Ask HN: What did I do wrong in my SaaS B2B startup?

[throwaway3141pi]

Hi everyone,

I somehow had 2M USD last year and I started a cyber security company. We developed some cyber security products that are really amazing and extremely effective. I know everyone think that their product is the best, but trust me, just take my word and assume I'm right, our products are on a different level for many reasons and its kinda ground breaking. (I really want to know root cause of my problems, so I'm not going to lie obviously).

So products are top notch (lets assume). I used all the money for extensive development, design and R&D. We created the best product. Now I'm very very low in cash and I didn't think much about the sales/marketing. I thought "product will speak for itself".....Well I was totally wrong. I can't even show the product.

Now I have around 100k left, but hey, we have couple great products.

I tried LinkedIn, but never got anything out of it.

I sent around 1000 emails to directors, got like 10 responses, did demos, they ALL loved it and told us that they will consider us in 2018 budget.

So very very long story short, I don't have any sales and I'm going broke soon. I tried VC firms, but they all need some sales first. I tried couple Angel VCs (Gust), but no one returned to me.

So what do you think I can do to save my company at this point. One of the main things I did wrong was not accounting for marketing/sales, but what else? Please tell me.

I offered free trials in my emails, I told the manager if they think they have something that will protect them against real threats and cyber attacks, I'm willing to do a very quick assessment by sending them sample emails that will bypass all their existing technologies. Still nothing...

Can you guys please give me some advise, some guidance, some tips? Anything would really help at this point.

Thank you

[dirktheman]

It seems that you already know the problem: sales and marketing. You've sent 1000 emails and tried LinkedIn and that's it? You have a lot to learn, especially when it comes to corporate sales cycles and B2B sales. But that's water under the bridge now.

My advice: fire everybody that's not essential to your operations. You'd be tempted to think 'if I get one big client I will need the developers/accounting/HR/personal assistant, but 100K in the bank gives you about 2-3 months runway and you're going to need ALL that money to get that client. So: fire everybody, sell everything, start cutting costs everywhere. It's ramen noodles and water for you the coming 2-3 months.

Now make a list of 5 clients that you want to have. They could be some clients that you already demo'd to, or new ones. Don't be overly ambitious with this step, don't aim for the Fortune 500 companies yet because they're not going to bet on non-proven stuff.

Spend all your time, effort and some money on getting these clients. Get to know them, make sure that you understand what it is exactly what they're doing, and how your product can help. Next, think of a way to SHOW them how your product can help. Cyber security is all nice and great, but unless they know the risk of not having your product you're going nowhere.

Maybe you can find a way to have a hacker break into their systems (with their consent, ofcourse!), show them how easy it is to get all client data or erase their client database. Cybersecurity is like fire insurance: you only realize you need it when your house is on fire.

A couple of tips: - Use the 100k to get a sales person with a proven track record to get sales for you. Sales is a profession just as programming, not something everyone can do - people who say that your demo looks great is fine for your ego, but doesn't say anything. Most likely the just don't want to make you feel bad - Sending 1000 emails and trying LinkedIn is not a marketing strategy - Dont' say 'I'll send you sample emails that will bypass your existing technology'. Why in the world would I want that? I might as well hand over my creditcard data to you as well? Why would I put my company at risk so that you can sell me something?

In short: cut costs to 0, focus on getting your first client. Oh, and some detention-work: write down the line 'Build it and they will come is utter BS' 100x. It's like rule #1 of entrepeneurship 101 and widely documented, there is no reason anyone would fall for this trap. Good luck!

[throwaway3141pi]

I will try to hire a person for sales. Unfortunately since cyber security is critical and you can see how companies almost go bankrupt after a single stupid breach, I thought people will have some senses and pay attention to cyber security products and instead of just keep buying and buying and buying same old technology thats proven to do nothing over and over, they would consider AT LEAST trying some newer technologies and products... Seems like I was dead wrong

[tixocloud]

Maybe you need to speak to the right executives - i.e Risk, Compliance, Legal, etc.

[HHalvi]

Not a lot of CXO's are willing to pay until.. they get hacked

[Blackstone4]

From reading your post, I feel like you already know you're problem is sales/marketing.

If I was a betting man, I would imagine you have a great technical product but it maybe needs some adjustments and better market positioning.

If I were you, I would get rid of all your staff if you have any. Cut your costs to zero. Then figure out where your product stands versus competition and put together competitive pricing. Show potential clients how much they can save in X (man hours, downtime, reputation etc.) if they use your product. Focus on selling. Maybe even bring on a sales-focused co-founder.

Failing all of that or if you've had enough try and sell your tech....

EDIT - Also go out and listen to your potential customers. Ask questions. Find out what their problems are and how you can help. Find out what is stopping them from buying your product. Speak face to face or over the phone not email!

[Blackstone4]

I forgot to add that B2B sale cycles tend to be longer. Be persistent and read around sales + self-help books.

[throwaway3141pi]

The thing is, its really hard to get rid of my developers at this point. They are constantly making things better, cleaner, faster. Also we have couple more features that we need to add to some products. But I hear you. I will try to cut down at least some of them. As for books, can you recommend some good ones?

[tixocloud]

I love Zig Ziglar's Secrets of Closing the Sale.

Another great one is Little Red Book of Selling (https://www.amazon.ca/Little-Red-Book-Selling-Principles/dp/...) but it might not be suitable in your current situation given the time crunch.

[jtap]

I wonder, I'm not a customer so you prob shouldn't listen to me, if your problem is that you are selling something customers don't really put a value on. Security is a nice to have and only becomes a must have when a problem has already happened. Kind of like virus scanners are only purchased when someone thinks they have a virus. Is there a subset of your security tools that can help determine problem, a cause, and a possible solution to an existing problem? Maybe package up this smaller toolset with maybe a white glove cleaning/restoration service as a product.

[throwaway3141pi]

I mean considering giant companies who you would think would stick around for another hundred year going bankrupt right after a single breach should tell a lot... No?

[staunch]

You need a repeatable marketing strategy! You can't afford to buy attention, ads are too expensive, so you'll have to earn it by giving away hard work.

1. Give away knowledge

Write interesting and informative blog posts on topics related to your technology. Post them on HN. See: CloudFlare

2. Give away code

Upload to GitHub some valuable part(s) of your product, or the entire thing, and then make money by offering Enterprise versions that have long term support, etc. See: Hashicorp

[throwaway3141pi]

I will try the #1. As matter of fact we are writing a whitepaper at the moment. #2 will take a bit time to prepare, but sure, I will consider that as well. But you think CISOs or MD or decision makers would pay attention to those? Would they notice?

[staunch]

This is bottom-up marketing, where you hope technical people will recognize your product as useful and pitch it to their boss for you.

"Hey boss, I found this thing called CloudFlare on HN, I think we could use it to help with these DDoS problems"

[throwaway3141pi]

Agreed, but how effective it is? They are willing to talk about a product to their boss? Bosses listen and accept?

[saimiam]

(FD - Not a marketer, just a coder who's trying to hack marketing for my own startups. If you want, we can brainstorm together offline.)

I'd stop spending and reserve the remaining 100k to buy me my first client.

Ads, email, and phone calls are too bloodless. You need to get in front of potential customers, make them engage with you person to person, and make a home in their instant-recall memory queue - if they think security, they should recall you.

Even if they never buy from you, if they recommend you to a peer, they've given you a patina of credibility that no online marketing effort can match.

How to find these customers to engage?

1. Seminars, conferences, lunch and learns, talks, even shareholder meetings(!)

2. Tell everyone you meet that you are looking to make industry connections

3. Followup followup followup..and don't forget the "Thank you" note after every meeting.

When you interact with people, listen 2x as much as you talk. Make sure you have an ask from everyone you meet - "I need...", "Is there anyone else...", "Love to hear your specific criticisms of my product..."

a) people love critiquing things. Listen politely and don't try to correct them. If they hate your product and say they'll never buy it, move on. If they find something good in it, start moulding their opinion in favor of the product.

b) make your success their problem but asking "How can I get you to..?", "If you were in my shoes, what would you..?" This gives you a window into their thinking and it makes them your champion with others if they see that you've done what they suggested.

[throwaway3141pi]

Thanks for the advice. For conference/seminars, I attend almost all of them. But you can't meet key decision makers there or get to talk to them. They are too closed and not open to talk to "vendors".

If you mean that I organize an event, thats costly, not sure if it will have good ROI.

I always listen to people and learn from them. Honestly probably around 12 features of my products came from potential clients and by listening to them.

[saimiam]

I'd refer you back to this -

> Even if they never buy from you, if they recommend you to a peer, they've given you a patina of credibility that no online marketing effort can match.

Marketers have this rule of thumb that you need between 3-7 touchpoints before your target becomes a customer. So, after one interaction with someone at a seminar, you are about 1/5 the way towards making the sale.

Don't lose heart - marketing and sales is as much, if not more, about the grind as it is about the product itself.

Don't organize events.

Also, there's a difference between listening for features which can usually be asked as "What" questions and questions which are designed to get your counterpart to solve your problem for you. I'd recommend a book called "Never Split the Difference" on how to ask questions to make the other person work for you without them even realizing it. It's by an ex-FBI hostage negotiator. His insights were used to save lives and personally, I found the book useful.

[kiraken]

Well, i work with startups a lot, and had helped hundreds of them launch their products and get funded, or generate sales, this is my advice to you:

1- You need a video commercial something simple, entertaining and youthful, something that would generate interest in your product, and people will be intrigued by 2- Create a good landing page or a website for your startup if you don't already have one and add the commercial to it. You need a great website, something that screams professional and clean, especially since your product is cybersecurity, and attach free trials along to your website. 3- Now for the next step, you need to spread your website far and wide on social media and web magazines, and try to have the biggest number of people visit and try it, and make sure you collect their reviews. 4- Once you have a big number of people who tried and loved your product, you can approach investors again, but this time with a product that has been tested and widely accepted in the market.

I probably have a few more good ideas, hit me up and lets chat about it more.

[throwaway3141pi]

I have a very good explainer video done by professionals (and paid good amount of $$ for it) I have a great landing page. Professionally designed and it looks great

As for 3-How? That's the main thing.... Can't get people or more importantly, decision makers, managers, MDs, CISOs, CTOs to visit my page

[kiraken]

What I usually do is pay facebook and twitter pages within the niche to share the link, leave the link on Reddit and Hackernews, and spread it on many newsletters etc. There are other more direct approaches of course.

[tixocloud]

It's clear that you're aware that your main issue is a sales/marketing problem and it looks like you've got great feedback from the directors you contacted.

Do you know what the timeline is for their 2018 budget? Will you be able to make it till then?

Also, what types of companies are you going after? Larger companies have longer sales cycles due to decision making, planning and implementation time. Is there an opportunity for you to go after smaller companies? What are the objections being raised by your potential customers? Is it strictly due to budgeting or is it because you're an unknown startup - if you're an unknown startup, onboard 1-2 clients for free, get their logo on your website and sell to the other folks.

How big is your current salesforce? Would you be able to align yourself with consulting/implementation firms that might help get your foot in the door? Would you consider hiring a salesforce that is 100% commission-based to try and get you the sales?

[throwaway3141pi]

Yes! I already offered 100% commission, no one is taking it!

[twunde]

Unfortunately B2B sales tend to have a longer sales cycle so you're definitely in trouble. At this point you probably need some financing and you need some sales. Anything else right now is a distraction.

Sales/marketing advice:

Most security companies partner with MSPs/MSSPs to sell/implement their products. It may make sense to work with them and/or sell to them.

You're currently targeting people at random. Instead of just looking at Directors, it probably makes sense to include CISOs (Chief Information Security Officers) and maybe some devops folks at startups/small companies.

Financing: You may need to look at alternatives to VC such as raising money from friends and family, raising money from smaller angels, getting a small business loan. As others have mentioned, you should look at cutting expenses. You may need to layoff some staff or cut some expenses.

[throwaway3141pi]

Thanks for the advice.

I contact CISOs and directors. Only through LinkedIn and email though. Nothing so far.

I will try some small business loans, hopefully they won't be asking about sales.

As for partnering with MSSP companies, I would love that, but how to find those companies and how to approach them? Just email them and ask for partnership?

[dpweb]

Nothing quite screams b2b tech like, better sales beating better product.

Vendors spend a lot of money on marketing and sales and id argue its a much tougher nut to crack that putting together some great tech. IT sr managers and up are constantly harassed by vendors for a piece.

Security however, sounds like you picked a good space to be in. I’d focus on getting an installed base by whatever means necessary. Your prospects are going to want to see you are out there in production at real companies. Ive heard stories of very small startups getting in that way.

[throwaway3141pi]

I'm trying to get some base... But that's the problem, can't get anyone aboard. They all look for old technologies and existing products. No one takes their time to check the product, check our explainer video, check the datasheet, nothing. They think they are OK with what they have, but all the companies who are being breached had those old / existing technologies and none of them helped. Still can't get people to listen/try demo/check out our site

[ajeet_dhaliwal]

Is this a hypothetical question or is it something that really happened?

If real I think expanding on the first sentence would be relevant. Did you generate that from another startup or raise it?

Spending 95% of your capital on developing the product probably wasn’t a good idea. Early launch/beta/iteration/lean would have been a low risk way of determining whether you’re making something people want.

[throwaway3141pi]

This is real and it happened. That was from another startup. I agree with spending all on dev, but creating the top quality product with best developers (who are expensive, not 15$/hr devs) costs a lot...

[isaki]

1. Cut the cost.

2. Most companies don't pay until they get hacked. Find any security vulnerability in your client app/backend and explain how it can impact their business and show how your product can protect them from such a security vulnerability.

[jackgolding]

Have a read of segment's story on indie hackers, their whole product changed when they actually got an entreprise sales guy. Otherwise you need to do more evangelism work.

[throwaway3141pi]

Do you have a link to the story? Also I'm really trying to get some enterprise sales guy, I offered share in the company, but can't find the right person. Also finding a real expert in sales is hard for me as I don't know how to tell who's better in sales. Everyone have similar resumes and they all have sales background, but which one is game changer, that I don't know and can't tell. I'm technical person, no skills or knowledge in sales

[jackgolding]

https://www.indiehackers.com/podcast/032-peter-and-calvin-of...

Also there was an interesting discussion on sales compensation on HN a few weeks ago - can't find it though.

[dyeje]

Get somebody who does Enterprise sales and offer them a nice chunk of equity. Seems like you're out of your depth on that side of things.

[throwaway3141pi]

I offered equity and share in the company. No one took it... They all have stable jobs, no one is willing to leave their stable job and take risk

[machinehead]

Create a website about your product, post to HN, reddit, youtube, twitter and any place you can think of.

[throwaway3141pi]

But that's like spamming communities, this is B2B product not for consumer and reddit/HN etc are mostly for consumers I think? Also with what context? In addition to that I think I won't get enough upvote or they will simply delete my post as ad. No?

[zhte415]

The quality of this troll is 5/10 but quite amazing it has elicited so many replies.

[ig1]

Have you considered asking the directors who love your product to become angel investors?

[Blackstone4]

Also how to you manage to spend $2m without getting any sales?! Was it all staffing cost?

[throwaway3141pi]

Developers, designers, explainer videos, website design, product design, .........

[brianwawok]

You should read lean startup before you build a company again :)

Should be getting sales very early in the pipeline. Say after 25k or 50k development.

[TheRealmccoy]

hi!

have you considered white hat selling?

Take 25 top companies of your prospects list and write to them asking for permission to do a pen test.

It all starts from there...

[sbinthree]

1000 emails to 10 meetings is really low conversion. It could be an issue of PMF, or who you are reaching out to, or the messaging of the emails, or a combination. I would try to find an experienced seller to partner with who can bankroll themselves in exchange for some generous equity. At this point you need their experience to build things back up. On messaging, I would suggest something along the lines of:

Prospect,

I noticed that (indication that they have the problem you solve). Have you considered (thing you do differently than their existing solution).

(my company) has built a new way to (solve the problem you hypothesize they have). Solving this problem would (allude to the promise land = more money or less costs or easier work or all three). Without our solution (scary things happen). I'd like to connect for 15 minutes and explore how you approach (the problem you solve) now to see if there is a fit.

Are you free (day and time)?

Pain, value, call to action. There are no hard and fast rules, but you should be getting significantly more than 100:1 outreach to meetings. Only ask for 15 minutes. The first call your goal is only to qualify. No tire kickers allowed. Is there budget? Do you actually have this problem? Who else needs to be involved to decide?

Ask 3-5 questions getting to the bottom of 1. How it's done there now and 2. Your synthesis of whether you think there is value. If you don't think there is value, straight up tell them. "It doesn't seem the like the value is there at this point, I appreciate you taking the time". If there is value, push hard. What needs to happen next to understand if this is a fit? Who needs to be involved? DO NOT offer a demo or a free trial. It does not win deals and puts you in a position of weakness.

You should be able to send 100 cold emails in a day if you grind. That should convert into 4-5 15 minute meetings with customers. That should result in 1-2 qualified deals. Most top sellers convert about 33-35% of qualified deals into money. Your sales cycles may be long, in which case I am sorry but it is what it is. If you can generate those 5-10 deals per week, you should be able to convert 2-3 of them. Any worse and the issue is product/market fit and probably not the sales process (probably).

It sounds like you sell to big companies (Directors?). If so, call high. Do not call people who do not sign cheques. Even if they delegate you down (which they often will) it is usually easier to get a response from senior people. Junior people prioritize what their boss tells them where as senior people tend to be more open. If you nail the hypothesis in the email (we call it "the hook") then you will get a response. If you don't, you won't, but at least you can disprove a particular hook.

In terms of cadence, try two emails and one follow-up call a week for three weeks. It seems obscene but it is necessary. You would be amazed how many people reply on the 5th email saying they have been looking for the exact solution you are describing. Of course, only 1/3 of those people actually end up giving you money (because people) but at least your persistence will make an imprint. You would also be amazed, after doing this work for a year or two, how many people come back to the table in six months.

Better engineering and product != success. Seriously, distribution wins almost every time. Stop worrying about product, whether it is amazing or just decent does not matter anymore. The only thing that matters is securing distribution. You have a distribution problem, 100%. If you try the sales route and fail, the best case scenario would be to sell the company to someone who does have distribution. Then they can plug your theoretically superior technology into their distribution.

[throwaway3141pi]

My email is exactly like that. I tell the problem (possible problem), I tell them existing technologies ALL of them fall short because of 2 reasons (I explain), then I say how we solve the problem all together and ask for a quick webex demo of the platform. I reached out to CISOs and MDs and Directors....

Calls are tough, specially since I don't have their phone numbers and when you call some, mostly it goes to voicemail or they dont have time to talk.

I will try with followup, but I'm afraid of spamming their Inbox. How frequently I should send emails?

[sbinthree]

Don't cold call them. Set the calls up in the email and ask for 15-20 minutes. I would say twice a week. Probably 4-5 emails before you just say "It's clear my hypothesis is wrong. If things change I'll get back in touch".