gonna be some kind of intelligence that filters what kind of activity should be done and how hopefully some of that stuff will go away. And we’ll find better ways to know with a little bit of a higher precision, with who to talk to, when to talk to them. That would be my hope, but who the fuck knows? Right. I don’t know.

 

[0:12:12]

Hiten Shah: Yeah.

 

[0:12:16]

Steli Efti: So let me ask you a question. I remember, a few weeks ago you made a side comment almost at the end of a conversation that we had that I wanted to or that popped up in my mind just as we’re talking now, which was that, you said if I’m right, if I remember it correctly, that today you observe that in many SAS companies sales is actually indeed to be SAS companies sales is actually a pretty dominant component to them succeeding or not. Or having a chance for success or skill or not, How do you, how do you, you know, and you have a bunch of companies that you’ve built companies that are completely self-serve and some of them that had sales teams that were more full service if you want to call it that way. How do you see a lot in terms of SASS company new SASS companies being built and new SASS companies scaling. How do you look at the market right now and how do you think about specifically sales teams and high human touch in sas today is necessary component for success is it crucial or is it you know a downward trend, how do you feel about that?

 

[0:13:25]

Speaker 3: Umm

 

[0:13:31]

Hiten Shah: I think it’s really easy to get caught in sales and sales people making you revenue so then you just start hiring a bunch of salespeople. And then, and then, at some point that catches up to you because the processes you used are not efficient or your business or your market changes and all of a sudden you have these hundred salespeople that are unable to close deals anymore. For some reason. Whether it’s there’s other products in the market, your product hasn’t kept up, you hit some kind of bottleneck in your sales process because you hire too fast. So the most common thing is that companies raise a bunch of venture capital throw that money at sales people because sales people are what’s making revenue, and then they inevitably have to contract and lose a lot of the sales people, because it just doesn’t work out, there’s so many reasons why it doesn’t work out, its not just one specific one but high level they got caught up in the fact that they found a formula when they had three or four or maybe 10 sales people and they thought they could scale it to a hundred and it didn’t work. Yeah most common thing. It really sucks y’know because it sucks having to hire all these people and then fire them. But I feel like a lot of folks are just not conscious of what they are actually doing when they create those systems and those processes and then what happens is, they fail, right? And they have to contract the company. Thankfully a lot of em have raised so much money it’s okay, right? Cause this is a problem you have when you raise money because basically hiring sales people, and scaling sales, is an endeavor of investing in your business ahead of your revenue. That usually only happens if you have the capital with you

 

[0:15:03]

Steli Efti: Yeah, and especially 2016 was year full of these stories. There’s not a single month were there was not a unicorn type heavily funded start up that had aggressively invested in sales that then decided that maybe we need to cut down on that. Maybe we scaled to aggressively, to fast, or maybe for a variety of reasons we created a toxic culture, we over incentivised the wrong type of behaviour. Whatever it was but they created a ton of issues. And I feel like you know when I came to the valley especially here in 2007 hiring salespeople seems so old school, and like, so stupid, and like, nobody wanted to do that anymore. And then I don’t know when it happened and probably I contributed to this problem, but you know, around over the last five years because more people in the tech community and so our community were talk about success, building sales teams, doing sales, that was more knowledge spread and more companies started doing and because, you know, as you said if you hire aggressively on sales people you’ll see revenue numbers go up independantly from if it’s profitable or not or if it’s the right type of revenue meaning they’re closing good customers, qualified customers, customers that will succeed with your product versus just closing anybody, and then having high (inaudible) problems down the line and all that so it went from, in the past ten years, it went from “sales is horrible” and “sales is toxic” and “sales people are the worst people in the world” and “we never wanna have the need to have sales people in our company” to “let’s hire as many sales people as humanly possible” and “sales is the most important thing in the world” and neither of these things are true. Right. Even as a sales person. I don’t believe sales is the end all be all. I think it’s really important. But I don’t think it’s like the thing that will solve all of your problems. If the product is not right or you don’t know who your customer is it’s not going to solve your problems. It’s going to amplify them. So I feel like we went though a phase in the past ten years from one extreme to the other, especially in Sass, especially in technology. And now it seems like in twenty sixteen and now probably even happen in twenty seventeen I see, I foresee a correction happening in this. So maybe I’m wrong about the timeline, maybe it’s not going to be this year, maybe it’s going to take the next two, three years but I do definitely see sense that there is a need for correction for companies to not think about sales as good or bad, or self serve as the end all be all or the worse thing or the best thing, just think about what works in my market for my customer, for our team and think about things in a measured approach, like you know, once something, even when something is generating results, it doesn’t mean that these results are the long term results are quality results, right? I can create a lot of shallow things, I can create massive spike in traffic to my (inaudible) site if all that traffic is from ten year old, kids that I got to click on some hacky subject line on twitter it doesn’t matter, it doesn’t matter that I got a massive spike in traffic it won’t materialize itself and the same thing is true I got all these new customers that you know upgraded to a paid account. If my sales team promised them things that we never deliver. If these people never had the money to pay for this or we are not the right type of customers it’s going to create massive problems down the line. So anyways, I think the two of us often times get back to this theme of it depends on your customer or your company, and there’s not a model that is gonna be the model for everybody.

 

[0:18:53]

Speaker 4:

 

[0:19:00]

Hiten Shah: Yeah I mean this topic is fascinating just because, it, we came from a place where, you know, going back to the kind of the big high level topic we’ve been talking about, like, we went, we came from a place where like everything was gated, and you couldn’t use something. And it was gated behind contact requests, demo requests, or just a lead form of some kind. And now we’re in a world where most products, for a customer standpoint, even, like, really large enterprise products to some extent, you can sign up for it, and you can start using it before you even have to talk to somebody and what I find fascinating about that is that what I’m seeing is you’re seeing a sort of uptick and, because there are MQL’s and SQL’s, you know one thing I think worth discussing before we are done with this, is like, the concept of PQL’s. Are you familiar with that study?

 

[0:20:06]

Speaker 3: Stell, you there?

 

[0:20:09]

Steli Efti: Oh sorry I was muted. Yes. PQL product qualify at least? I don’t know.

 

[0:20:15]

Hiten Shah: Yeah. Oh really? It’s a real (inaudible) oh shit break it real thing man oh wow yeah that sucks so PQLs are super interesting. What they are is, especially useful if you have a freemium business where you’re basically using signal from the product to qualify the lead

 

[0:20:34]

Speaker 3: Hmm…

 

[0:20:36]

Hiten Shah: And the reason I wanted to mention it is like I’m already not a fan of sql, mql, and all this complication people add into their funnels. Because one of the reasons is sql usually means it’s sales oriented. Mql means it’s marketing oriented. And then you have a divide. And so adding a third thing it’s really complex, but the reason a lot of companies have added it is because they are self-service but they have a sales team and their product provides a lot of signal. So like you know, it’s really important to know not only that people, that somebody is sea level executive at a company and it’s a 50 to 100 person company is also equally important to know that they actually signed up, hooked up the products, started using it, created something in it, and have been using it actively every day for a week and so that criteria turns into what a PQL ends up, you know, being comprised of is a bunch of activity that a customer is doing in your product, and then that turns into some other kind of qualification for sales and to become a lead and I’m mentioning because it’s not that popular yet, but all literally all the premium companies I talk to, all thee sas companies I talk to that are premium that have a sales team end up using some kind of metric bypass

 

[0:21:51]

Speaker 3: And so what do you think about that.

 

[0:21:58]

Hiten Shah: I think it is smart. I mean it is just like what a sales qualified lead would be for a criteria or what a marketing qualified lead. Why doesn’t product have it? When there are products out there, like dropbox and trello and many others where people are doing and they have not talked to anyone yet, and they are not necessarily a sales

 

[0:22:16]

Steli Efti: Okay but this is not in a company this is not a company that has an s qul and m qul and a p qul as well.

 

[0:22:24]

Hiten Shah: I’ve seen all three

 

[0:22:26]

Steli Efti: Oh so you seen companies having these three qualifying (inaudible)

 

[0:22:31]

Hiten Shah: Absolutely, I don’t think that’s ideal, I would actually say you should pick one, it really depends n what your company is driven by, I actually think MQL’s is are of the worst. If your gonna align with marketing and sales and the company, I beleive you should pick one of them and the ideal one would be the one closest to sales which would be (inaudible). Yep. I’m cool,

 

[0:22:57]

Steli Efti: Alright I think we are close to tips time yeah, so let’s round this episode up on like giving a tip to people that are either wondering if their when their starting should I build my start up on a self serve model or should I build it with a sales model or high touchable service model in mind or there are already in either of there models and have doubts if they’re the right model and thinking can I switch from self serve or should I switch to hiring sales people or being self service vice versa I’ve had sales people all the time, there’s all these issues, there’s these economic, margin problems maybe we should shift to a full self service model. Lets think about these two scenarios and tips for people on how to make decisions on how to choose the right model.

 

[0:23:51]

Hiten Shah: Yeah I mean I think we went into this a little bit earlier but didn’t really dig in. I really think what you said about it having everything to do with how your customer buys is pretty important. That’s a good starting point. So if your customer is used to buying with a demo request and all that. Sometimes it’s hard to get them to buy any other way or sign up for something any other way and then if your customer is used to self service it’s very hard to get them to get excited about talking to somebody. So that’s a really good easy framework to start with. From there though you almost need to make a decision of whether you need to flip it and change the way it works in your market I would say that usually I see folk who, in their market, it’s a request demo or contact request, it’s not really self service. Go more self service because they want to get activity like I was saying and get some data around people using it or get actual people using it first or make some part of their business easier because you end up getting a higher volume of people using your product if they’re able to us it right but you tend to get a lower volume of conversations. So it’s a full on trade off and I’ve seen it work both for enterprise and for SNB both ways. It’s just really, really depends on what, kind of, what your product is, how it works, and honestly one other piece I would add is just how much effort it takes for someone to use your product. If it takes a lot of effort, then you might be better off not making it full service. You are ve

 

[0:25:16]

Steli Efti: Alright so my tip for those that are at either camp and are doubts if the model they chose was the right one, or are wondering how to test the other model or if they should switch or not I would just say. Stop worrying so much and just start testing. Right. So you can always just take a certain subgroup of your leads or trials or whatever that come in and treat them differently than the others and see what the different sign and conversion rates so if you have a full service model and reaching out with sales people you could just make it that you, you know for a certain period of time you take half your leads and you don’t full service them. You don’t sales them. You don’t have sales people reach out to them. And you see how they convert. And how they retain versus the ones that you do self serve. Eh, full service. Or vice versa if you do everything self serve then you start taking a certain subset of your leads that are coming in and you start reaching out to them and just run a test and see what is the difference. How difficult is it to do what change does it require, I know one really public, big sas company ahhh billions in variation that very publicly says they have zero sales people but what they do temperately is they do have a sales teams internally they don’t call it that they’ll take certain products they have and they will deploy the sales team, they do the very heavily self serve. As a company with all their products, they have this internal task sales force that will go and ah, basically compete against the self service side of the product to see if they can convert better. And if they do, they will actually brand this as a bug in the software. And they’ll force the engineering team to make the self service product convert better. Right so they’ll have their sales team go from product to product team and try to compete with the product itself in converting better and if the sales team succeeds with it they’ll try to ask the question why is that and how can we prevent and change that. So nothing stops them from testing these things, and competing and taking the subset of your leads and experimenting with them and see how, what kind of changes and differences you can make, and then with more data, more information it’s gonna be much easier to make that decision. A lot, way too many founders worrying and wondering for way too long, without knowing how to make a decision on this versus just taking some action, creating some results. Then, hopefully the results and the data willl give you clear answers on what do it and if it makes sense for you to switch or not.

 

[0:27:51]

Hiten Shah: Ya, I love it. I mean that’s a great way to test it

 

[0:27:56]

Steli Efti: Alright. I think thats it from us for this episode. If you like the podcast, please do us a favor and go to iTunes and give us 5 stars and give us a review. If you have any topics you want us to talk about just tweet at us @steli and @hnshaw and we’ll do you very soon.

[0:28:15]