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DealHub raises $20M Series B for its sales platform
DealHub.io, an Austin-based platform that helps businesses manage the entire process of their sales engagements, today announced that it has raised a $20 million Series B funding round. The round was led by Israel Growth Partners, with participation from existing investor Cornerstone Venture Partners. This brings DealHub’s total funding to $24.5 million.
The company describes itself as a ‘revenue amplification’ platform (or ‘RevAmp,’ as DealHub likes to call it) that represents the next generation of existing sales and revenue operations tools. It’s meant to give businesses a more complete view of buyers and their intent, and streamline the sales processes from proposal to pricing quotes, subscription management and (electronic) signatures.
“Yesterday’s siloed sales tools no longer cut it in the new Work from Anywhere era,” said Eyal Elbahary, CEO & Co-founder of DealHub.io. “Sales has undergone the largest disruption it has ever seen. Not only have sales teams needed to adapt to more sophisticated and informed buyers, but remote selling and digital transformation have compelled them to evolve the traditional sales process into a unique human-to-human interaction.”
The platform integrates with virtually all of the standard CRM tools, including Salesforce, Microsoft Dynamics and Freshworks, as well as e-signature platforms like DocuSign.
The company didn’t share any revenue data, but it notes that the new funding round follows “continued multi-year hyper-growth.” In part, the company argues, demand for its platform has been driven by sales teams that need new tools, given that they — for the most part — can’t travel to meet their (potential) customers face-to-face.
“Revenue leaders need the agility to keep pace with today’s fast and ever-changing business environment. They cannot afford to be restrained by rigid and costly to implement tools to manage their sales processes,” said Uri Erde, General Partner at Israel Growth Partners. “RevAmp provides a simple to operate, intuitive, no-code solution that makes it possible for sales organizations to continuously adapt to the modern sales ecosystem. Furthermore, it provides sales leaders the visibility and insights they need to manage and consistently accelerate revenue growth. We’re excited to back the innovation DealHub is bringing to the world of revenue operations and help fuel its growth.”
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Qualified raises $51M to help Salesforce users improve their sales and marketing conversations
Salesforce dominates the world of CRM today, but while it’s a popular and well-used tool for organizing contacts and information, it doesn’t have all the answers when it comes to helping salespeople and marketers sell better, especially when meetings are not in person. Today, one of the startups that has emerged to help fill the gap is announcing a round of growth funding on the back of a huge year for its business.
Qualified — which builds better interactions for B2B sales and marketing teams that already use Salesforce by tapping into extra data sources to develop a better profile of those visiting your website, in aid of improving and personalizing the outreach (hence the name: you’re building “qualified” leads) — has picked up $51 million in funding. The startup will be using the Series B to continue building out its business with more functionality in the platform, and hiring across the board to expand business development and more.
Led by Salesforce Ventures, the funding round also included Norwest Venture Partners and Redpoint Ventures, both previous backers, among others. As with so many rounds at the moment — the venture world is flush with funding at the moment — this one is coming less than a year after Qualified’s last raise. It closed a $12 million Series A in August of last year.
Qualified was co-founded by two Salesforce veterans — ex-Salesforce CMO Kraig Swensrud and ex-SVP of Salesforce.com Sean Whiteley — serial entrepreneurs who you could say have long been hammering away at the challenges of building digital tools for sales and marketing people to do their jobs better online. The pair have founded and sold two other startups filling holes to that end: GetFeedback, acquired by SurveyMonkey, and Kieden, acquired by Salesforce.
The gap that they’re aiming to fill with this latest venture is the fact that when sales and marketing teams want to connect with prospects directly through, say, a phone call, they might have all of that contact’s information at their disposal. But if those teams want to make a more engaged contact when someone is visiting their site — a sign that a person is actually interested and thinking already about engaging with a company — usually the sales and marketing teams are in the dark about who those visitors are.
“We founded Qualified on the premise that a website should be more than a marketing brochure, but not just a sales site,” Swensrud, who is the CEO, said in an interview.
Qualified has built a tool that essentially takes several signals from Salesforce as well as other places to build up some information about the site visitor. It then uses it to give the sales and marketing teams more of a steer so that when they reach out via a screen chat to say “how can I help?” they actually have more information and can target their questions in a better way. A sales or marketing rep might know which pages a person is also visiting, and can then use the conversation that starts with an online chat to progress to a voice or video call, or a meeting.
If a person is already in your Salesforce Rolodex, you get more information; but even without that there is some detail provided to be slightly less impersonal. (Example: When I logged into Qualified to look around the site, a chat popped up with a person greeting me “across the pond”… I’m in London.)
Qualified also integrates with a number of other tools that are used to help source data and build its customer profiles, including Slack, Microsoft Teams, 6sense, Demandbase, Marketo, HubSpot, Oracle Eloqua, Clearbit, ZoomInfo and Outreach.
Additional data is part and parcel of the kinds of information that sales and marketing people always need when reaching out to prospective customers, whether it’s via a “virtual” digital channel or in person. However, in the last year — where in-person meetings, team meetings and working side-by-side with those who can give advice have all disappeared — having extra tools like these arguably have proven indispensable.
“Sales reps would heavily rely on their ‘road warrior’ image,” Swensrud said. “But all that stuff is gone, so as a result every seller is sitting at an office, at home, expecting digital interactions to happen that never existed before.”
And it seems some believe that even outside of COVID-19 enforcing a different way of doing things, the trend for “virtual selling”, as it’s often called, is here to stay: Gartner forecasts that by 2025, some 80% of B2B sales interactions will take place in digital channels. (So long to the expense account lunch, I guess.)
It’s because of the events of 2020, plus those bigger trends, that Qualified has seen revenues in the last year grow some 800% and its net customer revenue retention rate hover at 175%, with funding rounds come in relatively close succession in the wake of that.
There is something interesting to Qualified that reminds me a bit of more targeted ad retargeting, as it were, and in that, you can imagine a lot of other opportunities for how Qualified might expand in scenarios where it would be more useful to know why someone is visiting your site, without outright asking them and bothering them with the question. That could include customer service, or even a version that might sell better to consumers coming to, say, a clothes site after reading something about orange being the new black.
For now, though, it’s focused on the B2B opportunity.
There are a number of tools on the market that are competing with Salesforce as the go-to platform for people to organise and run CRM operations, but Swensrud is bullish for now on the idea of building specifically for the Salesforce ecosystem.
“Our product is being driven by and runs on Salesforce,” he noted, pointing out that it’s through Salesforce that you’re able to go from chatting to a phone call by routing the information to the data you have on file there. “Our roots go very deep.”
The funding round today is a sign that Salesforce is also happy with that close arrangement, which gives it a customization that its competitors lack.
“Qualified represents an entirely new way for B2B companies to engage buyers,” said Bill Patterson, EVP of CRM Applications at Salesforce, in a statement. “When marketing and inbound sales teams use this solution with Sales Cloud… they see a notable impact on pipeline. We are thrilled about our growing partnership with Qualified and their success within the Salesforce ecosystem.”
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Develop a buyer’s guide to educate your startup’s sales team and customers
Every company wants to be innovative, but innovation comes with its share of difficulties. One key challenge for early-stage companies that are disrupting a particular space or creating a new category is figuring out how to sell a unique product to customers who have never bought such a solution.
This is especially the case when a solution doesn’t have many reference points and its significance may not be obvious.
My view is simple — some buyers could use a walkthrough of the buying process. If you are building a singular product in a nascent market that necessitates forward-looking customers and want to drastically shorten sales cycles, I have a proposal: Create a buyer’s guide.
A buyer’s guide is essentially a prescriptive summary that provides an understandable overview of how a customer may buy your solution.
A buyer’s guide is essentially a prescriptive summary that provides an understandable overview of how a customer may buy your solution. What does your product actually do? Is it secure? How would you implement the technology? What does it replace, if anything? It should be short, simple and speak the customer’s language. It also acts as a sales-enabling tool. Sales teams, especially at smaller startups, can review the guide quarterly and analyze what is and isn’t working as the company goes to market.
Here is how to put together a buyer’s guide, including what to sort out before you type a single word.
Know your audience
From the start, it’s important to think about who the stakeholders are for your product’s buying cycle. One typical issue with early-stage startups is they meet with an enthusiastic buyer — a CIO, CTO or VP of product — but neglect to include the other stakeholders who should be part of the conversation. More importantly, a lot of companies don’t realize the impact of their product on a group or team that they would not typically sell to.
For example, target the security team as an early stakeholder, because they’re probably going to review your product. If the solution is focused toward, say, integration, then hone in on who would be owning the integration process on the buyer’s team.
If you’re selling a martech solution, on a business level, you have to consider a finance business partner for marketing. Think about the problems your customers face and also how others in their company relate to them.
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Sales scheduling platform Chili Piper raises $33M Series B funding led by Tiger Global
Chili Piper, which has a sophisticated SaaS appointment scheduling platform for sales teams, has raised a $33 million B round led by Tiger Global. Existing investors Base10 Partners and Gradient Ventures (Google’s AI-focused VC) also participated. This brings the company’s total financing to $54 million. The company will use the capital raised to accelerate product development. The previous $18 million A round was led by Base10 and Google’s Gradient Ventures nine months ago.
It’s main competitor is Calendly, started 2 1/2 years previously, which recently achieved a $3 billion valuation.
Launched in 2016, Chili Piper’s software for B2B revenue teams is designed to convert leads into attended meetings. Sales teams can also use it to book demos, increase inbound conversion rates, eliminate manual lead routing and streamline critical processes around meetings. It’s used by Intuit, Twilio, Forrester, Spotify and Gong.
Chili Piper has a number of different tools for businesses to schedule and calendar accountments, but its key USP is in its use by “inbound SDR Sales Development Representatives (SDR)”, who are responsible for qualifying inbound sales leads. It’s particularly useful in scheduling calls when customers hit websites and ask for a salesperson to call them back.
Nicolas Vandenberghe, CEO, and co-founder of Chili Piper said: “When we started we sold the house and decided to grow the company ourselves. So all the way until 2019 we bootstrapped. Tiger gave us a valuation that we expected to get at the end of this year, which will help us accelerate things much faster, so we couldn’t refuse it.”
Alina Vandenberghe, CPO and co-founder said: “We’re proud to have so many customers scheduling meetings and optimizing their calendars with Chili Piper’s Instant Booker.”
The husband-and-wife-founded company was fully remote from day one, with 93 employees in 81 cities and 21 countries, long before the pandemic hit.
John Curtius, partner at Tiger Global said: “When we met Nicolas and Alina, we were fired up by their product vision and focus on customer happiness.”
TJ Nahigian, managing partner at Base10 Partners, added: “We originally invested in Chili Piper because we knew customers needed ways to add fire to how they connected with inbound leads. We’ve been absolutely blown away with the progress over the past year, 2020 has been a step-change for this company as business went remote.”
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Pathlight, a performance management tool for customer-facing teams and the individuals in them, raises $25M
The longer we continue to work with either all or part of our teams in remote, out-of-physical-office environments, the more imperative it becomes for those teams to have some tools in place to keep the channels of communication and management open, and for the individuals in those teams to have a sense of how well they are performing. Today, one of the startups that provides a team productivity app with that in mind is announcing a round of funding to fuel its growth.
Pathlight, which has built a performance management platform for customer-facing teams — sales, field service and support — to help managers and employees themselves track and analyze how they are doing, to coach them when and where it’s needed and to communicate updates and more, has picked up $25 million — money that it will be using to continue growing its customer base and the functionality across its app.
The funding is being led by Insight Partners, with previous backers Kleiner Perkins and Quiet Capital also participating, alongside Uncorrelated Ventures; Jeremy Stoppelman, CEO of Yelp; David Glazer, CFO of Palantir; and Michael Ovitz, co-founder of CAA and owner of Broad Beach Ventures. Pathlight has now raised $35 million.
Pathlight today provides users with a range of tools to visualize team and individual performance across various parameters set by managers, using data that teams integrate from other platforms like Salesforce, Zendesk and Outreach, among others.
Using that data and specific metrics for the job in question, managers can then initiate conversations with individuals to focus on specific areas where things need attention, and provide some coaching to help fix it. It can also be used to provide team-wide updates and encouragement, which sits alongside whatever other tools a person might use in their daily customer-facing work.
Since launching in March 2020, the startup has picked up good traction, with customers including Twilio, Earnin, Greenhouse and CLEAR. But perhaps even more importantly, the pandemic and resulting switch to remote work has underscored how necessary tools like Pathlight’s have become: The startup says that engagement on its platform has shot up 300% in the last 12 months.
Alexander Kvamme, the CEO of Pathlight, said that he first became aware of the challenges of communicating across customer-facing teams, and having transparency on how they are doing as individuals and as a group, when he was at Yelp. Yelp had acquired his startup, reservations service SeatMe, and used the acquisition to build and run Yelp Reservations.
He was quick to realize that there weren’t really effective tools for him to see how individuals in the sales team were doing, how they were doing compared to goals the company wanted to achieve and based on the sales data they already had in other systems, how to work more effectively with people to communicate when something needed changing, and how to tailor all that in line with new variations in the formula — in their case, how to sell new products like a reservations service alongside advertising and other Yelp services for businesses.
“Whether it’s five or 3,000 people, the problem doesn’t go away,” he said. “Everyone uses their own systems, and it hurts front-line employees when they don’t know how they are doing, or don’t get recognition when they are doing well, or don’t get coaching when they are not. Our thesis was that if software is eating the world, and you as a company are buying more software and analytics, over time managers will be more like data analysts. So we are providing a way for managers to be more data-driven.”
Five years down the line, Kvamme got the bug again to start a company and decided to return to that problem, teaming up with co-founder Trey Doig, the engineer who designed SeatMe and then turned it into Yelp Reservations and is now Pathlight’s CTO.
As they see it, the challenge has still not really been addressed. That’s not to say that there are not a number of companies — competitors to Pathlight — looking to fill that gap as well. Another people management platform called Lattice last year picked up $45 million (I’m guessing it will be raising money again around about now); HubSpot, Zoho, SalesLoft and a number of others also are taking different approaches to the same challenge: front-line customer-facing people spend the majority of their time and attention on interacting with people, and so there need to be better tools in place to help them figure out how to make that communication more effective, figure out what is working and what is not.
And all of this, of course, is not at all new: It’s not like we all woke up one day and suddenly wanted to know how we are doing at work, or managers suddenly felt they needed to communicate with staff.
What has changed, however, is how we work: Many of us have not seen the inside of our offices for more than a year at this point, and for a large proportion of us, we may never return again, or if we do it will be under different circumstances.
All of this means that some of the more traditional metrics and indicators of our performance, praising, management relationships and learning from teammates simply is not there anymore.
In customer-facing areas like sales, support and field service, that lack of contact may be even more acute, since many of the teams working in these environments have long relied on huddles and communication throughout the day, week and month to continuously tweak work and improve it. So while tools like Pathlight’s will be useful as data analytics provision for teams regardless of how we work, it can be argued that they are even more important right now.
“I think people have started to realize that if you can empower front line to be more independent, your numbers will go up and do better,” Kvamme said.
This is part of what went into the investment decision made here.
“With the acceleration of digital transformation across the enterprise, it’s not enough to rethink the way we work — we must also rethink the way we manage,” said Jeff Lieberman, MD at Insight Partners. “Pathlight is ushering in a new age of data-driven management, an ethos that we believe every enterprise will need to embrace — quickly. We are excited to partner with the Pathlight team as they bring their powerful platform to companies across the world.”
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Box shares rise on report company is exploring sale
Shares of Box, a well-known content-and-collaboration company that went public in 2015, rose today after Reuters reported that the company is exploring a sale. TechCrunch previously discussed rising investor pressure for Box to ignite its share price after years in the public-market wilderness.
At the close today Box’s equity was worth $23.65 per share, up around 5% from its opening value, but lower than its intraday peak of $26.47, reached after the news broke. The company went public a little over five years ago at $14 per share, only to see its share price rise to around the same level it returned today during its first day’s trading.
Box, famous during its startup phase thanks in part to its ubiquitous CEO and co-founder Aaron Levie, has continued to grow while public, albeit at a declining pace. Dropbox, a long-term rival, has also seen its growth rate decline since going public. Both have stressed rising profitability over revenue expansion in recent quarters.
But the problem that Box has encountered while public, namely hyper-scale platform companies with competing offerings, could also prove a lifeline; Google and Microsoft could be a future home for Levie’s company, after years of the duo challenging Box for deals.
As recently as last week, Box announced a deal for tighter integration with Microsoft Office 365. Given the timing of the release, it was easy to speculate the news could be landing ahead of a potential deal. The Reuters article adds fuel to the possibility.
While we can’t know for sure if the Reuters article is accurate, the possible sale of Box makes sense.
The article indicated that one of the possible acquisition options for Box could be taking it private again via private equity. Perhaps a firm like Vista or Thoma Bravo, two firms that tend to like mature SaaS companies with decent revenue and some issues, could swoop in to buy the struggling SaaS company. By taking companies off the market, reducing investor pressure and giving them room to maneuver, software companies can at times find new vigor.
Consider the case of Marketo, a company that Vista purchased in 2016 for $1.6 billion before turning it around and selling to Adobe in 2018 for $4.75 billion. The end result generated a strong profit for Vista, and a final landing for Marketo as part of a company with a broader platform of marketing tools.
If there are expenses at Box that could be trimmed, or a sales process that could be improved, is not clear. But Box’s market value of $3.78 billion could put it within grasp of larger private-equity funds. Or well within the reaches of a host of larger enterprise software companies that might covet its list of business customers, technology or both.
If the rumors are true, it could be a startling fall from grace for the company, moving from Silicon Valley startup darling to IPO to sold entity in just six years. While it’s important to note these are just rumors, the writing could be on the wall for the company, and it could just be a matter of when and not if.
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Dooly closes on $20M for AI-based tools to help salespeople with their busywork
Robotic process automation has taken the enterprise world by storm by providing a set of tools for those doing repetitive, volume-based tasks to use software to remove some of that labor to let those people focus on more complicated tasks. Today a startup that’s taken some of that ethos and is applying it to more individualized work — that of salespeople — is announcing some funding.
Dooly, a Vancouver, Canada-based startup that has built a set of AI-based tools that automate the busywork that goes into updating data in their sales software, and namely Salesforce, has picked up $20 million in funding to build out its business, which to date has picked up a number of customers among the sales teams of enterprise-focused software companies. They include Airtable, Asana, Intercom, Contentful, Vidyard, BigCommerce, Liftoff and CrowdRiff.
Its aim is to make sales software more useful for salespeople by eliminating the work that goes into inputting data into those systems.
“Really they’ve just created a mountain of virtual filing cabinets,” Kris Hartvigsen, Dooly’s founder and CEO, said in an emailed interview with me. “Filing cabinets just wait for drawers to be opened — or in the case of enterprise software, reports to be pulled and data to be input. We know people are capturing information across the business and our job is to make sure that the people and systems across the business have a better, faster, more far-reaching way of staying informed.”
The funding is being announced today, but it was actually raised in two tranches that had not previously been disclosed. A $3.3 million seed round was led by Boldstart Ventures and also included BoxGroup. Its $17 million Series A, meanwhile, was led by Addition, with Boldstart and BoxGroup again participating, along with Battery Ventures, Mantis (representing musicians The Chainsmokers) and SV Angel.
Alongside the VCs, there are a number of interesting strategic individual investors, too. Daniel Dines and Brandon Deer of UiPath (the RPA connection clearly is not one that I’m imagining!); Allison Pickens, the ex-COO of Gainsight; Zander Lurie of SurveyMonkey); Jay Simons, ex-CEO of Atlassian); Harry Stebbings; and other unnamed investors are all also involved. Ed Sim of Boldstart is joining Dooly’s board of directors with this announcement.
The challenge that Dooly has been built to solve is that while there are a lot of tools out there now to help salespeople source leads, manage the progress of their sales, give them advice and other helpful material to supplement their charm and the basic strength of a product, manage customers once they’ve signed on, and so on, all of them still require something important to work: a time commitment from salespeople to keep them updated with information. Ironically, the more tools to help them that are built, the more time salespeople need to spend feeding them data.
Even more ironically, one of the big daddies of the problem — the somewhat overweight Salesforce — has published figures (cited by Dooly) that say salespeople spend just 34% of their time selling. The rest (minus trips to get coffee to stay caffeinated) seems to be about data entry.
The idea with Dooly is that you turn it on, connect it to what you are using — starting with Salesforce — and Dooly lets you make notes which it then organises and puts into the right places in the rest of your apps.
“When a salesperson starts using Dooly, the ‘aha moment’ is pretty immediate,” Hartvigsen said. “Whether they want to do quick pipeline edits or push their notes to Salesforce, we don’t ask the user to learn any new patterns they aren’t familiar with, we just automate a bunch of things they hate doing, often comparing those traditional chores to clerical work.” For example, he notes, when they sync a note, Dooly automatically updates any Salesforce with any contacts found in the meeting, updates fields, adds to-dos, logs activities, and pushes messages to the appropriate internal stakeholders on Slack, all in the same motion.
The product currently also integrates with Slack, G-Cal and G-Drive, because, Hartvigsen said, “we see this as an area where there is the most immediate friction and an area that was in need of disruption.” He added that the plan is to add more integrations over time. “We see need to expand the solutions that anchor to our connected workspace, with our near-term focus being the systems that touch revenue teams,” he said.
The design of Dooly seems to be about investing a little in order to save more. On average people are using Dooly between 2.5 and 5 hours each day, but Hartvigsen claims that right now the system helps people make up for more hours each week in lost productivity. Its pricing starts at $25 per user per month, going up depending on features and use.
There are quite literally thousands of products out in the market today, and among them hundreds of strong ones, being built to help salespeople with different aspects of getting their jobs done. I’ve written about quite a few of them, and I’ve actually asked companies about whether they are tackling the very issue that Dooly has identified and is trying to fix.
They weren’t, but that doesn’t mean that they won’t. Chief among them are companies like UiPath and Salesforce, which sit on different sides of this problem and could well move into it as they keep growing. (Having UiPath as a backer by way of its founder and a senior executive points to a relationship there, which is interesting.)
In the meantime, there have been some other interesting innovations using AI to improve the sales process, with companies like Pipedrive, Clari, Seismic, Chorus.ai and Gong all using natural language, machine learning and big data analytics (itself helped by AI) to improve how sales get done.
“The first thing we noticed when we met the Dooly team was the thoughtful design-first approach to product that engendered tons of customer love. This love was inherent not only on popular ratings sites like G2 Crowd but also in the individual usage and viral adoption throughout companies with only one initial user,” said Ed Sim, founder and managing partner at Boldstart Ventures in a statement. “Dooly is revolutionizing the note-taking experience for customer facing end users from sales to customer success to product.”
“Dooly is relentlessly focused on building a user-first experience for its customers to seamlessly create workflows and unlock new revenue opportunities,” said Lee Fixel, founder of Addition, added. “We are thrilled to support Dooly as it continues to scale and enhance the sales function for more businesses.”
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As Slack acquisition rumors swirl, a look at Salesforce’s six biggest deals
The rumors ignited last Thursday that Salesforce had interest in Slack. This morning, CNBC is reporting the deal is all but done and will be announced tomorrow. Chances are this is going to a big number, but this won’t be Salesforce’s first big acquisition. We thought it would be useful in light of these rumors to look back at the company’s biggest deals.
Salesforce has already surpassed $20 billion in annual revenue, and the company has a history of making a lot of deals to fill in the road map and give it more market lift as it searches for ever more revenue.
The biggest deal so far was the $15.7 billion Tableau acquisition last year. The deal gave Salesforce a missing data visualization component and a company with a huge existing market to feed the revenue beast. In an interview in August with TechCrunch, Salesforce president and chief operating officer Bret Taylor (who came to the company in the $750 million Quip deal in 2016), sees Tableau as a key part of the company’s growing success:
“Tableau is so strategic, both from a revenue and also from a technology strategy perspective,” he said. That’s because as companies make the shift to digital, it becomes more important than ever to help them visualize and understand that data in order to understand their customers’ requirements better.
Next on the Salesforce acquisition hit parade was the $6.5 billion MuleSoft acquisition in 2018. MuleSoft gave Salesforce access to something it didn’t have as an enterprise SaaS company — data locked in silos across the company, even in on-prem applications. The CRM giant could leverage MuleSoft to access data wherever it lived, and when you put the two mega deals together, you could see how you could visualize that data and also give more fuel to its Einstein intelligence layer.
In 2016, the company spent $2.8 billion on Demandware to make a big splash in e-commerce, a component of the platform that has grown in importance during the pandemic when companies large and small have been forced to move their businesses online. The company was incorporated into the Salesforce behemoth and became known as Commerce Cloud.
In 2013, the company made its first billion-dollar acquisition when it bought ExactTarget for $2.5 billion. This represented the first foray into what would become the Marketing Cloud. The purchase gave the company entrée into the targeted email marketing business, which again would grow increasingly in importance in 2020 when communicating with customers became crucial during the pandemic.
Last year, just days after closing the MuleSoft acquisition, Salesforce opened its wallet one more time and paid $1.35 billion for ClickSoftware. This one was a nod to the company’s Service cloud, which encompasses both customer service and field service. This acquisition was about the latter, and giving the company access to a bigger body of field service customers.
The final billion-dollar deal (until we hear about Slack perhaps) is the $1.33 billion Vlocity acquisition earlier this year. This one was a gift for the core CRM product. Vlocity gave Salesforce several vertical businesses built on the Salesforce platform and was a natural fit for the company. Using Vlocity’s platform, Salesforce could (and did) continue to build on these vertical markets giving it more ammo to sell into specialized markets.
While we can’t know for sure if the Slack deal will happen, it sure feels like it will, and chances are this deal will be even larger than Tableau as the Salesforce acquisition machine keeps chugging along.
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Casper files to go public, shows you can lose money selling mattresses
E-commerce phenom and D2C bright light Casper has filed to go public.
The New York-based company that raised nearly $340 million while private, according to Crunchbase data, expects to trade on the New York Stock Exchange under the ticker symbol “CSPR.” Its S-1 filing includes a $100 million placeholder figure for its possible capital raise.
The company will need the money, as it loses money and burns cash. Let’s explore just how a mattress company does that.
Growth, loss
In the full years of 2017 and 2018, Casper recorded revenue of $250.9 million (net of $45.7 million in “refunds, returns, and discounts”) and $357.9 million (net of $80.7 million in “refunds, returns, and discounts”). That worked out to growth of 42.6% in the year.
Over the same two periods, Casper lost $73.4 million and $92.1 million on a net basis, respectively.
In the first three quarters of 2019 versus 2018, Casper put up $312.3 million in top line (net of $80.1 million in “refunds, returns, and discounts”), up just over 20% from its year-ago three-quarter tally of $259.7 million in revenue (net of $57.7 million in “refunds, returns, and discounts”).
The company’s net loss during the three-quarter period rose from $64.2 million in 2018 to $67.4 million in 2019. The company’s net losses are generally rising (though slowly so far in 2019), while its growth decelerates.
In contrast, and to the company’s favor, its operating cash burn is slowing. From $84.0 million in 2017 to $72.3 million in calendar 2018, Casper slowed its operating cash consumption further in 2019, to just $29.7 million in the first three quarters of the year, compared to $44.9 million over the same period of the preceding year.
But the company’s slowing growth and stiff losses using regular accounting methods (GAAP) could strain its valuation. Casper was valued at $1.1 billion in its most recent funding round.
While the company’s gross margins aren’t bad for a non-software company (49.6% in the first nine months of 2019), the firm spent over 73% of its gross profit last year on sales and marketing costs. That figure indicates that Casper spent heavily to generate growth, growth that came in at about 20% so far in 2019, as reported.
That fact implies that growth will remain constrained, as the firm can’t afford to spend too much more on the line item. Which begs the question: What’s the value of a firm that is showing slowing growth, non-recurring revenue and sticky GAAP losses?
The company’s adjusted losses aren’t much better. Looking at its adjusted EBITDA, a profit metric so distorted to flatter that it’s nigh a funhouse mirror, Casper only marginally improved on its 2018 tally looking at the first three quarters of that year (-$57.5 million) in 2019 (-$53.8 million).
Investors
Casper has raised from IVP, Lerer Hippeau, Target and New Enterprise Associates. The firm raised seed capital back in 2014 along with a Series A. Lerer and NEA were most active back then, looking at its funding history.
The company raised $55 million more in 2015, and a far-larger $170 million in mid-2017. A $100 million round came in 2019 that set it up for its 2020 IPO.
This company’s IPO is a pricing question. And one that will impact a host of startups that both compete directly with Casper or operate in a different vertical with a similar business. Get hype.
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How startups close their first big sales
Joe Procopio is a multi-exit, multi-failure entrepreneur. Joe is currently building Spiffy, and previously sold Automated Insights, sold ExitEvent and built Intrepid Media.
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No matter what your startup sells or who you’re selling it to, companies that survive — and grow — need big customers and lots of them. But how do you land million-dollar deals with limited resources and no credibility?
In more than 20 years of building companies and products, I’ve learned that in the grand scheme of the startup lifecycle, while you scale your way through growth to eventual sustainability and success, acquiring your first customer is relatively easy. Any good salesperson can sell a good product to the prospect of their choice. Hell, any mediocre salesperson, even when they’re hawking complete crap, can get lucky once. Your first customer is a great signal, but it’s just a signal, not a savior.
What actually matters is what we learn from that first signal and all the signals that follow.
Aggregate value to target prospects
The process starts way before the first sales pitch. Your chances of closing your first big sale are going to be directly related to how well you’re targeting your prospective customers. So let’s begin with a discussion of aggregation and targeting.
All product and service sales come down to usage and aggregated value. It doesn’t matter if your target customer is a consumer or a business. It makes no difference if your price point is dollars or thousands of dollars. It doesn’t matter if your transaction is completely frictionless or requires a six-month hand-hold by your sales team.
If your customer is a consumer, they’re going to have limited usage with your product or service and the value needs to be tightly wound into that small usage window. If your customer is a business, they’re likely going to have multiple users and almost continuous usage of the product or service, so the value will be delivered over time.
So a “lot of customers” for your product or service might be 100, or it might be a million. Either way, you’re offering the same value per dollar based on usage. You’re aggregating that value into the sale, so you need to be targeting those customer prospects with the highest expected usage.
A classic rookie mistake made by most entrepreneurs is spraying and praying at large prospect audiences for the sake of their largeness alone, hoping that those shards of value surface for the right people at the right time.
Don’t do that. Instead, for B2C sales, you’re going to need some intelligence about your prospect list, which means more than Facebook ad demographics — it’s being able to predict the usage based on the source of the prospect. For B2B sales, you need to determine the optimum type of business to sell into: their size, their industry, their appetite for innovation, and anything else you can use to narrow your focus.
Figure out who is going to get the most aggregate value for their usage and target them.
Targeting customer prospects based on value aggregation is not only going to increase the chances of closing, it’s also going to dictate the near future in terms of the growth of your startup. A targeted, good customer is going to make your life a lot easier. A random, poor customer is going to fill your world with complaints, support requests, change requests, feature requests, and ultimately severe changes to your product roadmap.
Consolidate and find a champion
When you’re a startup, your customers are buying innovation. The tricky thing is, no one needs innovation. Rather, they need the derivatives of that innovation — time, simplification, throughput, security.
In order to close a big sale, in other words, the aggregation of many, many units of that usage and value, you’re going to have to consolidate that usage and find a champion of value on the customer side.
So the question becomes: Who benefits the most from the derivatives of innovation brought about by maximizing the usage of your product or service?
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