Today on The Startup Chat, Steli and Hiten are in DreamForce and they talk about how to create a business ecosystem and shed some light on how to do this.
Thanks to Jorge Soto and the team at First Cut for recording and editing the video!
The startup world has changed remarkably in the past decade, and new advances in technology are paving the way for more revolution. Perhaps, one way technology has changed business the most is in the way we operate on a day to day basis, and tools like Zapier and IFTTT have been at the forefront of that.
In today’s episode, Steli and Hiten talk about how you can build an ecosystem around your startup, how to make the right decisions when it comes to building ecosystems and things you should consider before building or joining an existing ecosystem.
Time Stamped Show Notes:
- 00:35 – About today’s topic.
- 00:56 – How to build an ecosystem around your startup.
- 03:08 – What role APIs (Application Program Interface) play in today’s ecosystem.
- 03:53 – Steli shares how Close wants to win in the ecosystem game.
- 04:29 – An alternative to a reseller partnership.
- 05:27 – Hiten shares his thoughts about Airtable’s ecosystem.
- 06:40 – Steli talks about Zapier, and why it has been so successful.
- 08:52 – How to make decisions on what ecosystem to build.
- 10:44 – Thinking broad vs thinking deep.
- 13:01 – What startups want to think about before becoming part of an ecosystem.
- Ecosystems are built on business development relationships.
- Today’s ecosystems don’t rely on reseller partnerships anymore.
- Becoming part of an ecosystem requires commitment and iterations.
Hiten Shah: Here we like talking about more than just sales and marketing.
Steli Efti: We just want to bullshit and chat about business and life and hopefully while we’re doing that provide a lot of value to people.
Hiten Shah: The world’s best business podcast. Oh shit. For people trying to get shit done.
Steli Efti: We don’t want to give you feedback that’s bullshit.
Hiten Shah: We want you to do your best.
Steli Efti: Welcome to .
Hiten Shah: That’s right. We’re here at Dreamforce in the sales hacker booth. And first cut is recording a video for those of you that are not able to see us on video.
Steli Efti: What are we going to talk about in today’s episode?
Hiten Shah: Something about Dreamforce.
Steli Efti: Something about ecosystems.
Hiten Shah: Yes, so we’re going to talk about how to create a business ecosystem and our thoughts on that. We thought that’d be a great idea considering we’re at Dreamforce and they have a small ecosystem, right.
Steli Efti: Yeah, tiny, but it’s …
Hiten Shah: Spread over half the city.
Steli Efti: It’s gaining speed, but it took them a while.
Hiten Shah: Took them a while, right.
Steli Efti: The theme is really how do you build an ecosystem around your startup and around your business, and like thinking about that. Now, this is a topic that need a little bit of a fine balance, because if a startup in the very early days, most startups in the very early days when they over think the ecosystem thing it actually concerns, but if you don’t think about it at all it’s also a problem long term, so what’s the right way to think about ecosystem in the early days especially.
Hiten Shah: I mean, let’s go back to how it starting, so back in the day people would sell enterprise software and you’d have value added resellers. Those are VARs, that’s what they called them, and they would be people that would resell your product to their customers because they happened to be service providers, and that was when software wasn’t delivered in the cloud and things were more complicated to implement it from an IT standpoint, because that’s what we used to call it right. I think that’s for me the roots of ecosystem come from that, and a lot of those ecosystems are built on business development relationships, and it was very human to human approach. Now, I would say that we’re at a place, just fast forward all the way to now, we’re at a machine to machine approach, where even closed out IO has a bunch of integrations because you guys have level of an API, and that is in some ways a start of an ecosystem and it’s a different kind of an ecosystem. It’s not an ecosystem you’re necessarily using to acquire customer I would say, although it can help you with that. It’s an ecosystem that helps people use your products and other ones they’re using in conjunction.
Steli Efti: Yes, so APIs is a great one, but I love the jump from human to machine.
Hiten Shah: Yeah, it’s human to human,. Machine to machine, right.
Steli Efti: Yeah, it was all about resellers, implementation specialists, consultants, that kind of an ecosystem, because software was really heavy and it took a whole army of people to implement it. Today, it’s much more light in most cases. Not when we talk about these massive organizations and implementation of software can still be pretty …
Hiten Shah: Yeah, the enterprise stuff still tends to have the same model.
Steli Efti: Yes, so it still exists in the logic, today’s systems, but in today’s world you can do a lot more lightweight things and one of the easiest and first things to think about is API. Having a strong IP. I can tell you with us, with , we knew from the get go that we wanted to stay a fairly small team, so we thought about ecosystem, but we thought all right, we’re not going to start hiring a partnership team and start running a conference and doing events and all kinds of stuff, so how can we do this differently in a lightweight way, and we thought all right, let’s have the best API in the game. Let’s make it that when customers or other software vendors, or even individual software developers that are thinking about building a little app, when they look at their API they go, “Oh shit. I could just build an app on top of close,” or, “I could just … This is much easier for us to integrate with our software than the other API.” So we wanted to win in the ecosystem games by having a really powerful API, and that made us go API first in our product development philosophy. From day one til today, whatever we do we first design the API, then we build the feature on top of it, so having a really strong or good API, or thinking about API in the really early days I think is super crucial in today’s environment. What other things can you do in today’s world in order to think ecosystem without doing reseller partnership stuff?
Hiten Shah: I think there’s a number of things you can do, even without reseller partnership, but ecosystem also means like let’s say, a good example of this is WordPress. They have a whole plug in ecosystem. It is still API driven, but then they also have partners that’ll build custom plug ins for you, so that’s more of like this software that’s built running inside of your software, so I think that another example. Another one is still I think, I would say today an implementation, sort of onboarding implementation specialists are still important, and that’s still an ecosystem in my mind if you have a product that can be customized a lot that is one opportunity. Another opportunity that comes to mind is if you’re a website creation tool getting designers to create templates and things like that that’s another ecosystem that works if you’re a landing page tool too. And I think the ultimate thing, I’m going to give this example because it’s pretty interesting, this company called Airtable and they … It’s like spreadsheets on steroids is a very simple way to describe it, and they have beautiful website, beautiful product. One of the things they did is they have this thing called Airtable Universe now, so they’ve always had templates. Now, they’ve made it so that they have their customers basically be able to promote their own templates on their site, and it’s really early. They launched maybe a month ago or something with this Airtable Universe, but to me that’s an ecosystem to. It’s actually an ecosystem where customers are helping you get more customers, helping you show off use cases. It’s probably one of the more powerful ones in my mind and you don’t need a conference for that either.
Steli Efti: Yeah, Draftsend is another example you guys just launched and one of the things you did earlier on is approach a bunch of people that have really powerful, unique presentations and ask them to upload them to Draftsend, so that’s how you launched, and you launched with highlighting a bunch of use cases, but those people are people with big audiences, with big businesses behind them, so it’s from day trying to create a little bit of an ecosystem in a different way for the platform right.
Hiten Shah: Yeah.
Steli Efti: Another things I’ll say, in today’s world is today, and this didn’t exist six, seven years ago, you have companies like Zapier, for instance.
Hiten Shah: Yeah, it’s Zapier. Zapier makes you happier. I can’t say that without my friends over there getting pissed off.
Steli Efti: All right.
Hiten Shah: Wade, Zapier makes you happier.
Steli Efti: Zapier makes you happier. I say the name all the time wrong. I said it wrong to him I think last week and he didn’t correct me. I’m not sure, but anyways they allow you to basically cretae integrations. It’s kind of like if this then that for business apps in many cases, and that’s something where you’re able to now, if you invest in your Zapier integration, and you can do a ton with it, if you really invest in that, you have somebody on the team, you can empower your customers a ton of waste integrate with other apps that they’re using, and you’re able to much quicker go to some of these companies and go, “Hey, we have a ton of customers that use our tool and integrate with yours.” If it’s through Zapier or not, who cares. That really doesn’t matter at the end of the day.
Hiten Shah: It’s still an integration.
Steli Efti: So a lot of our customers use our product as well and use it in conjunction. Let’s do an event together. Let’s do a webinar together. Let’s co-promote. Let’s work together and you can build a quick ecosystem and also empower your customers and show your customers that wow, these people are part of the larger ecosystem from day one, which is something that would have taken you a lot more energy, time, work and money to build up.
Hiten Shah: Yeah, so Zapier is the ecosystem hack for Sass.
Steli Efti: That’s why they’re doing so well because it’s a very powerful value approach position. So what about you? The ecosystem is never just a you show up and then you build around you. It’s always a you show up and there’s already ecosystems in place, and the question is how do you, what is your role in other people’s or other companies ecosystems, right. So how do you think about that? There’s platforms obviously right. Do we build on top of an existing platform? Do we build an app and add on? Like you could have a WordPress add on, or Chrome extension. You could be on Facebook with an app. You could be on whatever it’s called, reinforces exchange platform app thing, so you can look at ecosystems that already exist where your customers are and ask yourself what role are we’re going to play in that? How do you make decisions, again, especially from an early stage point of view when resources are limited in terms of what your role is going to be in other people’s ecosystems, or company’s ecosystems?
Hiten Shah: I think it goes back to what you’re solving for. So if you’re solving form usage and retention and you think you can build a Chrome extension, Chrome is over 50% of most people’s sites, like people come from Chrome, so if you built a Chrome extension because it’s a productivity tool or some kind of tool people can use in their browser that’s super interesting. You can even go more lightweight and there’s the kind of browser notifications, which is also a form of the kind of ecosystem, so to me, early on, what problem are you trying to solve? Are you trying to acquire more customers by integrating with this tool? Are you trying to create a ten x better product experience, or are you trying to just simply, not so simply, but retains customers as a result of integrating? So I think I’d really think about the product. Like, today, if you’re in the document space in any capacity, it almost doesn’t make sense for you to not integrate with Dropbox. A lot of people’s documents live in Dropbox. If you’re focused on enterprise you probably want to integrate with Box.
Steli Efti: Box.
Hiten Shah: That’s I think an example there. If you can imagine doing anything in the browser where while someone’s browsing different website or doing their work in a browser your stuff can show up, then in a Chrome extension, even Safari has extensions and stuff like that, that would be super critical.
Steli Efti: Yeah, I love that. I think the thing that I see oftentimes is that a startup in the early days, they’ll look at the different ecosystem that exist already, they’ll think of them primarily as a customer acquisition opportunity right. How can we go to somebody else’s ecosystem and get tons of users, tons of customers, not so much from a product value perspective, or how does this add value to our core customer base, our target customer base, and then what I see is a lot of them to … They thing broad versus thinking deep, so they go, “Well, there’s five ecosystems with known platforms. Let’s just build a quick app on all of them as quickly as possible, and then surely it’s going to rain customers our way,” and for those who don’t see the video, reaction is one of like heartbreak, heartbreak, because that’s obviously usually not a really good idea.
Hiten Shah: It happens a lot in the eCommerce space because there’s a lot of eCommerce tools you can integrate with that are platforms that provide web stores for people, and there’s only a couple that actually drive reasonable volume when it comes to users, and still you’re doing a lot to promote yourself.
Steli Efti: Yes, my point is always you’re going to have to work a lot harder than you think.
Hiten Shah: That’s the case always though.
Steli Efti: Always. That’s our life-long mantra, but it especially beautifully applies here because people think because there’s an ecosystem in place, a platform, I just hit launch on the app that we’ve built and then people just show up.
Hiten Shah: Magic happens.
Steli Efti: Magic happens. You’re going to have to do a lot to be surfaced on that. You’re going to have to work hard for it be promoted.
Hiten Shah: Ratings and descriptions and integration of it.
Steli Efti: Yes, and then talking to the marketing department, although partnerships and integration department, and make sure that maybe you’re included in a newsletter. Maybe you could be a featured app.
Hiten Shah: Yeah, all that good stuff.
Steli Efti: All that good stuff. Making sure that you segment out the users that come through that platform from others and you listen to their feedback. Do they like it? Don’t they like it? Are their expectations skewed. It might be raining users but they might not convert to customers for whatever reason, so you’re going to have to really invest in that, just like in anything else, and I think that too many times people go, “Well, our growth strategy is going to be we’re going to launch these five apps. It’s a Chrome extension here, it’s an add on here, it’s a core ad there, and then surely this platform has ten million users. This platform has a 100 million users.” And then it makes like messed up. We surely can get point one percent of them, and the eye roll, the eye roll at this point drops and obviously no, that’s not going to fucking work out, so pick and choose. When you’re a start up you have limited resources. You want to think about building an ecosystem and you want to be part of one, if there’s a useful important one, but you want to invest really deeply in those oftentimes and really make them work and remember that that’s also going to take iterations and it’s going to take, you’re going to start with an MVP version of whatever that is and you’re going to have to keep iterating until maybe six, nine, 12 months down the line you’re really are getting the benefits and the returns on that.
Hiten Shah: Yeah, there’s no silver bullet on the ecosystems for sure.
Steli Efti: I think that’s it for us for this episode. There’s another episode you can find in . We’re going to point to it, that we did about partnerships, which is very closely related to the ecosystem one, and don’t forget to give us five star ratings and a review on iTunes because that’s an ecosystem we’re playing on with this podcast. All right, that’s it from us.