Is the burden of student debt a necessity to be successful?
Arnold Schwarzenegger, Richard Branson, and Wolfgang Puck did not think so. And neither did Steli Efti, co-founder of Close CRM.
Besides their sweet accents, these entrepreneurs all found fame and fortune in spite of dropping out of high-school. Eat that Mark Zuckerberg, Bill Gates, and Steve Jobs.
But as Efti will share, education was a key reason that turned Close into a multi-million dollar startup. And how Close got their first 1,000 true fans.
After his parents moved from Greece to Germany, Steli Eftinopoulous was born.
Although many Germans were not entrepreneurs, Efti absorbed their diligent work ethic.
“The people were really hard workers and took an interest in doing good work, high craftsmanship, and precision. In Germany, when something is broken and you bring it to a professional to be fixed, you can count on it being done correctly,” (source).
No one in his family had a high school diploma either. Without a clear path forward, Efti also dropped out of high school. But he was a lifelong learner. And in time, this led him to the fascinating world of entrepreneurship.
“I struggled in school and really hated it. I had no other real option for what I wanted to do in life.
That led me to a path of reading about entrepreneurship and discovering that people don’t need certifications or qualifications to do something. They just have an idea, a dream, and hard work and they are able to build a business.”
“You can't connect the dots looking forward; you can only connect them looking backward. So you have to trust that the dots will somehow connect in your future.”
- Steve Jobs
After starting a few businesses in Europe, Efti has ready for a change. While Germany laid a necessary foundation, Efti knew Silicon Valley was the land of startup opportunity.
Twice he pitched Y Combinator (YC). YC is a famous startup seed accelerator that invested in Stripe, Airbnb, Dropbox, and 90 other companies worth over $100 million.
These rejections did not stop Efti from pursuing his dreams. He knew The Valley was where he needed to be. So in 2006, Efti sold everything he had and bought a one-way ticket to Mountain View, California.
Success did not come right away. It often takes 10 years to become an overnight success.
Over the next five years, Efti got rejected another five times by YC. He created two startups, both of which had limited success. And for one startup, his determination back-fired, spending several years on a doomed project.
But one thing was clear. Efti was not going to sit on his butt waiting for a golden opportunity to fall into his lap. Five years after moving to The Valley, Efti got his first break.
“The idea was you could sign up with your credit or debit card. Every time you purchased something, we would round the purchase to the nearest dollar and give it to your favorite charity.”
SwipeGood took off like a rocket. Within six weeks, Efti and his co-founders raised $500,000, got coverage in TechCrunch, and had 100 users sign up.
But Efti had his sights on something more.
Paul Graham (PG) had announced they were ready for the next YC batch. Efti sent in his application, then set out to blitzkrieg his way to getting a yes.
First, he came up with a list of past YC alumni. He reached out to each founder and told them about SwipeGood.
“When we sent the application, I emailed a bunch of people I knew that were YC alum.
I asked them to meet with us and give us feedback about the application and the interview. They were like, ‘PG will not like this, YC will not like this.”
Some were excited enough to send an email to PG.
“One guy was probably the reason we got in. He sent an email to PG after meeting us, and we got a reply from PG 20 minutes later saying our video in our application was broken.
We were in the lobby of a big company, and we recorded a new video waiting for that investor meeting and sent that link to PG."
Efti’s hustle paid off. After seven rejections, SwipeGood made it into the 2011 Winter batch at Y Combinator.
But not every rocket will make it into outer space. While some startups have an impressive takeoff, sometimes they fizzle out before leaving the atmosphere.
Eight months after launching SwipeGood, growth had flatlined. The problem? Their distribution strategy wasn’t sustainable.
SwipeGood partnered with non-profits and created landing pages for them. Each non-profit would send an email to their email list about an improved opportunity to support their cause.
The strategy was powerful with small charities. But results tanked when they did the same for bigger organizations who had stagnant email lists.
As growth soured, so too did the company’s mood.
Efti was on the edge of burnout. The team was struggling to come up with different ideas to improve their growth.
“We were banging our heads against the walls to try to get back to a growth path. What I realized was that after three, four, five months of working long hours and longer weekends, we were not getting results. I started feeling the team’s energy starting to drop.
People started showing up early and work hard. But there were less smiles, less creative brainstorming, and less fun [sic]. Eventually, we had to stop and ask ourselves as a team, ‘Hey, how do we feel, are we still excited about this?’”
There was still one ace up Efti’s sleeve.
Rather than partnering with NPOs, Efti reached out to large B2B companies to get them to sign up. Though the business development plan failed, it inspired his next million-dollar idea: an outsourced sales team.
Efti gave his team two weeks to test out this new project. With a short timeframe, Efti wanted to validate his business by pre-selling their product first. All he wanted was two companies to pre-buy the service to signal demand was high enough.
To reduce the customer’s risk, Efti gave an exemplary guarantee. He did not want anyone to feel like they were taken advantage of or did not get any value. So at any point, the startup could ask for their money back.
What did Efti do to find his first few customers?
First, Efti went to CrunchBase and got a few hundred company names he knew had money. He then called them up to see if they were willing to pre-pay for an on-demand outsourced sales team.
“Back in 2012, most Silicon Valley startups didn’t like sales. The future of software included ‘virality’ and would just market and sell themselves.”
Seven companies bought into their project. And with this success, ElasticSales was born.
Efti was busy renting out his time. But with two developer co-founders on-hand, Efti wanted to scale his services further.
“I hated the sales software that was out there and just selfishly didn’t want to have to use it. The products sucked, so we thought we would build software to help us scale.”
At the time, sales software was not about empowering a salesperson to sell more and do a better job. It was more for sales managers at big organizations to have great reporting, analytics, and forecasting.
During that time, it also wasn’t uncommon for sales CRMs to copy the major player in their market and niche. But that’s not the game Efti wanted to play.
“We completely ignored the competition. This isn’t advice I’d give to everyone. Everyone else looked at the dominant player, then niched their product. For example, they were a ‘CRM for social.’ We focused on building a product that sales team needed.
In our case, because we had so much customer data and sales teams in many markets, this benefited us. We had a natural amount of data to make smart decisions.”
When Efti’s co-founders started building the tool, they didn’t have a long-term vision for it beyond helping them scale faster. And scale they did.
“Over the next 18 months, we brought in over 200 venture-backed startups. We started to develop a vision of what sales software needed to be.”
With each new company, Efti and his sales team began to eat their own dog food by using the software 8-10 hours every day. Every client became a new opportunity for market research.
“[Each startup] gave us access to their sales CRM. We built their campaigns, so we were doing sales for 100’s of companies. In hindsight, this gave us the insights we needed to develop our tool.”
As ElasticSales kept growing, so too did market demand for their internal tool.
“First, we got signals from the market that we built something awesome.
Our sales rep showed the software to other sales reps they knew. So they were ‘selling’ them on the tool. And these reps were asking to purchase the software.
A bunch of our customers didn’t have an internal sales team, but some did and used us as a supplement. These guys saw the software we were using and wanted the services and our software.”
Second, our team saw our software as the future of our business. There was an internal group of champions that wanted to see it brought to market.
These two events peaked together, so I took a small team of five to see what they could do in three months as a separate product and brand.”
The product became Close CRM, a leading tool for startup sales professionals.
“The art of leadership is saying no, not saying yes. It is very easy to say yes.”
- Tony Blair, former Prime Minister of the UK.
When you first launch a product, you need to focus by knowing who you want to serve. Who is the customer type you add the most value through your product? Who do you understand and care about more than anyone else?
But it’s as valuable to get clarity who you won’t serve to increase your focus.
“Before we launched, we defined our ideal customer. But we also said, ‘Here are the types of customers that, if they come our way, we’re gonna turn away.’”
These customers are your anti-personas. Anti-personas are customers who may create product bloat or distract you from your main mission. Some may later fit your customer personas. But right now, you need to say “No” to anti-personas to increase your focus.
“When you say, ‘We’re not going to do enterprise sales,’ and then a massive company waves dollars in your face, it’s easy to compromise.
We did the same thing with our product. We had a product roadmap, and we had an anti-product roadmap of things we’re not going to build,”
Before doing Efti could launch, he needed to pick a price point. Thanks to his client, he got the research needed on another company’s dime.
While Efti did not have a clear pricing strategy, he knew pricing could strengthen his position in the market:
“We did not want to go with the cheapest software because this would mean raising an enormous amount of money as a free CRM. Instead, we wanted to price higher in the market because we knew we added a lot of value.
We were clear on our position, put a price on it, and launched. Then we were off to the races.”
In January 2013, Efti gave the Close team the green light to do a soft launch.
Close had some unfair competitive advantages with their launch, which are difficult to replicate. But there are still some nuggets you can glean from their launch success.
First, the team focused on Hacker News, a community of developers sponsored by Y Combinator.
“Because we were in YC and had a lot of connections, it was easy to get to the top of Hacker News.”
The Close team then focused on venture capitalists (VCs). With their massive Rolodex of startups, VCs can become partners to get you new customers.
“We also were talking to many VCs, so we had a reputation as the top sales team. So we emailed VCs to let them know about the launch.”
Next up, press.
“Techcrunch, Mashable, and VentureBeat covered our launch. Some of these outlets covered our launch, some we wrote articles for on sales strategy, negotiation, and demos.”
At first, Efti wasn’t planning on investing any sales or marketing beyond the initial release. But after they launched, the high demand quickly changed his mind.
It was time to map out the Close go-to-market strategy.
As Close grew, Efti began to check out the growth channels other CRMs were using. The goal was not just playing a game, but playing to win.
“We first looked at paid ads, but realize we would not outdo them here. Then we looked at public relations, and it was the same thing.
Eventually we looked at content. Most of our competitor’s content sucked. There was out-dated sales advice and it wasn’t compelling. It seemed only valuable for search engines, not humans.
Knowing this, we decided to go all-in on out-teaching our competitors. So educating through content marketing was our biggest focus.”
Educating the market wasn’t Close’s only go-to-market strategy. They also educated their team to better inform their strategy.
In 2009, Dr. James Oldroyd published a study on lead response management. The study looked at the success of sales representatives when calling web-generated leads.
If a rep calls a lead within 5 minutes, your chances of reaching the lead are 100 times higher than calling 30 minutes after signing up. And your chances of qualifying that same lead are 21 times higher.
“We called all our trial users minutes after they signed up. This was the most valuable and they picked up because they just looked at our site. We welcomed them to the trial and asked them questions to improve their experience.”
Here are some questions you can ask on that first phone call:
In the first call, your goal is to find out if the customer qualifies for the product.
If the product isn’t the right solution, you can win their loyalty by helping them find a better solution. And if you find your tool is what they’re looking for, set up a second call to convince them to buy your product.
There are a lot of misconceptions about product-market fit. A common blunder is to view product-market fit as a final milestone.
“Product-market fit is not a destination, but a moment in time. Some people think they need to iterate and pivot, then you’ll arrive in the promised land of product-market fit and now it’s only about growing. That’s an illusion.”
Think about it. If:
Then what was product-market fit today may be old news tomorrow.
How can a new product ever survive the journey to product-market fit? If market demand is high enough, customers will put up with a buggy product.
“Early on, we did not have reporting, which was about 60% of the use-case for CRMs. We would say our tool would help you with sales, but there wasn’t a massive crucial feature: reporting.
Customers were saying, ‘We love your software, but please, please, please we need reporting!’ Or they would buy from us and tell us they needed to leave, but wanted to come back once we had reporting.
If people are buying your product with massive holes and begging you to close those holes, you’re onto something. Most people are lukewarm, saying maybe they will buy when you add five more features. That’s a weak signal than buying your product and begging you to build what they need.”
To Efti, there are three stages on your journey to your first 1,000 customers, which he wrote about in this book.
The first stage is getting your first 10 customers. Here, your #1 goal is to do what it takes to get your first 10 customers.
“Try to get to your first 10 customers any way you can. Ask people you know and people you’ve worked with. Tell them what you’re building. Don’t worry about scalability.
If you can get 10 people to buy, ask what convinced them to do so? What was different about your solution from they currently use?”
The second stage goes from 10 to 100 customers. In this stage, you should begin to explore your first scalable growth channel.
“From 10 to 100 customers, explore scalability. Family and friends won’t scale forever. Can you do content? Outbound emails? Paid ads? There’s a finite number of marketing channels. Do you have expertise in a certain area? Can you use that expertise to get new customers?”
Once you reach 100 customers, you need to decide who are the customers that get the most value from your product.
“At 100 customers, you need to check yourself before wrecking yourself. Who are your 10 most successful customers?
Some customers are bigger than others. Some are indifferent markets or countries. And some have different use-cases.
Who of your 100 customers receives the most value from your product and is aware of it?
How would someone who doesn’t know you evaluate the value they get from your product? Look at the top 10 customers, and double down on the most successful types of customers. Others will churn and complain and will create massive problems down the line.
Focus on these top customers. Then scale."