Bootstrapping A Tech Startup – From A Big Data Startup to A Growth Stage Company
Updated: Feb 12, 2021
This past week Datahut was at Xime, handling a session at their startup event. Post session, we had a chance to interact with some startups and shared our journey about how Datahut bootstrapped to profitability with just the founders doing all the sales. Even though Datahut was formed by three co-founders, we had a lot on our plate from product development, marketing, sales and even grocery shopping ( we couldn’t afford a cook back then). The process of bootstrapping Datahut helped us learn some very essential lessons in our entrepreneurial journey. Through this post, we hope to shed some light on our learnings from converting a big data startup into a growth stage company.
At Datahut, we solve a very important problem: bringing essential web data into our customer’s hands. We built a scalable data extraction platform to enable customers to extract data from the internet without any coding or technical know-how. Ours is a Data subscription business (DaaS) which is similar to SaaS.
We made our first sales hire after hitting $350K in ARR mark. We’ve come a long way since then, have more than $500K in ARR and full-time salespeople leaving the founders to escalate to management roles. However, a lot of those learnings can be applied to any early stage DaaS / SaaS startups. Here are our two cents on our learnings.
We started sales early
When we first started sales, we didn’t have a finished product, just a vague idea. However, we wanted to make sure that we’re onto building the right thing. Soon, we were talking to people who might need web data to escalate their businesses. We reached out to VP / CIO / CTO / CPO level people at companies in the retail industry via LinkedIn and email.
By the time we had finished talking to 20 people, we had a clear idea of what potential customers wanted. Out of sheer luck, one of our connections revealed his business’s big problem and luckily we knew how to help him. This turned out to be our first big opportunity. This happened on the 18th day of starting sales and I still remember waking up my co-founders to share the good news. We closed that deal promising the customer that we will deliver a solution in two months and we did it in half the time, working day and night.
There is a common misunderstanding that you require a finished product before starting sales.
I would say this line of thinking is the kiss of death for a big data startup. Ideally, you must know how to sell your idea even before beginning to implement it.
We built a scalable and repeatable sales process
When we first started, we had a simple four-stage sales process. We’ve identified some flaws in this and later modified it to a six-stage process with a few rules determining if a lead is good to go to the next stage. We kept on tweaking this process, however, we had built a scalable and repeatable sales process.
In our opinion, founders should figure out a good sales process before hiring a new sales rep.
It’ll consume time in the beginning, but the time spent will be worth it. It took us around one
and a half years because we wanted to be 100% sure about the process before hiring a new rep.
We walked away from bad deals
A bad deal is something that the startup is not comfortable going through at that point in time.
The deal breaker can be a variety of reasons ranging from pricing to a non-negotiable term of the contract. Each week, we encountered at least one bad deal. We trusted our gut feeling to decide whether the deal is worth holding into or not. If the project did not seem the right fit, we walked away because we knew it would affect our growth in the long term.
Here are some side effects of bad deals-
Your product might not work well for them and complaining emails will keep coming.
Wrong customers churn really fast and they might cause damage to your reputation.
We created good content
Educating prospects is one of the biggest challenges in sales. Creating content is one of the ways to solve the problem. Writing good content which educated readers about the problems we’re solving was one of the ways through which we addressed our challenge. We leveraged online channels to distribute content. We published on our blog and used Quora as a medium to reach readers. Thereafter, we moved to other channels like LinkedIn. This helped us educate our customers who were looking to solve data problems.
We built a good process for customer support
We always maintained a high customer retention rate by offering customer support whenever they needed it. In the initial days, the founders themselves attended to customer support and later brought in a team. Even after two years, the founders still handle all the major accounts. If you are providing good service, you build a loyal customer base. We have accounts which started at a few hundred dollars a month and grown to really big $$’s over time.
Always exceed the customer’s expectation when it comes to customer support. You get three things in return: customer retention, referrals, and upsells.
We found some Amazing partners
Partnerships are a sure shot to grow your business. After building a basic version of our product, we partnered with some organizations to offer our data bundled with the solutions they are already offering. We scouted for partnership opportunities via Angelist, started with small startups and then found bigger players (companies with more than $25 Million yearly revenue) later.
Use free tools for lead generation
Lead generation demands investment in sales tools and we couldn’t afford it. There was a python script available on GitHub which lets you guess the email of people given the name and company. We modified that script to find leads. Even though the success rate was not good, we managed to find some good contacts using it.
We also used free credits of lead generations tools. Many lead generation tools have a small number of free credits per month. We found 14 such tools and used their free credits to
generate leads. These hacks require a lot of time, but collectively they reap results
We asked for help
Having a mentor with a proven track record in sales is always a plus. We were fortunate to have found a few really good mentors. They helped us navigate through some very complicated deals. One of the most important lessons for a big data startup that we learned from our mentors was having the courage to say no to a bad deal.
Key takeaways for a nascent big data startup
Start early – even before building your product.
Use your resources wisely.
Build a scalable and repeatable sales process – founders should do it.
Create content around the problem your product solving to educate prospects.
Build partnerships and expand your business.
Find mentors who have a proven track record in selling to the market you are targeting.
Always measure and improve your sales process.
Use free credits for sales/lead generation tools to generate leads.
Walk away from bad deals.
Customers will always be having questions and complaints, if you don’t solve it yourself, the competition will. Provide good service and try upsells. It works!
Add your 2 cents to our 2 cents as comments or shares and we’ll have 4 cents! 🙂