Scrum Ventures Hosts First Expert Deep Dive Session with Nakul Patel
Former Facebook Executive Talks to Founders about Building an Enterprise Business
By Scrum Ventures
Last month, Scrum Ventures launched our new Expert Deep Dive Series to provide the opportunity for our portfolio founders to dive into specific topics with an expert in specific areas of company building. We plan to hold several sessions per year and we will share the key learnings from each event here.
For the first event, we held a customized discussion session featuring Nakul Patel, former VP of Revenue for Scrum portfolio company mmhmm, where he helped grow their business product. Before mmhmm, Nakul was a founding member of the Workplace by Facebook team in 2015 and later spent two years in Singapore to build out the Workplace team across Asia. Today, he invests in and advises early-stage startups.
During the event, Nakul shared insights and advised and answered questions for founders on enterprise sales, go-to-market strategies, segmenting the market, discovery, building a sales team, and custom pricing. Below we share highlights of his comments.
Enterprise sales processes
When customers aren’t converting from free to paid products, there is often merit in shortening the free trial duration or eliminating your freemium offering altogether. Or, if you are having trouble with customer setup and onboarding, I recommend investing in human-led onboarding that involves walking the customer through the actions that are predictive of longer-term usage of the product.
Many companies fall into the trap of giving away too much for free, which makes it hard to manufacture urgency to purchase later on. It’s also hard to get someone to all-of-a-sudden pay for something after they’ve been on an extended free trial. Anything you can do that is counter to that is probably worth it.
The fear that you will scare everyone away if there’s no free trial or the free trial is not generous enough is usually unfounded. In fact, after I left mmhmm, they started positioning their products as strictly paid products. This approach has served the company well. The bottom line is companies that give away a lot for free often struggle to monetize.
It’s a good idea to charge a nominal amount initially, add as much value as possible, and then adjust pricing. There are a bunch of psychological and practical hurdles that you get over by collecting a credit card and credentials up-front.
Go-to-Market Strategy
The prevailing wisdom is to focus on a narrower set of customers to start, either a vertical or a sub-vertical. In the case of consumer products like Facebook, it was universities. That wisdom, in my experience, is generally effective.
The caveat I would add is don’t be obstinate. You might have a point of view about your ideal customer profile (ICP), but you may very well be wrong. Also, realize that there might be surprises and you should welcome them with open arms.
When we started on Workplace for Facebook, basically a B2B version of Facebook, our initial hypothesis around the ICP was completely wrong. We thought the product would appeal to high-growth startups and grow bottoms-up, but that didn’t happen.
Where we ended up having traction with Workplace was at the complete other end of the spectrum: with larger, more traditional organizations, mostly in the the Fortune 5000: airlines, retail organizations, hotel groups, etc.
When we were getting started, Sheryl Sandberg gave guidance to our team not to spend too much time pursuing healthcare or government organizations. Fast forward a few months, and two of our first customers we closed were AstraZeneca and the Government of Singapore. When those organizations came knocking, we quickly qualified them. We had strong champions at those organizations and were willing to spend the time to establish those marquis partnerships, less so because we were trying to unlock those verticals or categories, but more for the marketing and PR halo effects.
Eventually, you’ll need to focus on verticals or use cases that you can close in a more repeatable manner in order to save time, energy, and resources.
Segmenting the market
It’s easy for a marketing person to spin up specific landing pages for verticals or use cases you have some level of conviction around but are still unproven. You can easily look at the clickthrough rates on those landing pages and run ads to drive traffic to those pages to get top-of-funnel interest. Then track that all the way through to conversion and figure out if it ultimately led to deals.
One of our board members had high conviction on a couple of user personas: executives and salespeople. We spun up numerous landing pages targeting CEOs, technical founders, and sales professionals. We got quick data within a week on clickthrough rates and traffic. There’s a secondary benefit there, too. Having all those use cases listed on your website makes you look bigger than you are.
Doing discovery without sounding interrogative
Start with the 80/20 rule. The customer or prospect should be talking 80 percent of the time, and the salesperson should talk 20 percent of the time. If that’s flipped, you might be doing something wrong. Ask open-ended questions and be a good listener. Double-click on their pain points to get more information you can re-incorporate into the conversation. It’s like being a good therapist or professor. It combines listening and being somewhat prescriptive in offering a solution. It’s more of an art than a science.
The other tip is to offer the prospect something of value to soften some of the awkwardness that can occur when posing open-ended questions. One of the things that works well on LinkedIn is an individual from a company will post a screenshot of an Excel sheet or something like that and say, “DM me if you want a copy of this app or template.” I almost always fall for that. That might be something to experiment with.
I also like the idea of asking questions when you first start the demo so you can focus the demo on what’s most relevant to the prospect. It lets them know why you are asking the question versus just having a checklist. It also helps you triage the lead to send it to the right place afterward.
Building a sales team
When scaling out a team, don’t rely too much on scripts in the early days. It becomes very obvious to prospects when someone is reading off a script and they have a flowchart in front of them that they are regurgitating questions from.
Remember that during the initiation phase of selling, you may need to optimize for organizational learning rather than pure revenue acquisition. Hire people who are quick on their feet and can drive these conversations independently with the right level of guidance. Record and audit the sales calls so you can draw learnings and insights that can be shared with future hires.
Doing custom pricing and having discussions around pricing
The right price point is often not about value extraction but about value-add — and the value-add for the customer is often different from what you hypothesize it to be. To the extent that you have humans talking to these folks or you can survey them, it’s important to ask questions about why they want to upgrade or the types of things that they’re willing to pay more for. You might find pleasant or unpleasant surprises around what they consider to be features, functionality, or capabilities they value. It might differ from what you think is valuable, and there might be some low-hanging fruit regarding revenue you can collect.
Most companies underprice their offering, and as you go up in terms of the segment, it applies even more, especially if you’re talking about a larger enterprise. customers. Sometimes you think you are a tiny startup and when you pitch to Microsoft or AstraZeneca, you’re almost apologetic when you say the price for the first time.
A sales coach once told me to go into a pricing discussion with =three prices in your mind, from the highest price to the lowest rate. Show the customer what you offer most customers and then show what you are willing to offer this customer. Don’t get to the lowest price right away. Start with the list price and then go on mute and see what happens. Use the highest price to frame the generous discount you will offer.
You might also explain that you’re figuring out the pricing together. Tell them you’re early in the journey and your goal is not to extract the maximum amount of revenue but to build a long-term partnership. Sound more human, be semi-vulnerable, and invite their feedback. Then you have joint accountability.
About Nakul:
Nakul Patel was VP of Revenue for Scrum portfolio company mmhmm (Founded by Phil Libin, funded by Softbank, Sequoia and others). Nakul has worked in enterprise sales and revenue functions in the US and abroad, and joined mmhmm to help grow their business product. He also invests in and advises early-stage startups.
Before mmhmm, Nakul was a founding member of the Workplace by Facebook team in 2015 and later spent two years in Singapore to build out the Workplace team across Asia. Workplace is now used by 5 million paying users from companies including Walmart, Starbucks, Nestle, Telefonica, Grab, Spotify, and Chevron. Nakul joined Facebook via the acquisition of mBaaS startup Parse.com in 2013, and spent the first few years leading partnerships for Facebook’s Developer Platform. Before Parse, he spent 5 years at Google including assignments in Beijing and Tokyo.
