Sponsoring Conferences: Useful Or Waste Of Time?

The subject of sponsoring a conference results in heated debates among founders of technology startups:

  • Are conferences a waste of time and money, or useful?
  • Should the CEO go to the conferences or not?
  • How many people should you send?
  • How much money should you invest?

I’m writing this post on a break at Palo Alto Networks’ Ignite 2015. The PANW team has done an amazing job at setting up a beautiful conference, full of interesting content. We’ve spent roughly $20,000 on this conference (including flights and giveaways). Is it worth it? Moreover, is it worth me personally spending time here?

To answer those questions, you need to identify what value you believe going to the conference will give you. In our case:

  • Exposure – we want customers, resellers and even PANW employees know who we are and what we do. Time and time again we’ve been contacted by people who heard about us from someone else and eventually became customers. However, it’s very difficult to measure the usefulness of this (which I find problematic – I’m a data nerd).
  • Leads – while this is the first time we sponsor Ignite, we have sponsored other network/security manufacturer conferences in the past. Time and time again, we’ve seen an immediate ROI in the form of leads that turned into customers. A big portion of our sales is driven by people that we’ve met at a manufacturer conference.
  • Understanding Pain – customers are our lifeblood. As such, we need to make sure we understand their pain and how it evolves over time. For me, this is the number one reason I came to Ignite this week. I know many CEO’s think this is best left to the product/R&D guys, but I disagree. A CEO needs to understand their customer.

So $20,000 spent on Palo Alto Networks’ Ignite, or Check Point Experience, or F5 Agility – is always worth it for us.

However, we’ve spent similar amounts on Cisco Live! and a few infosec conferences. Those weren’t useful for us:

  • At Cisco Live! it’s almost impossible to get above the noise without a very big marketing budget. Especially when companies like Statseeker give away a car at each event. When the spend gets too big, it’s difficult to prove ROI.
  • At the infosec conferences most visitors are interested in tools that will help their security and not in those that will help their operations. So while some of our customers are network security operations teams, they usually don’t frequent the infosec conferences.

Now, it’s all down to trial and error. I have a good friend, a CEO of another company, that invested several $100k in Gartner conferences over the past couple of years and can point to real ROI. He could only find this out after investing quite a bit of money.

Investing money into something that doesn’t pan out is one of the things a startup hates doing the most, it’s not like it grows on trees. However, you gotta spend money to make money, right?

Happy conference season!

P.S.
You should really watch this, it’s beautiful.

VAR+SaaS: The Unobvious Fit

Recently Tomasz Tunguz made a point regarding VARs in his post on the 5 marketing channels of SaaS: simple SaaS solutions generally don’t need VARs to sell. You can see that by looking at solutions like Expensify, RingDNA, Zendesk, Mailchimp and others (all of these are services that we use at indeni). Generally, it makes sense – VARs are “Value Added Resellers”, which means they add value to what they resell. In most SaaS solutions, VARs can add little to no value – the setup is easy and the customization required can be done by the end user with little help.

Even in more complex solutions, like ServiceNow, VARs aren’t utilized (in the US, their primary market). In their case, they opted to provide professional services, mostly at a loss (see their S-1), over utilizing VARs. It gives them control over the customer experience, which is extremely important. Generally, SaaS, gives you so much control and insight into customer experience, why would you want to give it away?

I argue that you can partner with VARs while at the same time retaining control of the majority, albeit not all, of the experience. Specifically, you can achieve this even with a SaaS solution that is extremely easy to deploy and requires no customization. That’s what we’re doing at indeni – we partner with leading networking and security VARs and go to customers together. It’s so important to us that we’ve set it as the cornerstone of our long term strategy as a means of fueling our aggressive growth. Our VP of Sales, Darcey Harrison (previously a director of inside sales at Meraki), is spearheading this approach.

Why?

Well, what we’ve discovered, is that while indeni is a SaaS solution, it ties into non-SaaS physical and virtual equipment. To recap from previous posts: indeni is used by the world’s leading enterprises to identify configuration issues in switches, routers, firewalls and load balancers before they result in downtime. That’s because over 70% of critical network issues could be avoided by simply making configuration tweaks at the right time.

So this means that our software integrates with devices made by Check Point, Cisco, F5, Fortinet, Juniper, Palo Alto Networks and soon others. So, from the point of view of the customer, indeni is a tool that is tightly integrated with their network infrastructure. As such, they not only expect to purchase it via the same channel as they purchase their equipment (VARs) but also expect their channel to recommend indeni to them. This means that a major source of customers for indeni actually comes from VARs reaching out to their own customers and saying “Remember issue X that happened a few months back and you got a ton of flack for it? indeni would have ensured you avoided that from even happening. We can help you set up a POC in less than an hour.”.

Magic, eh?

Now, going back to Tom’s point – SaaS and VARs are a very rare combination to see. That means that there isn’t much experience in the market for getting this done right, especially with a solution that’s so easy to deploy. It means that a lot of times we invent our own metrics and strategies to get this done right. It also limits our sales talent pool: how many sales people have experience in both selling SaaS solutions and working with VARs?

Also look at it from the point of view of the VARs – how much experience do networking and security VARs really have with SaaS? Most don’t have any experience at all.

The message I’m trying to get across here, is that while the vast majority of companies take a certain approach, it doesn’t necessarily mean it’s a fit for YOUR business model. Don’t be afraid to invent something new. Just make sure you get it right.

Are You In The Business-Building Business?

I’ve recently had a few conversations with different founders about the companies they are building. Thinking about it, I found I could separate them into two groups (like most other things): those who are building a business and those who are looking to exit quickly.

In today’s market, many startups with zero or very few sales can be sold for tens of millions just for their technology. In many cases their technology really is amazing, while in some cases you find yourself questioning the acquirer’s decision. It’s interesting to see, that even (or some would say, because of) today’s market, people still build companies with the goal of selling them quickly.

Others, focus on building businesses. They want to get to their first $1M ARR, then $10M, then $100M, then $1B, etc. They see a gap in the market that they know they can fill and want to do it for every single possible customer out there. They are building a real business.

From my tone you can see what I prefer to be building. I don’t really understand the concept of building a company for selling it as quickly as possible. You’ve quit your job, you are putting yourself (and possibly a family) through a roller coaster and you’re doing it for what? To make a few millions and do it again? Are you really going to feel self-fulfillment selling your company to some large corporate, who will most probably mishandle the acquisition and kill your vision?

Don’t get me wrong – making millions is important. But you can achieve that on your way to the $1B ARR. Why not focus on building a real business, that will delight customers around the world and have them coming back again and again?

I’ve made my choice when I started indeni: every single enterprise on the planet should be relying on indeni to run their IT and that’s where we’re headed.

What’s your choice?

Why You Shouldn’t Work From Home

You have an amazing idea. You’re excited. You’ve left your job (or are about to). You’re broke and cannot afford an office. So you think to yourself: “I’ll just work from home now until we raise money.”

Big mistake. Big. Huge.

After leaving Check Point to start indeni I thought I can start working from home (this was before Marrisa Mayer outlawed it). A one bedroom apartment in Tel Aviv without a study or a small office in an amazing location and no parking. Fabulous!

A week later I found myself sitting on the couch in my boxers with a laptop, realizing I haven’t showered in three days. Noa, my wife today, girlfriend back then, was amazingly tolerant of this.

The reason this is a mistake, though, is not because of the scent that filled the living room. It was actually the fact that when working out of home you don’t interact with other people throughout the day. Seeing people, having lunch with them, talking to them, even if they’re completely unrelated to what you’re working on, will help you make progress. For example: they will keep asking you what is it that you’re actually doing. Trying to answer that in the early days is as difficult as proving Ferme’s Last Theorem.

But still, you have the problem that you’re broke and cannot afford an office. The solution to that is simple, you find a really good friend and ask for a favor. In my case, it was Lior Akavia, the CEO of Seebo, who came to the rescue. He gave me a place to be when I needed one. Thank you Lior!

Good luck in whatever you’re trying to do!

Home Is Where You Are

In a meeting yesterday I said “I’m a foreigner wherever I am – whether in the US or Israel.”. Which is how I truly feel sometimes. On the way home last night I thought a lot about that sentence.

The bay area, where I live, is full of immigrants. The vast majority of people I know are either immigrants or first-generation born in the US. With those who were born outside of the US and have moved here I find a common language: our minds keep comparing life here with our lives in the country where we were born. We look for what is better at each location, we discuss the process of learning new habits and assimilation into a new culture. Many try to find other immigrants of the same origin to connect with, as it seems easier to do so. US history is full of stories of where certain neighborhoods and even towns were comprised of mostly immigrants coming from a certain country (Irish, German, Mexican, etc.), for this very reason.

So, what can an immigrant do to make their assimilation faster? The tips I found to work so far are:

  • Wake up every morning thinking “This is my home. This is my life. Everything I do today needs to be aligned with setting up roots here.”
  • Identify as many elements of the local culture as you can and force them upon yourself. For example, I look at how others in my industry dress and do the same. In Israel, I would never dress this way, but here it’s the norm.
  • Work. If you haven’t moved here for work (let’s say you’re a spouse of someone who has), find work. Make sure your work is with locals and not in a company that is owned by expats of the same origin. At work, focus on learning how the locals live.
  • Stop comparing to home. Resist the urge. Yes, at home X, Y and Z were better. So what? Here A, B, and C are better. There are pro’s and con’s to everything. Stop comparing.
  • It’s OK for the first two or three friends to be from your home country. But don’t let your fourth, fifth and sixth be. Get out of your comfort zone.
  • Live as if you’re never leaving. Maybe your visa is just for two years, or you told yourself “I’m just coming for this one job and then I’ll go back.”. Whatever it is, living in a sense that one day you’ll go back is dangerous. It puts you in the same situation a cat is in when it’s got a buttered toast attached to its back. You’re in limbo and feel out of place constantly.

Not necessarily tips that are easy to follow constantly. I know I sometimes don’t. However, while I still feel a foreigner here I do feel more and more at home as the days go by. It will take some time, but I’m seeing progress.

Happy St. Patrick’s!

When Customers Give You A Run For Your Money

When you’re a product guy like me, you get excited every time someone uses your product. You think to yourself “That’s my baby out there! Look at how amazing it’s doing!”.

Today, indeni has grown to the size where at any given moment, dozens of enterprises are trying out our software. Those trials usually run for 14 days (we’ve come to the conclusion customers don’t need more than that) and the vast majority convert to paying customers. It gives us a sense of pride – people love what we do.

Sometimes, some of those enterprises trying our software, decide to take our product apart. Piece by piece. Inspect every alert, every feature in every possible scenario. Today I reviewed a report by our support department: there are currently several very large organizations (financial institutions, pharma and government mostly) taking our product apart.

It’s amazing to see what they look at. What they care about. What they verify before making their decision to buy. In my experience, it’s highly uncommon for someone to take this approach. Most of our customers don’t.

Look at your smartphone. Do you know every feature it has and how it works? Have you found all the kinks and where your smartphone is pushed to the extreme? >90% of people I ask this say all they do is call/text/use-apps. They have no idea how to find their APN settings or what that even is. It’s fine, they really don’t need to know actually. I’m actually the odd one out here – knowing what APN is and when you need to change it.

When someone does want to know, though, things become interesting. And if your product can not just tolerate the third degree it’s getting but actually deliver, you become all warm and fuzzy inside. It’s an incredible feeling to suddenly, and repeatedly, realize you’ve built something that actually works.

Silicon Valley Really Is The Center Of The World

To clarify: I was not born here. My first time in California in my adult life was a few years ago and I’ve only been living here for a year. So obviously, I’m not biased towards Silicon Valley.

However, since I moved here, it became widely apparent to me that Silicon Valley (and that includes San Francisco and the peninsula) really is the center of the world in our day and age.

Look at what you do on a daily basis – every single action you take has been impacted by Silicon Valley. Even the design of the milk carton you’ve used for your cereal this morning – was probably created in one of Adobe’s on Apple’s tools.

It annoys the hell out of people when Silicon Valley-ians say this. Some people go blatantly against it –  like Herb Kim. He was interviewed by Gigaom stating that Silicon Valley isn’t the center of the tech world – however the organization he ran no longer exists.

Brad Feld, who is far more known in the tech community, makes a similar argument. In his case he refers to system dynamics as a reason for why it doesn’t make sense to have all of the tech innovation happening in one place. I argue that system dynamics is the exact reason why tech companies should concentrate in a small space.

Something people forget often is that tech companies have two types of customers that are NOT buying their products:

  • Employees – if you think you are not selling your company to prospective employees you are mistaken. Highly talented individuals need to buy into the company’s vision, culture, future. Salary isn’t the only thing that brings them on board. Interestingly, the some tactics one uses to market their product they will find themselves using to market their company to the talent pool.
  • Investors – I don’t think I need to elaborate here.

So – if you have three sets of customers – users, employees and investors – how do you decide where to place yourself? I found it to be very easy:

In the tech world, your users are all over the globe. There is no single location you can place your company that would be close to your users.

However, the talent and investors are concentrated in Silicon Valley. So it makes the most sense to place yourself close to these two types of customers.

Now, this results in an saturation, but that saturation actually makes a ton of sense. It’s the same reason ice cream stands find themselves standing next to one another. We want to get to the most customers we can, and so do others, so we compete for them neck-to-neck. There’s no other alternative.

So, with all due respect to Silicon Alley, Silicon Wady, Silicon Beach, Silicon Flatirons and Silicon Roundabout – it is Silicon Valley where all the tech companies should be located. It is the center of the tech world.

And since tech is the most powerful force changing the way we live then the logical conclusion is that the center of the world is Silicon Valley.

Just accept it, relocate here, and drive up the real estate prices. We haven’t reached the $100/sqft mark yet.

The Art of Firing

If you look for advice on how to hire in startups, you’ll find plenty. For example, for the specific challenge of hiring your first sales persons, you’ll find:

Now – do any of these three blogs have posts dedicated to how to fire someone? As a matter of fact yes – both Mark Suster and Jason Lemkin dedicated blog posts to firing people (why it’s important, how to do it, etc.) which is why I listed them. OnStartups.com did not. I actually scanned more blogs (Google magic) and noticed that only a portion of them dedicate posts to firing, while almost all dedicate posts to hiring.

Firing is painful. It’s the activity I detest the most. No, scratch that, I would hate to lose an important business deal, miss our targets or fail at something important because I did not fire someone I should have.

However, no one prepares you for this. I have directly fired seven people in my role as CEO of indeni, so far. Each and every time I showed up to the event with my hands shaking, my blood pumping and my mind at 200%. “You are about to tell someone you prefer that the company continues its journey without them. However, it’s good for them – if they are not a fit here they better find somewhere they DO fit as they are just wasting their time with us.”.

Rationalizing this is bull. You are breaking up with someone who believed in you, who thought you will lead them to prosperity. And instead, you’re telling them they should find prosperity elsewhere. We’re human beings, we have feelings and we were raised to dislike inflicting pain, even emotional, on others.

Don’t take me the wrong way, I’m sure the event was far more painful for the fired than the firer (yes, that’s a word). However, I can only share my personal experience, not others’.

Some of the firings were a lot more painful than others. One of them blew up in my face in a way I did not anticipate. In hindsight, I should have. That little blow up, though, helped underscore the importance of the action I took. It was the right time to take an uncomfortable action. To this day (and even last night, which spurred this post), I still dream of that specific individual and how bad the process went. Funny how these things don’t leave you.

There’s a silver lining to all this, though. I’m not afraid of firing anyone anymore. I realize that it is my duty to protect the company that I lead, and part of that is by identifying those we are better off without and removing them. I tolerate poor performance a lot less now as I realize the damage it causes, to everyone.

The funny thing is, the more successful you are, the more people you’ll need to fire. All you can do is accept it and focus on doing the hiring right – after all, there are over 1M webpages and blogs posts available to help you hire correctly.