293: What Tools Should You Use to Run Your Startup?
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In today’s episode of The Startup Chat, Steli and Hiten talk about how business equipment and tools can help or hinder your business. They define the difference between when a start-up needs to upgrade to new or more professional software or when what they are using is good enough. They also discuss the pitfalls that founders can avoid as they try to set up their business.
A key success point, for all businesses, is to make sure that you have the right equipment. As your company grows, you will need to find solutions to support the running of your business, with a focus on maximum efficiency and success. So it is essential to make sure that you pick the right tools, but when the market is flooded with solutions how can you be sure that you have found the perfect equipment and tools to continue steady growth.
Tune into this week’s episode of The Startup Chat to explore what role software and mindset play in the success of a Startup and why upgrading to the industry standard isn’t always going to aid in the companies success. Steli and Hiten, challenge the idea that there is a “one shoe that fits all” approach and look at alternatives ideas for how you can handle software within your company.
Time Stamped Show Notes:
01:25 – The start-up case study.
02:05 – An example of bad advice.
03:04 – The disadvantages of investing in the wrong equipment.
05:23 – The issue with investing in complex software.
08:07 – Why experience in buying the right software matters.
08:23 – The advice bias and being well informed.
09:24 – There’s a time for everything, keep it simple.
10:19 – Face the reality of what you need, not what you think you need.
12:22 – Being resourceful will save you money.
12:57 – Free advice for founders.
3 Key Points:
- If the start-up is too young and they take on these tools, which are meant for larger companies, they will fail.
- Remember a spreadsheet is often good enough and most of the time the tool that isn’t the high-end tool, will be best for your business early on.
- Invest your time in solving problems as they exist in your business now and not in solving potential problems for the future.
Steli Efti: Hey, everybody. This is Steli Efti.
Hiten Shah: And this is Hiten Shah. Today, on The Startup Chat, I’m supposed to just go with it, and I’m going to follow Steli off this cliff that he’s going to take us on. So, I hope all of you are ready. What do we got, Steli?
Steli Efti: So, I don’t even know what this episode will turn into, but hear me out. I get this question fairly frequently, and it’s funny. So, people come to me and they ask me what CRM they should buy, right? Not surprising since I’m in the CRM space and I’m writing a lot about sales. Somewhat surprising to me at times because I’m like, “You know that I have my own CRM system. Wouldn’t you think that I’m biased? How did you come to me with advice?” But, I’m always flattered because I just assume, or my hypothesis is, that people believe that I’m honest enough that I’ll tell them the truth. But, recently, I heard this once and I really just didn’t pay it too much attention, and then I heard it recently again and it really pissed me off. So, I wanted to talk to you about this. I have this founder, and they’re a tiny team. They’re like four people. They have not raised a ton of money yet. They are in the early stages of getting some “early customers”, maybe customers that are paying very little money to test out the first version of their product. This founder was talking to an investor, and was talking about their sales process and how they are trying to get these customers and all that, and then the VC asked, or the investor asked that founder, “Hey, what CRM are you guys going to be using or are you using right now?” And the founder was like, “Yeah, we have not really decided yet. We’re using a spreadsheet at this point.” The investor told him, “You need to buy Salesforce right now. Don’t even look at any other CRM, because sooner or later, if you succeed and you become a big business, you’re going to end up with Salesforce anyways.” When I heard that, it really pissed me off, because it’s really dumb advice. It’s like telling a 20-year-old that got his first job, or her first job, and is making an okay salary and is thinking about buying an apartment, “You know what? Sooner or later, you’re going to get married and then you’re going to have four or five children and you’re going to buy two dogs and you’re going to have a little pony, so might as well buy that house right now. Don’t buy a small apartment that’s the right fit for you right now, just buy the biggest house. Just buy the house you’d want to have when you retire at 60 right now.” That’s very dumb advice for obvious reasons, right? It’s financially not a smart thing to do. It’s the same thing with startups. It’s not just Salesforce and CRM. This is not just about me and my competitors. But, it’s like when you buy a product at the wrong stage, it will actually slow you down and make success harder, not easier. A lot of times I feel like startups want to buy very complicated and sophisticated software, tools and products and instrumentation, ’cause they feel that that will help them succeed at the end of the day, but at the wrong stage, buying something that’s highly complicated will actually just slow you down and cost you a ton of money, not really move the needle. At the stage that that founder is in, a spreadsheet is all they need. They don’t need any CRM, not even my CRM. Once they get to more than 10 customers, and once their volume goes up, and once they do a lot more things and it’s not just one person on the team doing sales, they might want to migrate from that spreadsheet to a simple CRM, and it might be Close or it might be something else. As that works out and they grow to a bigger and bigger team, eventually, once they are hundreds of sales people, they might want to take the next step and eventually end up at Salesforce. But, buying Salesforce today, when they don’t even have two customers and it’s just one of the founders doing sales, and then him having to learn how Salesforce works instead of just doing sales and using a spreadsheet is just ridiculous to me. So, I wanted to rant about it. I wanted to hear your thought. I don’t know if this is a big problem or not a problem at all, and it just appears to be a problem in my mind. But, it’s like people and companies sometimes, the software they buy or the things they purchase that are very expensive and complicated because they think they will help them, and then often times it hinders them, I don’t know, something bugs me about it and I wanted to dissect it with you.
Hiten Shah: Yeah. It’s like when I was building marketing tools, which I still am to some extent, people would just … Not that I was competing with them, like in your case or anything, so I can be a little less biased than you, not that you were biased.
Steli Efti: Just because I’m biased, doesn’t mean I’m wrong. Just throwing that out there.
Hiten Shah: I can quote the shit out of that. That’s great. You’re totally right, yes. I don’t think you’re wrong at all, I just had to nitpick that for a second. People would recommend Marketo to companies, and Marketo’s yet another one of those products that’s really, really great if you have a person who can go get Marketo trained and if you’re willing to spend the effort to use all the little things Marketo has and learn how to use them in their clunky way. No offense to Marketo. It’s a very clunky product, like most products that target upmarket folks. The reason these products turn out that way is because the teams there that are building them are just trying to solve enterprise customer problems, not the problems that are targeted at the startup, not the problems that are targeted at even like a series A or even B startup often. So, I would say that in your category of sales, I’m probably less concerned with an investor saying it, for one specific reason. Because, unfortunately, Salesforce is a de facto standard, and a lot of investors, when they were actually operating, if they were, or based on their limited or not limited experience, they think companies are only successful if they use Salesforce. The company itself, Salesforce, and all the aura around it has basically made people, especially investors, think that. Part of the reason is, many years ago, a lot of the other CRMs were not as good. They just weren’t. They couldn’t do little things that Salesforce had figured out as important for any sales team. I think we’re in a place now where that advice is stale. Same with the Marketo advice. Right now, I would rather use a chat tool that combines email and messaging than use Marketo. Period. Because the paradigm is different. So, if I heard an investor suggesting Marketo, my eyes would roll. If I heard a team member at an early stage startup trying to use Marketo, which I have heard, my eyes roll, and I’m like, “No. You’re going to fail.” It’s not even 9 times out of 10. 100% of the time, if the startup is too young and they take on these tools that are meant for larger companies, they fail. The only caveat is if someone on the team has experience with that tool and is an expert in that tool, maybe it’s okay. But, then, you’re just like taking a hammer and smashing something like a cookie with a hammer, you know what I mean?
Steli Efti: Yeah.
Hiten Shah: Like, you could just smash it with your foot. You don’t need to … Cookies are bad, they have sugar and all this stuff. . I like cookies. So, I think you’re taking a sledgehammer onto something that doesn’t need it, and then you’re going to inevitably break stuff and cause a lot of problems in your company. I think a lot of people that buy software are new to buying software, essentially, or even using this kind of software, ’cause they never had to. They have to build out a sales team or they have to build out a marketing function, and they’re going to go with expertise. So, I think the statement I would say is, even the people who aren’t investors, that are true experts, but if they’re experts and they have a bias towards the tool, just realize that when you’re getting their advice. Just remember that often times a spreadsheet is good enough. Often times, most of the time, a tool that’s not the enterprise tool, not the high end tool, is going to be better for you earlier on than any other tool you can pick. I think it’s very much a mistake for the people giving advice to suggest these heavy tools to people when they don’t need them. But, often times, they don’t know any better. This is one of those where it’s like, I think it’s on the person who’s receiving the advice that needs to really check for themselves.
Steli Efti: Yeah. But, you know, the flip side of that, that I see, is that sometimes startups … This is inexperience, really. Like, how many times have you purchased business software and had to implement it in a business environment? If you haven’t had to purchase that much, sometimes founders, they tend to overthink what product they should use. There’s so many times that people are like, “Well, I spent the last three weeks researching CRMs. We have this massive matrix, and I’m trying to figure out what is going to be the best tool,” and all that. And I go, “Whoa, whoa, whoa, whoa, whoa. Tell me a little bit about your company. How many customers do you have? How many sales people? How many calls, emails do you make? How big of a problem is CRM right now?” If they’re like, “Well, we don’t have any customers yet, and we haven’t launched our product, and I don’t have any sales people,” it breaks my heart because I’m like, “For the love of God. Why are you spending two weeks on this shit right now? This is not the right time to do buying research. You’re solving a problem that doesn’t exist right now. You need to solve the problem that your company doesn’t exist yet because you don’t have any customers. You haven’t launched a product yet. That’s the problem you need to solve, not what CRM will we use a year from now.” Also, equivalently, sometimes people will have maybe a small team of two or three sales people … I always use the CRM example, but this really could be if you’re marketing people, could be if you support people. Doesn’t really matter what the team is, or set up. But, they think, “Well, I need a tool that does these 30 different things,” and then when you ask them, “How are you using these 30 different things? Why are these 30 things really important to you?” … You realize, once they told you, that they’re not using any of these things, they don’t need any of these things, and they don’t know anything about these things. They just read a few blog posts, and they imagine that they’re going to want these things. You know, there’s like … Marketing automation’s a beautiful example, because for a minute … I mean, it’s still a hot term, but for a minute, it was a really hot term. Everybody was like, “Oh, we need marketing automation.” , “All right. Just explain to me what that means and how exactly are you going to use it, and what you are doing right now for that.” People just like, they don’t know. They read a few blog posts and they get the impression … And we all do this. I’ve done this before, myself, I’m not above this, where you read a bunch of stuff and you think, “Well, we need to also fill in the blank buzzword to be successful,” but you really don’t understand that buzzword. You don’t really know what you’re talking about. Lead scoring is such a beautiful example in my space. Oh my God. You know how many times I’ve talked to people in sales teams about lead scoring, and when I ask them to explain to me how they would implement lead scoring in a practical manner at the stage they’re in, they just don’t fucking know. Lead scoring, not that it’s not a great thing, but it’s a solution to a problem that comes up when you have too much noise in the leads that you have and you need to prioritize, ’cause prioritizing is really crucial for profitability. I talk to teams that have too little leads and too much time on their hand, and it’s like lead scoring is not your problem right now, and if you wanted to do a version one of lead scoring, you could do that without purchasing a super expensive lead scoring tool that costs you £1000 a month. You could just do that with some basic, simple logic. What are our top countries? What are countries we want to exclude? Maybe we just take corporate emails versus the gmails and yahoo mails. Maybe there’s an IP thing. Maybe there’s two questions we can ask people on the signup form that helps us prioritize. Maybe there’s a few basic things we could do to score leads internally rather than using super complex enterprise level lead scoring software. It’s like that … What’s that? That inexperienced founder that thinks he or she needs to purchase something super complex in order to succeed. That’s a massive mistake, a distraction, a waste of money, time and energy. I don’t know if I have anything smarter to say than please don’t do that. I don’t know how to say this differently, but please don’t waste time trying to imagine where your company’s going to be three years from now and trying to buy a product today that will get you there. Let me ask you this, Hiten. Have you ever heard … Let’s take marketing as an example. Have you ever seen a team that started with like two co-founders or three co-founders and chose a marketing tool, and they grew to 3,000 or 30,000 people, they [IPO’d 00:13:24], they became like a , a massive organization, and they still use the same marketing tool?
Hiten Shah: No.
Steli Efti: No.
Hiten Shah: Never.
Steli Efti: Never. Or even the same process or the same marketing language. That doesn’t exist. It’s a beautiful idea that you’re going to choose the “right thing”, and then you’re going to just have that thing work forever as your company goes from one to one million people working at that company. It just doesn’t exist. Just try to solve and buy the tools and products you need for the stage you’re in right now and the next stage you want to get to. Don’t think 20 steps ahead. It breaks my heart when I see people, founders specifically, waste their time and money on this. I don’t know. Yeah. It just breaks my heart. You need the right product for the right stage. Don’t worry about getting the right product forever, for life. That doesn’t exist.
Hiten Shah: Yeah. It just doesn’t. Nobody’s successful just because of the tools they use. It’s just that simple, right? So, someone tries to get you to use Salesforce even, and you’re early, don’t just … Think twice. Don’t do it.
Steli Efti: All right. That’s it for my rant. Thank you for helping a brother out. Part of having this podcast is to talk about these like … ‘Cause this is not like something I would write a blog post about, but it’s something I have seen as a seller, as somebody that’s been selling to companies. As an advisor, as somebody that a lot of people come to advice to, I’ve seen this so many times that I’m like, “What is this? I need to talk with Hiten about this, like startups buying the wrong tool.” So, thanks for-
Hiten Shah: Well, I mean, what’s more important for us here is that if you’re thinking of using a CRM and you don’t have one, use Close.io. I mean, it’s that simple. Right, Steli?
Steli Efti: I wish I could disagree with you, but I can’t.
Hiten Shah: Why wouldn’t they use it? Why wouldn’t they use it, or at least give it a shot? It’s better than a spreadsheet and it does a lot of things around tracking information, such as calls, that you don’t get out of other products yet. They were the first, if not, one of the pioneers, depending on how you want to talk about it, Steli, to do that. So, their product has more longevity around an important piece of your sales process than other products do.
Steli Efti: You’re not just good looking, Hiten, you’re really wise as well. Thank you for the pitch.
Hiten Shah: There we go.
Steli Efti: That’s it from us.
Hiten Shah: Course.
Steli Efti: Ending the episode with a Close.io pitch delivered by Hiten Shah. Like, what more can I ask for, people? I’m a happy man. We’ll hear you-
Hiten Shah: Any time. Not getting paid for it. Just a friend of the company.
Steli Efti: Not kidding.
Hiten Shah: All right.
Steli Efti: All right. We’ll hear you very soon, everybody.
Hiten Shah: Bye.