Recently, VCs have been regularly opining with punditry on how your startup–never, their startup–needs to cut back. As a technology startup CEO, I want to share how we run our company’s sales, service, and marketing stack for about $1,000 a month. Here’s our stack.
“Cash is king,” “Tighten the belts,” “The party is over,” “Valuations need to come back to earth,” and other similar VC insights abound. It feels like the same set of articles that were written in 2008, and they all sound like variations of this one. It’s true that many well-funded startups offer outrageous employee perks, such as nap pods, in-house gyms, yoga classes, etc. as reported by The Economist. A CFO at a 40-person startup in San Francisco told me that the company spends money like there’s no tomorrow. It’s part of the aura the CEO wants to create to attract employees and, likely, potential acquirers. M&A executives from stodgy firms and big bank balances like to visit the startup’s exposed-pipes-and-brick-walls office and crave some of that positively not-trying-to-be-cool cool that comes off its team with their Dre Beats headphones, daily Zesty lunches, and apparent lack of awareness that when the next Big One hits in San Francisco, offices with brick walls are literally going to come crashing down. So, with advice that’s at 50,000 feet coming from board-wallahs, how does a startup actually keep costs low?
Don’t rent offices with brick walls in San Francisco.
As a startup CEO, it is obvious to you where your money is going. It may be the insane rent that you’re paying to have a super-cool office in SOMA, San Francisco or Castro Street, Mountain View, CA. So, save yourself $10,000/mo (or $125,000/mo as the hot startup CFO told me their rent was for a 40-person office), and cut the office lease loose. Move the core team into a co-working space, and let the rest WFH until the VC winter blows over. Review your headcount and only keep people who are building your product or selling to customers. You don’t need on your payroll that “R” data analyst who can give the CEO the answer to the question about churn that bothers him while he is sipping his morning $5 latte made with beans that have been crushed under the feet of vestigial virgins from Amazonian forest tribes. Buy Excel instead and watch the 11 lectures on Udemy on how pivot tables work.
I mean, dude(tte), you don’t need me to tell you this stuff. You could move to Brussels or Bangalore, where there are some great engineers, but that’s not realistic. I wish I could move to a tropical island and run our business (like our co-founder just did, living in Thailand for a month – he actually worked harder). I can’t, if for no reason other than this–my wife runs a food company with a 10,000 square foot commercial kitchen in San Francisco and she can’t just move to Brussels–not unless she wants to take Indian Bento global. So what’s a tech CEO to do to keep costs low?
Save money with the right tools for your Sales, Marketing, and Service tech stack.
You could save money on your tech infrastructure stack, but that’s an article for another time. 100% of our team comes from Keynote, a 700-person company that made websites faster (an early employee, I was the CMO & EVP Corpdev, managing marketing, products and corporate development, and our 18th M&A deal was to sell it for $395 million). Our engineering team knows how to build highly performant software that uses less server resources, reduces bandwidth usage, and still delivers the OnBoardify product at the right speed and latency, so we have pared down our costs as much as we possibly could there.
What I do know is how we can run our marketing, sales, and customer service on an affordable budget, and I know you can do the same. Today, I had lunch with the CMO of a 400-person analytics startup in Silicon Valley. Their marketing automation SaaS software costs them $50,000/yr, but the complexity of running that software and making it work with their CRM requires them to hire a Marketing Operations staff member whose cost is $175,000/yr. So their marketing automation software actually costs $225,000/yr. And they need more business analysts for the next 3 months to correctly sync their leads between their marketing platform and Salesforce and have the right leads delivered to their sales BDR team. We used the same platform at our previous company and the real cost is in the complexity required to operate it.
At OnBoardify, we do not have anyone on our staff except engineers building our product and sales and marketing teams selling our product. Of course, that is because our product, OnBoardify, does all the heavy lifting in helping us communicate with leads from Salesforce, recognize visitors on our website, and support customers in real-time in our application portal. To do this, we integrate OnBoardify–if that’s the word for the 30 seconds it takes to do this–with tools like Salesforce, Outlook, Dropbox, Asana, and many others. OnBoardify works out of the box, and our customers do not need to hire staff to learn how to use our product. Here’s our stack and our actual costs on the tools:
Awareness: Web Site Stack ($369/mo)
Your web site should be fast and measurable, that’s the place where engagement starts.
- Facebook Ads ($100/mo) – Display Ads. We buy ads that Facebook users get to see.
- Google Adwords ($100/mo) – Search ads. Ads displayed to users when they search.
- Linode ($35/mo) – Hosting provider. Linode has a ton of docs, ’nuff said.
- Vimeo ($17/mo) – Video hosting. Its analytics are awesome.
- OnBoardify ($95/mo) – Chat. Site visitors ask questions and we capture emails.
- Google Analytics ($0) – Analytics. Measures our audience metrics.
- Warfare Plugins ($2/mo) – Social Share. Adds social sharing buttons to the site.
- CrossBrowserTesting ($20/mo) – Browser Testing. Test the site on many browsers.
Outreach: Sales Stack ($310/mo)
Salespeople are directly in charge of their outreach to leads with these tools.
- OnBoardify (included) – Outreach. Automate sending emails and update Salesforce.
- Salesforce ($125/mo). CRM. Update automatically using OnBoardify.
- GoToMeeting ($29/mo) – Conferencing. For meetings with prospects.
- Outlook 365 ($78/mo) – Email. A necessary evil because it’s the easiest way for customers to reach us.
- LinkedIn ($48/mo) – Prospecting. Look up prospects for outbound prospecting.
Customers: Service Stack ($80/mo)
Responding to customers and prospects in seconds is our secret sauce.
- OnBoardify (included) – Trials. OnBoardify kicks in to onboard and support customers.
- Asana ($42/mo) – Support. Convert customers emails to Asana tasks and discuss internally.
- Dropbox ($17/mo) – Content. All docs and screenshots are stored in the cloud.
- DocuSign ($21/mo) – Contracts. We speed deal closings by sending Docusign docs.
- Skype ($0/mo) – Support. We use OnBoardify to click-to-call via Skype.
Leadgen: Marketing Stack ($349/mo)
Our marketing strategy combines writing insightful articles and targeted email offers.
- WordPress ($0/mo) – Blog. We installed WordPress on our servers, it’s faster.
- Lead411 ($209/mo) – Contacts. Lead411 is an inexpensive, though small contact database.
- SendGrid ($100/mo) – Email. Sendgrid is a newer player in email marketing.
- Adobe ($40/mo) – Docs. We use Robohelp and Photoshop to create our documentation.
You can pare down your Sales, Service, and Marketing tech costs.
Specific ways to cut your costs, no matter how small or large your business is:
- Tiny Business ($47/mo) – If you are a tiny business or freelancer, here are the essentials that you need:
- Small Business ($750/mo) – If you are a small business, you can use most of the tools in the stack above, but drop Facebook Ads, Google Ads, Salesforce, Lead411, and SendGrid and a few more to bring your cost down to $750/mo.
- Medium Businesses ($1,108/mo) – If you are a larger business, there are many ways you can cut costs. For example, instead of $200/mo on commercial blog software, you can use WordPress for free, instead of using expensive marketing automation software for $4,000/mo you can use OnBoardify ($95/mo) and SendGrid ($80/mo), and instead of using ticketing software for $400/mo you can use OnBoardify ($95/mo for your entire team) and Asana ($42/mo for 10 people).
Rather than writing yet another How Your Startup Can Survive the Downturn blog post, we wanted to share our strategy for reducing technology costs for sales, marketing and service teams.
Vik Chaudhary is the OnBoardify CEO. In its two-year existence, OnBoardify has become the fastest way to communicate with prospects, customers, and partners—on email, on your site, and in an app. When you sign up for OnBoardify, he’d love it if you would say hello, and he will respond immediately whether he’s online, on email, or (always) tapping away on his phone. In his copious spare time, Vik–well–blogs.