Getting more accurate customer feedback with Attentive's Brian Long
Getting more accurate customer feedback with Attentive's Brian Long
Brian Long:
When you're building your products, you need to be thoughtful about what am I able to build? What am I uniquely able to build that is going to be hard for the competition to copy? And you need to be real about it because the reality is that very few companies have any moat at all.
Peep Laja:
I'm Peep Laja. I don't do fluff. I don't do filler. I don't do emojis. What I do is study winners in B2B SaaS because I want to know how much is strategy, how much is luck, and how did they win? This week, Brian Long, Co-founder, and CEO of Attentive, an SMS marketing solution. Attentive was founded in 2016, and in a little over five years, the business has grown to over 1300 employees. In 2021, Attentive raised 470 million in Series E funding, with a total of 866 million raised to date. In this episode, we discuss Attentive's vertical focus, obsession with customer feedback, and success with outbound sales efforts. Let's get into it.
Brian Long:
Back in 2016, a bunch of us had actually worked together at a prior startup that did mobile app engagement and analytics. And we had sold that company to Twitter and had worked at Twitter. And while at Twitter, had seen how important messaging was and how much brands wanted to use messaging. Initially, the idea was let's go to companies and give them a way to use text messaging in order to communicate with their workforce as well as with their customers. We went through and pitched that a bunch of times, and we found out that people were not as interested in using texts to communicate with their workforce, but they were very interested in being able to reach consumers and potential customers through text. They were struggling to reach consumers in traditional channels, whether it be phone calls or email, or even in ads. And they really just thought the opportunity of using text and reach them on a mobile phone through chat would be great. That customer feedback is what got us to build the company.
Peep Laja:
Were you focused on e-commerce from the get go, or?
Brian Long:
We did focus on e-commerce from a very early stage. I think that even though you might have a massive TAM and many companies you can sell it to, it's a lot easier to get it right for one sub-vertical of company and to really make sure everything from your marketing to the products you decide to build to the way you manage those customers, to the way that you sell those customers. Everything I think is a lot easier to do on one sub-vertical and have a team focused on. And then over time, of course, you can begin to cover off on new verticals and things like that, but I really think you get a focus to start.
Peep Laja:
Be vertical-specific, and vertical is similar to niche but bigger. Email marketing is already a huge established category, but Klaviyo being email for e-commerce, managed to get massive, today worth over $10 billion. Attentive is doing the same with SMS for e-commerce. If you're building for a very specific audience, solving a very specific problem, it's going to be very hard for anyone else to do the exact same thing. To explain more about market verticals and why playing in them is beneficial to startup, here's Steve Blank, the entrepreneur, and educator whose customer methodology launched the lean startup movement.
Steve Blank:
Startups differ sometimes dramatically by vertical market. Now, talk about vertical market, so let me give you a Steve definition of a vertical market. It's the customers who identify themselves in a narrow industry or group of companies. They sell similar products or services. They typically compete with each other. And good for you, they typically buy or use similar products or services. And this is to contrast a vertical market with horizontal markets that cut across a series of vertical markets. So, for example, selling word processing software or database software kind of goes across a set of industries and markets. Selling tools to make semiconductor chips is a very specific sale into a very specific vertical market. Does that make sense? Vertical markets, horizontal markets.
Peep Laja:
What was the competitive landscape like when you got started?
Brian Long:
When we were starting, there really were very few e-commerce companies that were doing text messaging. I think that the real competition for us was convincing people that this was a product, a solution they wanted. So, ultimately I think you really have to sell the problem, particularly if you think you are early to a market. So, we knew the problem very well. The problem was that marketers want to make more money, and they want a better way to reach their customers. Right? There are many potential solutions to that, but we really led in our emails, in our outreach, in our marketing. Everything really focused on that problem. And once they agreed, "Yes, that's a problem I want to solve." We said, "Great. Well, we've got a solution that's working for some other people, and it's text messaging." And it was funny because I think there were so many companies that started doing it. Not because they thought they wanted text. I don't think anyone wanted text in 2017, but they wanted to solve their problem. And we thought we had a pretty good solution to that problem.
Peep Laja:
So how were you selling the problem? Like, what were the mediums you were using for it?
Brian Long:
Just how you're engaging the buyer. Right? So I'd spent a lot of time thinking about what goes in that subject line on the LinkedIn message? What goes in the subject line on the email? What's the first couple of sentences you say when you go to an event, and you meet them at a booth of a conference or whatever it is. And I think really approaching it from, are you interested in potentially finding a new top-three revenue channel that's growing really fast for brands like X, Y, Z? And the answer in most cases to that is yes. And then, once you get agreement that they have the right problem, you want to solve their problem. Then I think providing your solution to that problem is easy. I think too many people jump straight to the solution.
Peep Laja:
Pitching someone? Worst thing to say: "Do you have time this week to meet or hop on a call?" Best thing to do, offer insight about pain points your target has that they might not even know of and how others have solved it. Optimize for an aha moment. To identify those pain points, you need to ask yourself how confident are you that you know the three primary problems your target market has? Can you name the top gains they want to achieve? Where have you substituted your judgment for what you want to deliver for what the customers actually want to receive? Companies used to compete with rivals in their categories. Now the real competition is between whoever offers outcomes that particular customers seek, basically, jobs to be done. To get ahead, you have to convince customers that yours is the product best able to address their pain points. But first, you have to figure out what those pain points are.
Peep Laja:
Tell me about going from zero to first million in revenue? What kind of channels work? What helped you reach that milestone?
Brian Long:
So for us, it was very inside sales, SDR driven. I believe in hiring three or four SDRs at a company from the earliest days. And really, pre-product, I think a team should have three or four SDRs. Often entrepreneurs hold off on hiring sales way too long, and they just go straight to building. They just go straight to building products, straight to getting stuff out. And they don't realize that once you start building, it's really hard to tear that down. It's really hard to change direction on real product feedback. What you have then is you have a solution looking for a problem, and that's not where you want to be. So, I think the beauty of having a large inside sales team, a couple of people from the early days, is that you can go get a lot of feedback fast, figure out what the real problem is, and then build your solution accordingly.
Peep Laja:
Do you still think that every startup should hire SDRs today, because it's gotten harder out there?
Brian Long:
Yes. Absolutely. Look, think about it from an expense standpoint. An SDR might cost 50, 60K base, plus maybe, 20K in additional bonus. So you're looking at maybe selling 70K or something like that. Go out and try to hire one engineer right now. And you're probably talking 100s, if not more than that. And it's very hard to get them and retain them. And then, what's the output that you get from that. What are you going to have them go build? Well, that's what the SDR team is going to tell you. You know, to me, I think that it's very much a research team, even more than it is just a sales team, on what to build. So I think that you can get three SDRs often for the price of one engineer, and you can figure out what your company's going to build. So, I think it's a no-brainer to get that early.
Peep Laja:
Once you hit the impossible landmark of one million, then the journey of one to 10 million, like really starting to scale the business up, how did the marketing or customer acquisition strategy evolve? And how did your product strategy evolve?
Brian Long:
I think it comes back to the size of the problem and how big of a problem is it? Is it a problem where people are willing to spend a bunch of money to solve it? I think that there are three types of software companies out there. There are companies that make money for businesses. There are companies that save money, and there are companies that don't do either. And I think if you're in the first bucket that makes money, you're going to grow fast because you're going to get prioritized. Right? And I think that that step of saying a million to five to 10 to 25, to 100 to 200 to 400, that we've been through, that's a lot easier, really, than it is figuring that out for something where you don't make money. Make money, number one. Distant second, save money. And then third, if it doesn't do either, you better figure out how you're tying it to one of the first two. Because if you can't make that really clear, it has to be a burning on fire problem to get there. Now look, there's exceptions to that rule. You can take a company like, say, Slack, right? Does Slack make money or save money? No, it kind of just took off all of a sudden when a bunch of people started using it, and it kind of grew on its own. So, there are different versions of this model. I'm thinking more how are we looking at it from mid-market to enterprise SaaS sales type of business.
Peep Laja:
Relevance is so important. Your solution has to align with the customer's priorities and challenges at hand. Over time, some companies become more relevant, and others less relevant. Some of it is due to changing customer preferences or external events like COVID, but mostly you can actively manage brand relevance through innovation and storytelling. You create substantial innovation and then position those capabilities as must-haves. And by doing so, you make competitors less relevant. In the process, you start winning more business, you get better margins, and fight less brand-preference battles.
Peep Laja:
Was there a tipping point where the market became, let's say, problem aware, and they started to seek out SMS on their own?
Brian Long:
Yeah. Biggest snowball for us came in the winter of 2019. So, we worked our butts off to get a whole bunch of name brands just through blood, sweat, and tears. Got them to try out the channel. We offer free trials of the product because it's not a line item someone already had, make it easy, reduce the friction. I think, way too much, enterprise SaaS sales resolves around this idea of long-term contracts and making it really hard to try, which makes no sense. So, make it really easy to try, easy to buy. And we just would get these major brands trying it out. And that was the first holiday season where major brands were partnered with us and doing it. And what happened was all these other marketers and brands, and folks saw major brands doing this and said, "Whoa. There's some major marquee brands doing SMS. What am I missing here? What's going on?" And I remember we came back from holiday 2019, and we just booked an incredible amount of demos in Q1. And you were kind of thinking, "Oh, my God. We're on top of the world." And then, of course, COVID came, and for a couple of months, we thought this could be really bad for the business. But then, of course, e-comm took off, and it did even better. So, that really was the turning point for us was holiday 2019.
Peep Laja:
From there on out, did the increase in organic inbound leads become more prevalent compared to like outbound? How has the channel mix evolved?
Brian Long:
We still have a really strong outbound organization. We have had a pick up in inbound, but I think that if your outbound team is properly staffed and doing their work, I think it still is majority outbound. If you're selling mid-market enterprise and you've got the CAC/LTV ratios, then it makes sense. If you're selling long tail, it's going to be harder to make the CAC/LTV make sense. If you're doing mostly outbound, you got to have an inbound type model. So, it depends on who your customer is. For us, it's going to be profitable to have a team getting those demos because the CAC/LTV ratio is where it is.
Peep Laja:
The category that you play in, what do you call it? Is it new mobile marketing, or?
Brian Long:
We'd say communication, communication and marketing.
Peep Laja:
In your opinion, how mature is this market? Have the market leaders emerged and the top five is well established, and there's a bunch of also-rans? Or, are the pieces still up in the air?
Brian Long:
I think the pieces are totally up in the air. And I think we live in a world today where it changes faster than it ever has before. We had a thing we looked at when we raised our first round of money back in 2016, 2017. And it laid out who we thought the competitive landscape was. We dusted that off the other day, and we showed it at all hands to make a point. I said, "Look at this chart. These are the 20-something companies that we said were competition." Today, two of them are still relevant companies. Two of them are companies that we actually still see in market and exist and are relevant. The other 18, most of them didn't even exist anymore. They got bought, they ended, they went another direction, whatever it is. So, the market is changing faster than it ever has changed before. Small groups of people can build software really quickly. The market is so dynamic. You have to continue to move really fast, I think faster than ever before. And I don't think that would've happened 10 years ago. I've worked in startups for a bit now, and the companies that I worked at 10, 15 years ago, you would see that landscape, and five years later, the landscape was the same. So, I think we're seeing the landscape change now. And I think, again, you're going to go five years from now, and it's going to be materially different.
Peep Laja:
Look how the competitive landscape has changed over the last 10 years. There are about 50 times more companies today. What's more, change happens ever quicker. The timeframe for change is less than three to five years before more aggressive astute competitors start taking your most profitable customers. Here's Jeff Weiner, Executive Chairman at LinkedIn, with more on how rapidly the competitive landscape is changing and what companies should be thinking about if they want to keep up.
Jeff Weiner:
I mean, think about the drivers, the variables that will increasingly alter the landscape in which you're operating. And it's becoming more and more dynamic, and it's changing faster than at any time people can recall, and that's in large part due to technology and the rise of these massively scaling, incredibly fast technologies. Sometimes we are innovating as a global society faster than our ability to keep pace with the impact of these changes, and you can see that in daily headlines. And so, just keeping up to the best of your ability is going to become increasingly important. It's also really important to ensure that you have someone on your team who's got the technology chops to make sense of this world because the world is increasingly technology-driven. And we want to make sure we stay ahead of that, so we're not reacting to it. And we have to be as proactive as possible. We have to read the tea leaves. We have to understand where the world is headed and try to get ahead of that.
Peep Laja:
So you said 18 of the 20 companies have dropped off the earth or whatever happened to them. So there have been companies that maybe started around the same time as you but did not succeed. So, retroactively, why did you succeed when some others didn't?
Brian Long:
It's a combination of, I think, execution and strategy selection. So on the strategy side of things, just as an example, years ago, when we started, a lot of other businesses were focused on Facebook Messenger and doing things in tools like that. And we experimented with that too. And we just, at the time, we saw it performed a lot worse than SMS. So we said, "Even though it's kind of a hot area right now, it just doesn't work nearly as well." And when we surveyed buyers, buyers were kind of not also super jazzed about it. So, we decided not to focus there. And I think a lot of other companies at the time focused on Facebook and subsequently saw their business flatline. And then, on the execution side, the bottom line is that executing and scaling a business is very hard. There's a lot of mistakes you can make along the way, and they kind of add up pretty quickly. We've certainly had our own host of problems we've run into, but we've been lucky to have a team that's been doing it for a while. And a lot of us worked together for over a decade doing startups and, hopefully, try not to fall into the same hole over and over again.
Peep Laja:
Can you tell me more about those typical execution problems you see companies face?
Brian Long:
Well, it depends a little on stage. I think when you're trying to find product-market fit, that's probably where the most businesses kind of go off the handle. That is where the inclination of just kind of building and trying to make it work. And then, just building more and more, rather than selling and listening to customers and spending time with customers, is where, I think, most businesses make mistakes. You'll hear companies say they have a vision. And it's like, that is great if that works because you just happen to have a vision that aligned with the buyer's problem. But a lot of those visions don't align with real buyer problems. And if you don't align with real buyer problems, you're not going to have a successful company. I think early on, companies need to have more honest conversations with buyers. And I think a lot of companies will sit there and say, "Oh no, I talked with the buyers. I got intros from friend of friends. And they told me, "This is awesome.'"They told me, "This is definitely what they want."
Brian Long:
Especially to a friend of a friend or things like that, all the feedback is total BS, right? They don't tell you really what they think. Very seldom do you actually get honest, critical feedback. Everyone just smiles and says great. Because who wants to tell someone their baby's ugly? So, I think that it's pretty rare to get that type of feedback. You only really get it when you, A, pitch people that you get through sales when you're actually trying to sell something. And, B, if you ask questions at the end of the pitch that are like, "Okay. All that sounds good. On a one to 10 scale, one being the lowest, 10 being sign me up now, and I'll buy this. What's your rating for this product?" And up to that question, you might have thought, "Wow, this person loves this." And then the person will go, "Oh, it's a six." I'm like, "Whoa. I thought we were a 10. Like, why is it a six?" And they're like, "Well, I don't even like X, Y, Z." So you know, the type of questions you ask and the way that you're trying to really learn and be skeptical rather than just check the box on your vision can have a tremendous impact on that early zero to one. And then once you have product-market fit, then it's all about execution, really, on being able to scale a business and keep things on the rails.
Peep Laja:
In B2B SaaS, in most categories what's happening is, over time, competitors become more similar to each other. In the end, everybody has every feature. They say very similar things about themselves on their website, in their marketing. How are you thinking about standing out in the sea of sameness?
Brian Long:
I think that you need to be clear about what you do different. I think at a point, you have to say, "We're not right for every buyer." For our company, we make it clear. We're like, "Look, we want to be the absolute best product in market. We're not going to be the cheapest. We're not going to work with every type of business. We just want to have the absolute best product." So, that's where we focus. And then secondly, I think when you're building your products, you need to be thoughtful about how am I building products and features that can leverage my network effects over time. So, what am I able to build? What am I uniquely able to build because of my scale, because of my knowledge, because of what I've built over time that is going to be hard for the competition to copy? And you need to be real about it because the reality is that very few companies have any moat at all. Other than Google and a couple of other companies out there long term, I don't think any companies have anything. So you need to really be thoughtful about what kind of moat can you build? How long is it going to last? And you know, where can you make those investments? And I think for a lot of software companies, it's network effects based on the companies that they've worked with and how you can leverage that across your customer base.
Peep Laja:
Thinking five to 10 years into the future. What kind of bets are you making to maybe build moats or have the upper hand?
Brian Long:
I think we got to build real moats. And I think we also need to figure out how the customer problem is changing. I talked earlier about the importance of understanding that customer problem, and that problem is also constantly changing. And what happens is companies, they build a product for a problem. They have the solution to the problem, but then the problem changes, and they don't change their solution. And then, a couple of years later, the problem's totally different. The solution doesn't work anymore. Or there's versions of the solution that are much better for it, and then the buyer goes buy the new thing. So you got to talk to customers. You got to talk to, hear feedback from, survey, know where their head's at, what they're feeling. You got to really have your finger on the pulse of what it's like to be your buyer. You got to be keeping really close track on how the problem is changing and changing your solution accordingly.
Peep Laja:
To win in the era of saturated markets, you need to know, one, what your customers think. And two, what they think of you. In essence, you need buyer intelligence. The faster your feedback loops, the bigger your advantage. I seek and love feedback. I'm running support day and night. When a client isn't truly happy, or there was a miss somewhere, I feel truly sad. I'm emotionally invested in their success, and I translate it into urgency of making improvements. Someone else who understands the importance of feedback loops is Peter Caputa, CEO at Databox, who talked about his obsession with customer feedback on a previous episode of How to Win.
Peter Caputa:
We're obsessed with gathering feedback in a scalable way. And so, what we did is initially, our support team became the feedback loop. And our support team painstakingly would catalog every piece of feedback, potential bug, confusing thing that the customer ran into and put it into a project management system. And then, the engineering team would take it, read every single one, categorize it, and put it into a backlog. Work on some of them that we could and move others either into a bigger project that we needed to do or just a project we knew we needed to do something before we could address it. And so we had this system where we were manually tracking every piece of feedback. We've since moved that to a public roadmap site, realizing just how many calories we were spending doing that. And that added another level of interaction directly from customers where they didn't have to report the issue. They could just go and vote for issues or requests. But every week, literally every week, we're taking that feedback, and the product team is acting on it. Sometimes, it's a pixel, or it's a word or whatever, but we're knocking those down, literally, every week. And then our long-term robot incorporates a lot of the bigger things that we get feedback on.
Peep Laja:
What are you guys doing today on the brand and marketing front to compete and win.
Brian Long:
I think that people make marketing a lot too hard on themselves, often. How many times do I go to SaaS company, software company websites? And I spend a couple of minutes on it, and I say, "I have no idea what the F this company does." Right? How often does that happen? Look, marketing are inherently really smart, creative people. And I think that they over-complicate things. You try to get cute. You try a new approach, a new way on whatever it is. When you go to their website in the early phase, in the product-market-fit phase, I think it should just say the problem as a big headline and then the solution in little type under it. And then when you reach the point like we talked about when it starts to snowball, and people actually are convinced they want to buy the solution, not just the problem. Then it's a combination of big solution in the front and then problem below it. But I'm still blown away by how many companies decide, someday, you know what we're going to do? We're going to make our corporate website imperceptible what our company actually does. That makes the job so much harder. You know, you go to our website today, and it just says, "The most comprehensive text message marketing solution." That's what we do. And then you'll see the way we solve the problem in the south head. But the headline just says what we do, the solution. I think people get away from the problem and the solution. They try to get cute. And it's really hard to know what the heck the business actually does.
Peep Laja:
Big brands have the advantage that their reputation precedes them. They can get away with fuzzier messaging. Shopify or Amazon, or Salesforce don't need to explain what they are. They can trade crisp messaging for fuzzy feelings and get away with it. Smaller brands cannot. The smaller, lesser-known your brand, the more on-point your messaging needs to be. So many observers want to imitate the big brands, but that's not the way at all. When people don't know your brand, the level of scrutiny goes way up. The key test any website messaging needs to pass, what is this? Category. What can I do here? Value proposition. And if I'm your ideal customer, why choose you? Differentiation. Assuming you've nailed these things will result in suboptimal conversion performance, and you might not even know it. That's why you should test your messaging.
Peep Laja:
You've been doing this business for a while, have picked up lessons learned along the way, so if you had to pass on wisdom to a fellow B2B SaaS founder, what would you say?
Brian Long:
I would say sell first before building, really understand the problem. I think once you're there and you're ready to scale, I would hire an in-house person to run recruiting as early as possible, like first person after co-founding team type of early. Like, I would co-found 100% with a person who just runs recruiting and only does recruiting. Because there's a common view of, "Well, it's all about the people on the team." And I think that's 100% true. It is all about the people on the team. But then, it's amazing how many companies you'll say, "Okay, it's all about the people on the team. How do you recruit and build talent?" "Oh, well, the CEO does that, and we hired an outside firm." "Wait, you just outsourced the thing that you say is the most important part of the company?" So, I think that having a full-time, awesome person to run recruiting will raise the bar on those first 50 hires tremendously. And yes, you can tell me it's the CEO's job, and the CEO should spend time doing that. They absolutely should. But guess what? The CEO also has eight other things they should be doing. And if you have a full-time person focused on making that funnel great, making the candidate experience great, really being thoughtful about who comes in, what the culture is, et cetera, you are going to have such a higher bar for the people you hire. I think that's probably one of the top pieces of feedback I give because when I talk to founders, they say, "We're holding off on sales, or we don't want to bring recruiting in-house yet." And it's like, those are the things. I would pick them up very, very early.
Peep Laja:
So, what are three key strategies that have helped Attentive Mobile to succeed? One, they keep their finger on the pulse of what matters to the customer.
Brian Long:
What happens is companies, they build a product for a problem. They have the solution to the problem, but then the problem changes and they don't change their solution. And then the buyer goes buy the new thing. So you got to talk to customers.
Peep Laja:
Two, they focused on getting it right in one vertical before looking to expand their customer base.
Brian Long:
We did focus on e-commerce from a very early stage. I think that even though you might have a massive TAM and many companies you can sell it to, it's a lot easier to get it right for one sub-vertical of company.
Peep Laja:
Three, from the start, they built a strong sales team who could collect additional customer feedback.
Brian Long:
I think the beauty of having a large inside sales team, couple of people from the early days, is that you can go get a lot of feedback fast, figure out what the real problem is, and then build your solution accordingly.
Peep Laja:
One last takeaway from Brian.
Brian Long:
I think you really have to sell the problem, particularly if you think you are early to a market. So, we knew the problem very well. And once they agreed, "Yes, that's a problem I want to solve." We say, "Great. Well we've got a solution."
Peep Laja:
And that's how you win. I'm Peep Laja. For more tips on how to win, follow me on LinkedIn or Twitter. Thanks for listening.
