Nailing your Go-To-Market strategy

In today's episode, James Gasteen sits down with David VanHeukelom, a 2x Salesforce ISV founder (Vana Workforce & Klient - both acquired), serial entrepreneur and advisor to a number of ISVs across the ecosystem.

David shares his journey into the Salesforce ecosystem, emphasizing the importance of focus in the early stages of an ISV. From tackling challenges in product development to building a strategic go-to-market approach, David provides valuable lessons for ISV founders.

The conversation explores David's experiences in acquiring the first customers, the dynamics of building enterprise software in the Salesforce space, and the significance of partnerships with key players like Sage and Systems Integrators. Dave's advice for ISVs echoes the need for a laser-focused approach to go-to-market, honing in on specific industries, regions, and customer profiles.

Discover the intricacies of channel partnerships, the role of sales and marketing in ISV success, and the lessons learned from navigating time zone challenges. With a wealth of experience and hindsight, David reflects on what he would have done differently, offering valuable insights for current and aspiring ISV founders in the competitive landscape of the Salesforce ecosystem.

Tune in to gain practical strategies, firsthand experiences, and actionable advice from David's journey in scaling ISVs within the Salesforce ecosystem.

If you are a Salesforce ISV founder with an interesting story to tell, we'd love to hear from you. Send us an email to podcast@unaric.com and we'll be in touch.

Transcript

James Gasteen (00:01.097)
Hello and welcome to today's scale to sale podcast where I'm joined by Dave Van Hucklem. Dave great to have you on the show.

Dave (00:10.09)
Hi James, great to be with you.

James Gasteen (00:12.689)
Dave has not only founded one but two ISVs and gone to successfully exit them. He's now an advisor to ISVs including Unariq where we've been working with Dave for just under a year now. Dave, just to give us an idea and kick off the show, can you give us an idea of how you actually got into the Salesforce ecosystem? I think every founder has got their own esoteric tale of how they ended up here.

Dave (00:41.302)
Yeah, sure. So I started my first ISV way back in 2010. I had already spent about a decade in enterprise software space. I worked at PeopleSoft, I worked at Oracle and so forth in enterprise software. Always wanted to be an entrepreneur, wanted to do my own thing. And I was kind of looking at, where could I start a business? Where could I start a software business? And I kind of just lucked on to the Salesforce ecosystem and AppExchange back in 2010. It was fairly early.

James Gasteen (00:58.534)
Yeah.

Dave (01:11.518)
As you know, and my background was in HR or human capital management software. That's where I spent my first decade in my career. And I thought, well, maybe there's an opportunity to build on the Salesforce platform, do something there at that point in time, there was really only us. When we ended up building and a company called fair sale, which was subsequently acquired by Sage. So, it was a fairly white space for us building a HR solution on the platform. And.

James Gasteen (01:17.08)
Mm-hmm.

James Gasteen (01:31.023)
Hell yeah.

James Gasteen (01:34.494)
Mm-hmm.

Dave (01:41.13)
That's where we started from. So given my product background and decided to take the plunge and start my first ISV back in 2010 and Then grew that exited that and I'm sure we'll get to that started another one exited that so that that's kind of how I first started

James Gasteen (01:57.886)
Brilliant. And then in terms of identifying that niche, really, you knew the category well and your bet was moving that onto the Salesforce platform versus creating a new category that you weren't necessarily aware of.

Dave (02:11.026)
Yeah, exactly. I mean, I spent a decade in the space. I knew the space well. And at that point in time, whether it be right or wrong, and I would actually say maybe to some extent wrong, but I thought, hey, well, having HR on the platform where customers can consolidate everything, both back office and front office on one platform would be a good opportunity. And, you know, I think for the most part, that was right.

James Gasteen (02:35.529)
Yep.

Dave (02:39.83)
When you get up to the very large enterprise, they're going to make the right decision for them whether it be on platform or off platform. But for our target market, it was a good opportunity. We closed a lot of business and raised some angel funding and eventually exited. So no, it was a good run.

James Gasteen (02:46.516)
Yep.

James Gasteen (02:59.489)
Yeah, and I remember like my business, we were in the kind of professional services space, which is not a million miles away. But we found that there was definitely some challenges in the classic era Salesforce platform, especially when the servers were on the west coast in terms of latency, and trying to do anything kind of dynamic with rendering data. So those were fun days back in the early 2010s trying to do things that weren't just, you know, filling out database fields. And tell us a bit more, Dave, like when you first set up that business, what was some of those?

You mentioned you had some income and what was the initial challenges that you faced and how do you overcome them?

Dave (03:35.562)
Yeah, so it was my first entrepreneurial journey. So in a first time founder, so there was a lot of challenges, if you will, not only just as a SaaS founder, but also just in the first time in the ecosystem and understanding how the ecosystem works and how the platform works and so on. So I mean, one of the major issues that I experienced was

James Gasteen (03:38.92)
Yep.

James Gasteen (03:43.605)
Hehehe

Dave (04:01.43)
you know, and we'll get to this, I'm sure, with the second ISV, but both of the ISV that I created were quote unquote enterprise software products. They weren't niche, small little, you know, products that, you know, augment the Salesforce, uh, sales cloud implementation. It was a full on enterprise product and we were building fast, which meant that there was a lot of product issues. There was a lot of support issues. Um, uh, some, most of it on our end, but also as, uh, you know, I'm sure you're

James Gasteen (04:08.798)
Yep.

James Gasteen (04:18.69)
Mm-hmm.

James Gasteen (04:24.5)
Yeah.

Dave (04:30.274)
familiar with the platform was also being enhanced over time. Starting back in 2010, the platform isn't what it is today. So there was a lot of product issues there and a lot of challenges there. That was probably one of the biggest challenges that we were working through. Like any other SaaS founder as well, when you have a product, it doesn't mean the leads start flowing in. So

James Gasteen (04:35.815)
Mm-hmm.

James Gasteen (04:55.992)
Hehe

Dave (04:56.682)
You know, it took some time to build the lead flow, to build the awareness. And maybe that was a little bit unexpected as a naive first time founder, but you need to be prepared for that, right? It's gonna take time to build up that lead flow. And so the first year was really tough, building the product, building the lead flow. Eventually we closed some angel funding, which was nice and helped us grow a little bit more faster and we'll get to that as well. But...

James Gasteen (05:06.801)
Yep.

James Gasteen (05:18.142)
Mm-hmm.

Dave (05:26.206)
Yeah, those were probably some of the two biggest issues, building too fast, building too wide, not understanding the ecosystem and the platform as much as we should.

James Gasteen (05:33.981)
Yep.

James Gasteen (05:38.777)
Yeah, I think that's I think that's probably also part of the Salesforce kind of some of the challenges that inherent of being an ISP founders that the platform is infinitely, you know, it's infinitely scalable at the same time, it can be customized, right? So customers can tweak it to the nth degree. And then it's kind of like who's on the hook for supporting that well, telling the customer, but if they're not happy, they're going to come back to you. And if they're really unhappy, they're going to kind of cancel and I remember our first product a precursive

I mean, that was just a behemoth. It was like a Swiss army pen knife with about 15 blades because it was relatively easy to just roll out new pages, roll out new pages, link it to the database versus for someone building a SaaS product on, rack space like they did in those days, it would have taken them way longer and they'd need someone in DevOps to manage it all. So I think sometimes that, the fact that it's easy is also a slight curse because you can just make a big, big product.

Dave (06:32.682)
Yeah, no, I should have mentioned that earlier on. I mean, two points I want to make. One is that the reason why we initially selected the Salesforce platform is because when you're building this enterprise software like HR software and you're competing against Ceridian and ADP and some of these other products that are out there, there's the expectation that you have a reporting engine, you have a security, you have, especially with people data, right, personal data. And of course the Salesforce platform gave you that out of the box.

James Gasteen (06:58.031)
Yep.

Dave (07:02.166)
So go to market was much quicker. So that was a benefit. The one point, the one challenge that I should have mentioned was, I'm not sure if you were ISV or OEM at Procurece or both, but yeah, we were.

James Gasteen (07:05.458)
Yeah.

James Gasteen (07:12.521)
Bit of both, we started off OEM then we went to ISV, but we didn't really know what we were doing at the time, if I'm being perfectly honest.

Dave (07:18.61)
Yeah, we were OEM for both. And the reason we were OEM is because the majority of people that we were bringing on to our product were not Salesforce users, their HR, right? And or employees of the company and so on. So when you're OEM, the customer expectation is that you support the product from end to end. Meaning that, you know, if you're an ISV, a plug into Salesforce, well, you're not replacing a system administrator and you're not

James Gasteen (07:22.251)
Um

James Gasteen (07:29.589)
Mm-hmm.

James Gasteen (07:40.009)
Yep.

Dave (07:47.21)
you know, needing to support them on sales cloud and permissions and so forth, but with our product and OEM, there was an expectation that, you know, they have a, a support issue, a security issue, a permissions issue, and, and support is what we needed to offer. Similar to it was our platform. Um, that causes a challenge as well.

James Gasteen (08:04.265)
Yep.

No, I don't remember that. I think we tick the OEM box on the paperwork back in the day, not really know what we're getting ourselves in for. And I remember some customers would see it says Salesforce reports and dashboards and they would come to us and say, how does this work? And it was like, well, it's all online. Why are you asking us? But there was that kind of expectation management, I think with OEM customers, because often they were new to Salesforce. Maybe their organization used it, but you had to onboard them. You got to then coach them. You have to hold their hand slightly versus, you know,

an ISV plugin, it's like simpler because they already know about Salesforce, they're already bought into it. So tell us, how did you know on the first business, you're in the HR space, first business, you decide to go up against some enterprise players, how'd you go about acquiring your first customer?

Dave (08:41.326)
That's right.

Dave (08:54.182)
Yeah, so back then, back 2010, the app exchange was a little bit different than it is today. It wasn't as crowded. So, and again, at that time we were bootstrapped. We never, for either business, we never raised traditional VC funding, right? It was all the income funding. So given that we did have marketing or budget constraints, if you will, on how much money we could spend. So we did the traditional app exchange, Dreamforce, partners.

James Gasteen (08:59.463)
Hehe.

James Gasteen (09:04.872)
Yep.

James Gasteen (09:08.917)
Mm-hmm.

James Gasteen (09:19.762)
Yeah.

Dave (09:21.29)
events, we did do dreamforce, sorry, we did events, we did the app exchange marketing program a couple of times like the homepage promotion. Again, even that was different. I mean, I remember way back in 2010, the entire homepage was just the paid promotions from ISVs. That's all you saw was much easier to get noticed on the homepage. So, you know, we did pretty well as far as lead flow. And my second company, I was lucky enough to have some strategic partners that really

James Gasteen (09:36.05)
Hehehehehehe

Dave (09:50.242)
brought us a lot of business. So we actually partnered with Sage and they brought us a lot of business before they decided to exit the space for strategic reasons. But anyways, they brought us some business as well. So it was a lot of, we didn't do any outbound sales. We didn't spend a lot on, if anything, on paid ads. It was really app exchange, partners, all the traditional kind of get starting.

James Gasteen (09:54.226)
Oh, brilliant.

Dave (10:20.386)
marketing avenues that an ISV usually uses. Now I don't necessarily recommend that now. And I'm sure we'll talk about that. But, you know, that's how it was back then. With my second company, which was a little bit later started that in 2016 exit in 2020. The app exchange started to get a little bit more busy, if you will. So there were we did a fair amount of outbound.

James Gasteen (10:27.134)
Yeah.

James Gasteen (10:39.444)
Yeah.

Dave (10:45.85)
We did the inbound, but we didn't do paid at that point in time, but we did inbound. We did partners like Sage, as I mentioned, but we did do some strategic outbound. I did have a sales rep that was kind of a co-founder with me. So he would do some, some inbound and outbound as well. So yeah, those are kind of the key, key channels that we used early on.

James Gasteen (10:52.244)
Yep.

James Gasteen (11:08.965)
And in terms of that growth, I mean, in the first business, did you have any AEs or were you the super AE? Like, how did you go about acquiring customers?

Dave (11:16.67)
Yeah, in the first year for both companies, as a founder, I was sales marketing everything. But we raised a little bit more in the first company, actually, even though it was Angel, raised about a million and a half. So I did hire eventually, there was two to three to four reps that we had on board, primarily for Inbound. So whether it be a partner channel, app exchange,

James Gasteen (11:23.687)
Yep.

James Gasteen (11:41.343)
Mm-hmm.

Dave (11:45.978)
our organic social media and so forth. It was inbound free trial requests. So we did have free trials on both companies. So inbound free trial requests and those reps were taking that. So when we had the funding, we kind of doubled down on sales at that point in time, not as much on marketing. And that's one of the challenges that I'm sure a lot of product or technical focused founders see is that

James Gasteen (11:51.796)
Yep.

James Gasteen (12:14.59)
Yeah.

Dave (12:15.246)
Just like me. I'm a product guy. I'm enamored with the product And I kind of leave sales and marketing aside until it's too late. So You know, we did hire reps as quickly as possible to kind of uptick that lead flow So yeah, that's in the second company you only had one rep We had double the AR in the second company to hopefully some learnings from the first company But we were doing a lot of partners

James Gasteen (12:35.931)
Bye.

James Gasteen (12:40.871)
Hehehehe

Dave (12:44.29)
partner channels on the second company, did some app exchange, did inbound as well with the free trial. We doubled down on reviews, case studies, things like that. So never had a lot of money because we were bootstrapped to hire a big team or do a lot of paid ads or just do outbound. It takes time and money there. So those were the main channels that we used on both companies.

James Gasteen (12:46.194)
Yep.

James Gasteen (12:55.89)
Mm-hmm.

James Gasteen (13:11.545)
Yeah, I'd love to explore a bit more about you know, you said you had Sage, you had a few of the kind of SIs that doesn't kind of happen overnight. Like what kind of tips would you maybe give other founders about really getting that channel fired up something in the ecosystem, if you can fire up a channel, and they're bringing you business, it's a dream because then you're as infinitely scalable SaaS business, flicking switches on your partner order app, and watching the ARR move on a daily basis.

Dave (13:36.118)
Yeah. It was a lot of handholding. I mean, with Sage as an example, I did travel to Sage headquarters. I was in Europe. Stephen Kelly, I think, was a CEO at that time. So I met with their team, trained their team in different regions. A lot of sales enablement material that was available to them. One of the nice things though, is that

James Gasteen (13:47.221)
Hehehe

James Gasteen (13:52.895)
Yep.

Dave (14:04.874)
because there was a commitment there on their side, they did train and educate themselves where they were actually delivering the demos when they're in the sales cycle with their other products. So remember that they had the financial accounting product on Salesforce for a period of time. So they were selling that alongside our product, our PSA product at that point in time. So, you know, they were certainly committed. They saw opportunity there.

James Gasteen (14:12.585)
Wow.

James Gasteen (14:19.994)
Yep, that's right. Yeah.

James Gasteen (14:26.846)
Well.

Dave (14:34.378)
Um, and I think, and this is prior to the intact acquisition, excuse me, as you probably know, you know, intact, um, in some others do have some professional services components in it, track projects, track time sheets and so forth. And, uh, they're, they're Sage accounting product really didn't have any of that. So, uh, we were a strategic partner to them, which helped. And then on, on some of the other SIs again, handholding enablement was, um,

James Gasteen (14:47.049)
Yep.

Dave (15:03.026)
was critical. We didn't have too many partners, just a handful, like three or four, but they were committed to it. They saw it as an opportunity there. They weren't necessarily large global SIs. And what that means is they were looking for revenue wherever they can grab it. They were in the professional services space, like in high tech as an example, or even consulting. So

Yeah, no, there was a there was a commitment there for sure. And we didn't rely on partners, although they brought us a lot of business. I'd say maybe, you know, 50% of our business was or leads were generated from partners. It wasn't 80%, but it was 50%, which is substantial. And then, then there was everything else that, that came with that other 50% app exchange inbound, you know, Salesforce, AES, things like that.

James Gasteen (15:43.144)
Mm-hmm.

James Gasteen (15:50.331)
Yep.

James Gasteen (15:56.081)
And if you think about now, you know, you're obviously advising lots of different Salesforce ISV founders. Like what are you seeing as some of those kind of marketing strategies that might be working quite effectively? Because as you said before, the app exchange is very noisy. You know, the A's are now carrying a bigger bag of products. The SE's have got more products to demo. Like what do you see that's maybe kind of working out there when you're talking to founders?

Dave (16:19.762)
Yeah, no, it's a great question. And that's where I spend the majority of my time now on helping ISVs and SIS go to market. And as you stated, you know, it's not only the Salesforce ecosystem, it's the SaaS industry in general is much more saturated than it was. I think I saw a stat that there's 10 X the number of SaaS companies that there was a decade ago. So there's a lot of noise out there. So what I recommend now is, and this is really where I start is, nail your go to market. I mean, what I mean by that is,

James Gasteen (16:25.593)
Mm-hmm.

James Gasteen (16:33.81)
Yeah.

James Gasteen (16:39.741)
Yep.

Dave (16:49.47)
If you're an early ISV and you're maybe less than one to two millionaire, you really should have one customer profile going after one industry, going after that one problem with one or two use cases in a certain employee segment. And if I didn't mention already, most importantly, one industry, right? Maybe two, depending on if you're the problem that you're solving.

James Gasteen (17:05.969)
Mm-hmm.

James Gasteen (17:12.937)
Yeah.

Dave (17:17.782)
is consistent across those two industries. But really stay focused. And as an example, if you then want to leverage partners, you wanna leverage Salesforce AEs and selling, you've narrowed down your ideal customer profile where you're gonna say, okay, if I'm going after healthcare, I don't need to engage 10,000 Salesforce AEs, I need to engage 200 AEs in the healthcare sector.

James Gasteen (17:20.393)
Mm-hmm.

James Gasteen (17:35.741)
Yep.

James Gasteen (17:43.679)
Yeah.

Dave (17:44.418)
find out who those people are, engage with them with the right sales enablement material, customer case studies, so on and so forth. And then on the SI side, look for those SIs that are heavily engaged in the healthcare sector, are working with those clients day in and day out. And that's where you're gonna find, hopefully find potential partners to partner with and hopefully generate leads together. So, I mean, very focus is the key point here.

You need to be focused. There's, as you stated, Salesforce has so many products now. They are industry focused. So as an ISV, you need to be focused. I think the traditional channels can still work as well, but I think you need to have a story. You need to have a problem. You need to have a differentiated product.

James Gasteen (18:21.545)
Yep.

James Gasteen (18:32.501)
Mm-hmm.

James Gasteen (18:36.23)
Yep.

Dave (18:39.726)
You need to be solving an urgent problem that customers care about and if in Salesforce customers care about and if you have that, I think various channels can work, but I think you just need to be focused and then expand from there. You can't go in with a generic horizontal solution that just, you know, your target market is every single Salesforce customer. It's not going to work. There's too much noise.

James Gasteen (18:53.941)
Mm-hmm.

James Gasteen (19:05.062)
Yeah.

Dave (19:08.28)
You need to start and be focused and then scale and expand from there.

James Gasteen (19:12.541)
Yeah, you got to get famous. I think that's really useful advice. Kind of thinking, looking back, like, you know, hindsight is a beautiful thing. Is there anything that you'd have done differently in the early stages of either one of your startups?

Dave (19:25.394)
Yeah, I mean, I've already mentioned go to market, right? I mean, I would have been more focused. I probably would have picked one industry, one region, certain employee size and so forth, certain problems that we were solving for and so on and just tackle that instead of, as a founder, whether it be an ISP founder or any SaaS founder, you wanna take money from anybody that wants to pay you.

James Gasteen (19:29.042)
Yep.

James Gasteen (19:52.017)
Exactly.

Dave (19:52.582)
Um, but it's a challenge. I mean, one of the bigger challenges we had on the first company as well was, um, signing deals in Australia. Right. So, uh, with me being out of Toronto and the time zone, I mean, we were working around the clock with 10 PM calls every night, um, around the, around the clock support, so it was tough and, uh, even in the second ISV company, um, we sold a

James Gasteen (20:02.242)
Yeah, time zone.

Dave (20:21.938)
Israel as an example, in Australia, and those are tough. We didn't really have around the world support, if you will. The majority of the development team on both ISVs were based out of India. So we did have regional support available at that time in those time zones, but it was still, it was really difficult. So I would probably, as I stated, start smaller as far as focus, get a beachhead into that industry area.

James Gasteen (20:37.31)
Yep.

Dave (20:50.642)
solve those problems, have those case studies, and then expand from there. And I'd be more focused on, you know, and every SaaS founder says this, but I'd be more focused on sales and marketing than I would on product. It's a tough, I built a little product that I'm selling now as part of my consulting and advisory. And, you know, I could have released it a year ago, but what I ended up doing is taking half the product out, because it's really hard as a product

James Gasteen (20:50.665)
Mm-hmm.

James Gasteen (21:04.093)
Yeah.

Dave (21:20.138)
guy to not build stuff when it's so easy to build on the platform. So I had to basically cut it in half and say, no, I'm going after this problem, this use case in this industry. I don't need any of this other stuff. So it's a hard lesson to learn, especially as a product founder. I've heard before that the next feature that you develop is not going to substantially change.

your success in the marketplace, right? And if you're a product founder, when I talk to ISVs, I like to ask, what's the first thing that you look at in the day when you start your work? If you're a product or technical founder, the very first thing, and I'm guilty of this as well, the very first thing that they do, they don't check their sales and marketing metrics. They go in to look at the cool new feature that they're developing and see how it's looking, right? When in reality, you need to execute on the sales and marketing side.

James Gasteen (22:12.364)
Hehehehehehe

Dave (22:17.95)
just as much on the product side, especially if you're early on.

James Gasteen (22:21.797)
Yeah, I think it's funny, like, you know, I came from more strategy and commercial background and I was the de facto product owner, I wasn't a technical person. But it's almost the person, the cold face doing the sales is actually interacting with the market and prospects, as opposed to sometimes, you know, the product owners can be slightly more academic, you know, think viewing the market as you know, PowerPoint slides versus actually, we lost this deal because of support.

or time zone, not because of a feature set, right? Or we lost this deal because of price, or we lost this deal because the AE went to university with the buyer, nothing to do with the roadmap. So yeah, I think that's a great thing. Talking a little bit more now about the future of kind of the app exchange, like, well, how do you see the future of the Salesforce kind of app exchange and marketplace evolving? And how do you see some kind of founders thinking about preparing for those changes? Obviously,

Dave (22:48.696)
That's right.

Dave (22:57.908)
Exactly.

James Gasteen (23:16.018)
AI is a big thing.

Dave (23:18.302)
Yeah, I'm bullish on the ecosystem actually. Um, I think, you know, a couple of reasons. Number one is just the pace of innovation coming from Salesforce, the amount of products acquisitions. You mentioned AI there's data cloud, there's industries, there's new industries. They're coming out with a pharmaceutical and life sciences cloud. They just came out. They just came out with a new nonprofit cloud, right? That's going to be the new cloud going forward for nonprofits.

James Gasteen (23:30.974)
Yep.

James Gasteen (23:37.934)
Oh yeah.

Dave (23:45.766)
There's lots of opportunity there, I think, to fill in the gaps in the white space for customers. I also think just in general in the sales, or excuse me, the SaaS ecosystem is getting so saturated that customers are looking to consolidate vendors. And I think they want to consolidate vendors on leading platforms that they're using internally, one of those being Salesforce. So if they can get a...

James Gasteen (24:03.494)
Yep.

Dave (24:13.802)
a rev-op solution or a transcript solution or a geolocation mapping solution native on Salesforce versus some third party that's not on Salesforce, it makes total sense to kind of consolidate on the Salesforce platform. So I think that's an opportunity as companies look to rationalize, consolidate some of their SaaS spending. Yeah, and I think...

James Gasteen (24:35.529)
Totally agree.

Dave (24:41.83)
As the SaaS market gets more saturated as well, and I've seen a couple studies recently that have come out, as the market gets more saturated for SaaS vendors in general, and that would apply to ISVs, getting brand awareness, generating leads is becoming harder. There's so much noise in inboxes, so much noise on social media, so more and more vendors are looking to partners and ecosystems for growth. So I think there's gonna be an uptick.

James Gasteen (24:57.746)
Yep.

Dave (25:09.89)
in the amount of new ISVs that are coming into the ecosystem. Even though they might have an established product that's not native to Salesforce, they want to become part of that ecosystem and take advantage of Salesforce's ecosystem and develop an app, a native app as an example that complements their other product so that they can really penetrate those, you know, 150,000 plus Salesforce customers. So I think partner ecosystem is going to be a major channel.

I think the study was from GoToMarket Partners that did this study of companies are looking at partner ecosystems, not only Salesforce, but AWS, Microsoft, and so forth, ServiceNow. Those ecosystems are exploding. So I expect Salesforce to continue to see expansion there.

James Gasteen (25:38.386)
Yep.

James Gasteen (25:47.631)
Mm-hmm.

James Gasteen (25:51.367)
Yep.

James Gasteen (25:57.801)
And then you mentioned the kind of the virtualization, some of the kind of the new industry clouds coming out, like, you know, if you were to bet, would you say that, you know, building an ISV that was specific to an industry cloud would be a good bet, or would you maybe be thinking start horizontal, tease out some use cases, and figure out how you may verticalize your proposition? Because obviously, coming out with something verticalized could be very niche, but it's also high risk in case either Salesforce rolls out that feature, or you don't quite hit the mark.

Dave (26:27.91)
Yeah, I like to say when I'm talking to other ISVs, just because you are marketing vertical doesn't mean that your product needs to be vertical. Right? Exactly. So, you know, you can have a horizontal product that applies to a lot of industries, but just pick one or two when you're getting started. Right? And market to that. And you're going to learn from that, right? You're going to learn on

James Gasteen (26:36.27)
True. That's what Salesforce did for 10 years, right? They had industry sales teams.

Dave (26:56.318)
you know, what industry, what features apply to what industries, where the, the success is coming from your app based on success stories, case studies, so forth. And then you can kind of go industry specific as far as feature set. Um, but, but I see industries at least starting off with, if you have a horizontal app is more of a go to market play than necessarily a product vision, right? So it's just a matter of having more success with the app itself by

James Gasteen (27:17.958)
Yep.

Dave (27:24.814)
targeting specific industries early on instead of trying to boil the ocean. And then you can learn from that. If you're not having success in one industry, but you're having success on another industry, okay, you're gonna double down, right? And I was just listening to a Blackthorn podcast earlier today, I'm not sure if you saw that, but you know, yeah, yeah. You know, they started generic or horizontal and took them four years to get to one million error. I had a lot of learnings during that. That.

James Gasteen (27:35.474)
Yeah, I agree.

James Gasteen (27:41.196)
Which one?

Dave (27:53.846)
But they learned from their customer base and they saw success in two main industries, right? They saw success in education and nonprofits, I believe it was, is the second industry. But they doubled down on those two industries and then they, you know, the next four years was 10 million error. So even though they have somewhat of a horizontal solution for events and payments, by going vertical,

James Gasteen (28:01.289)
Yep.

Dave (28:20.818)
Um, from a marketing perspective, from a go-to-market perspective, and then of course they heard from those customers, what the features that they needed are. Then they could double down on those industry specific features. So I do think being industry focus as far as go-to-market is essential. But as far as product, um, you can build a horizontal product, especially early on where you're doing some.

James Gasteen (28:28.946)
Mm-hmm.

James Gasteen (28:33.01)
Yep.

Dave (28:46.794)
some things that are not scalable, because you need to learn from your early customers, see if you have product, market, fitness, certain industry. You can go horizontal, test out the waters in a couple of industries, but then once you have that success, I think you need to double down on the industry play.

James Gasteen (29:01.317)
Yeah, totally agree. I mean, I refer to it as a soft IP, right? It's the same product, but you've got the case studies, the collateral, the terminology, the go to market layer. And again, the products more or less the same, maybe you tweak a few of the labels, but you know, it's really getting and also the customer success bit coaching the customer to get the outcome, right? So you know, the regulated industries, pharma, telco might be about risk reduction, they don't care about productivity, the same product you might sell it into the SaaS marketplace for agent productivity, right? Same products.

Dave (29:18.702)
That's right.

Dave (29:29.422)
That's right. Yeah.

James Gasteen (29:30.389)
same technology. And then really just to kind of wrap up what's one what's one kind of piece of advice you wish someone had given you when you when you first started out Dave?

Dave (29:39.894)
Uh, I guess this, you know, maybe I'll give you two, one that's ISV, one that's ISV specific and one just in general. Um, you know, just in general, as far as a SaaS company, I think, you know, two things, number one, um, and I mentioned this already, but you really need to nail your go-to-market before anything else. Uh, and, and that's what I, you know, spend my time on now, um, which is you need to nail your ICP, your personas, your competitive differentiation.

James Gasteen (29:43.049)
Hehehehe

James Gasteen (30:02.601)
Yep.

Dave (30:08.002)
your positioning, your messaging. Without that, you're just spraying and praying about who you're going after and hoping that the leads come in. Right? And I should have done that much better on both companies, both ISVs. It would have been so much easier on my time. The second one that I'm big on is startups are hard. Having a new product is hard. And maybe this applies to not necessarily big ISVs that

James Gasteen (30:17.054)
Yeah.

James Gasteen (30:21.047)
Hehehehe

Dave (30:36.83)
you know, maybe have a component solution, but they're a bigger company, but more startups, if they built a product on the Salesforce platform, just like any other SaaS vendor is take care of your health. And it killed me on both startups. Um, and, and I'm still living through it now. Um, but you need to exercise. You need to eat, right? You need to.

James Gasteen (30:50.589)
Hehe

Dave (30:59.106)
uh, you know, make sure your mental health is, is okay. And you know, again, this doesn't apply to ISPs necessarily, but any startup. And again, it killed me on both. Uh, I took, I took what a two year gap between starting the second company, um, because it was burnt out. Um, and then I, I was, you know, I have a product that I launched now that is a smaller product. I'm not building into a big company.

James Gasteen (31:14.953)
Yeah.

Dave (31:25.958)
But I did toy with the idea of a third ISV that I would grow and you know the I Think it took me a year to decide. No, I just can't do it. All right, it's hard As far as ISV is concerned, I guess one tip that I would state is Watch your discounting We you know discounting is probably not going to move the needle in the majority of deals

James Gasteen (31:36.349)
Yeah. It's hard.

Dave (31:55.246)
Um, unless you're discounting substantially, which of course you don't want to do because it's just going to impact your, your error. Um, and, you know, my learnings are you don't really need to discount, um, at least not substantially. Uh, if the customer sees value in your product, uh, they're going to buy it. Uh, if, if the customer can't buy this quarter, but it's going to buy next quarter, you dangling a carat of a 30% discount is probably not even going to move the needle.

James Gasteen (32:00.202)
Mm-hmm.

James Gasteen (32:13.833)
Yeah.

James Gasteen (32:24.537)
They haven't got it, they haven't got it, yeah.

Dave (32:24.558)
because they haven't, yeah, they haven't got it. They have internal issues, internal process that they need to go through. And I did that way too much, right? Like, hey, you buy by the end of the quarter, you know, 50% discount, right? And that's early on when we wanted every dollar that we could get. But I think it's the wrong thing to do. I think, you know, what you should be doing is just proving the value and helping that customer

James Gasteen (32:37.153)
Hehehe

Dave (32:52.066)
you know, internally, if they if they need help to find the challenges that they need to address internally to make this deal happen. So I guess that's one which would which would be you don't need to discount to win deals provide value. And yeah.

James Gasteen (33:00.242)
Yep.

James Gasteen (33:12.429)
I think just on that, I remember my first business often, it would be like, we'd have quite a lot of services, we're in the same space as your second business in the PSA space. And you know, customers were used to spending on services, but often our services were so cheap and we had a team in permanent sales, I was like, right, as long as it makes someone happy, but it was almost like, actually, I can charge the same rates to an SI because the customers used to pay those rates. So I say that's one thing to look at, especially when you're bootstrapped.

Number two, I often found as well that customers have this kind of perceived barrier in terms of different line items on the quote. So SaaS they saw as recurring. So they would often try and take some discount on that. If you put in things like Premier Support, which they introduced in my first company after I stepped out, that's what they found was very successful within certain bigger companies. It was almost actually, if you've got this big team, you're going to need the next level of support and customer success.

And nobody bats an eye out of that. And I think the standard, I think maybe Salesforce led the market by adding 20% of the contracts. But I've seen lots of ISVs do that in Salesforce space and customers actually quite welcome it because they don't want ad hoc services. So often it's like, actually, if you're bootstrapped and you know, you can, well, even if you're not bootstrapped, if you can get recurring managed services, that's quite nice because then you can start to build a support function around that looks after your customers. That means that CS is paid for, it means pre-sales is paid for.

So again, I think it's also some people shy away from services is this kind of bad word, but you know, even the big VC say, you know, as long as it's not more than 20 odd percent, you're fine. I think that's often an area that you know, bootstrap founders shirk away from but it's a it's a source of funds. And B, it's often makes your product a lot stickier because you're getting closer to your customer.

Dave (34:55.394)
Yep, no, absolutely. We had services people at both companies as well, and quite frankly, early on, it paid the bills. Our margins weren't necessarily great, but at least it was positive cash flow that was coming into the business that very early on was probably greater than our ARR. Because we had these enterprise products that we were selling HR software, PSA software, as you know, it's not a flip the switch and...

James Gasteen (35:03.59)
Yep.

James Gasteen (35:13.697)
Bye, guys.

James Gasteen (35:18.662)
Yeah.

James Gasteen (35:21.941)
Hehehehehehe

Dave (35:22.21)
you're ready to go, right? There is implementation involved. So yeah, absolutely. We did leverage partners more as we grew, but yeah, and then early on, the only reason we didn't do premium support is because we didn't think we could deliver, right? But then eventually we had kind of a premium support model as well near the end. And I do agree that, you know, the ACV too is important, the annual contract value of the product, because if you're selling a 5K product, you shouldn't require

James Gasteen (35:49.918)
Hmm.

Dave (35:52.874)
a big services implementation to get up and running and for the customer to receive value. But I think in our case, in our products, they were kind of 25K ACV and up type products. So there was an expectation there, okay, we need some handholding. We will pay for implementation because this is something that's critical to our business, running our services business, right? Running our HR employee database, so on and so forth. So

James Gasteen (35:53.069)
Yeah.

James Gasteen (36:09.565)
Yep.

James Gasteen (36:14.389)
Mm-hmm.

Dave (36:20.742)
Yeah, no, we never shied away from implementation services. I can't say that we priced it at the same rate as SIs. We were a little bit more, we could have maybe, but we were always concerned on services losing the deal. But right or wrong, I think as you stated, it's an important component. I think at the end of the day, the customer's really just focused on a successful implementation, getting the value that they promised.

James Gasteen (36:36.798)
Yeah.

James Gasteen (36:51.045)
Dave, I've really enjoyed this conversation. Thank you so much for getting on the show. I think that's some really useful tidbits there for a lot of founders, having you've been through the journey twice now. So yeah, appreciate it, Dave. And yeah, look forward to catching up soon.

Dave (37:06.006)
Great, thanks James.