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by chuckus 3500 days ago
From my experience, I disagree with the heuristic of money paid within the first month for knowing if you are really talking to users, because it doesn't apply especially for enterprise SaaS, where you likely to have a direct sales model, and as a co-founder with no sales experience at the beginning, as you continue to sell subscriptions, let's say the same functionality within a product, you will improve as a salesperson, closing deals earlier and by that heuristic, you know what your customers want.

Consistent user engagement with the product is a better metric to build such a heuristic, because user engagement is direct correlated to value IMO. That's why I am a fan of even charging $1 per month for a product, because it easier (relative to having given it away for free) to increase pricing based on the value you deliver to your customer, which can be measured through user engagement with the product.

1 comments

> user engagement is direct correlated to value IMO

It is not. At RethinkDB we had great user engagement, but people were unwilling to pay (or unwilling to pay enough to keep the business going). The heuristic of getting money in early avoids markets with bad fundamentals (developer tools is one instance of such markets).

Building a DB is a large endeavor, it's hard to see being able to get people to buy within only a month of contact for it (without playing with it and such). If you were to start from scratch again with RethinkDB, do you feel this logic still applies?
I would build it as a PaaS business (e.g. see Firebase), although that's a bad business for other reasons (impossible to effectively compete with Google Cloud and AWS).
Why not rent out access to AWS / GC instances running your software?
Do you think the one-month horizon applies to enterprise products as well? If not, how does the metric change? In some industries a sales cycle lasts 18 months before culminating in a multi-million ARR contract. I'm curious given your experience with a database product that perhaps could have gone down that path.
This post mostly applies to hunting deers and rabbits[1]. Elephants and flies are different.

The concern with new founders working on enterprise products is that it's very easy to convince yourself you're building for the enterprise when you really aren't. RethinkDB is case in point -- it's not the type of product you sell to a CIO (even with MongoDB, very few if any large organizations run on it -- it's mostly limited to silos). We found that we could capture at most $100k in value annually, and $1m contracts were ten years away.

My advice would be to either (a) not start enterprise companies unless you really know what you're doing, (b) start enterprise companies with consumer adoption models (Slack), or (c) if you must start an enterprise company, get really spectacular advisors who regularly spend enough time with you to understand your business intimately, and then listen to them.

[1] http://christophjanz.blogspot.com/2014/10/five-ways-to-build...