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This week in How to Win: Peter Caputa, CEO of Databox, a business marketing analytics tool, explains how the company pivoted from a mobile-first enterprise platform to targeting the data analytics industry at-large. We discuss how despite being venture capital funded, the company behaves as if it is bootstrapped, enjoying 50% year-on-year growth through methodical product development and watching the bottom line.
Hear how successful B2B SaaS companies and agencies compete - and win - in highly saturated categories. No fluff. No filler. Just strategies and tactics from founders, executives, and marketers. Learn about building moats, growing audiences, scaling businesses, and differentiating from the competition. New guests every week. Hosted by Peep Laja, founder at Wynter, Speero, CXL.
How building methodically is helping Peter Caputa and Databox disrupt the business marketing analytics industry
Peter Caputa (00:01):
I would rather build the building blocks that will help us accelerate growth, as opposed to just investing in the things we already know. We're taking some bets on things that we can do differently or on top of what we're doing that we think will help accelerate our growth. I think we have a low cost way to scale revenue, so we're going to try that.
Peep Laja (00:25):
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, how did you win?
Peep Laja (00:35):
This week, Peter Caputa, CEO at Databox. Databox is a business analytics and dashboarding tool. Since Peter joined the company in 2017, Peter transformed it, growing it to excess of five million in revenue with a team of 99.
Peep Laja (00:49):
In this episode, we talk about behaving as if you're bootstrapped, even with VC funding. And we hear about building product and marketing moats. Let's get into it.
Peep Laja (01:01):
So you joined Databox when the company had already started. You joined in as a CEO. And I read in one place that the first thing you did was you figured out what the right go-to-market model should be, because apparently it wasn't right model. So what was wrong with it and how did you change it?
Peter Caputa (01:21):
Yeah. So first of all I have to give credit to the founders. They're a extremely persistent bunch. They had actually gone to market once and found some success, selling the product to very large companies. And largely what those large companies were buying were the ability to track their business metrics on their mobile device.
Peter Caputa (01:39):
And I don't know if you can remember back to 2015, everyone thought we were going to stop using computers and just use our mobile device. And so they rode that wave. Unfortunately it was a very short wave. And so when they started to bring in a go-to-market team the first time and they raised capital, they raised their seed round, it just didn't quite work. And so before I joined, they had already started pivoting to selling the software to smaller businesses, a little bit of a focus, although not a hundred percent focused on marketers.
Peter Caputa (02:09):
And the mission became really automating reporting through dashboards for small businesses. Because what small businesses were facing is just too much data to absorb. And that data was often in lots of different tools. So using some SEO tools, some social tools, email marketing, or marketing automation, your CRM, et cetera. And so by the time you started using all those tools, getting a complete picture of your sales and marketing was really hard.
Peter Caputa (02:36):
So when I joined, I had that background already, I'd spent nine years at HubSpot. And so when I joined, we went full steam into working with marketers and marketing agencies.
Peep Laja (02:45):
You have said in a previous interview that you believe in focusing on one market at a time, did you follow your own advice there?
Peter Caputa (02:57):
Sort of. We focused in on marketers and marketing agencies, and initially we actually focused in on HubSpot partners. At HubSpot, I started and built the HubSpot partner program, which at this point has thousands of marketing agencies that are members. And so we've since expanded to more ecosystems, but we kind of do one at a time. We built a tight integration with one of those ecosystems and then go to market with that.
Peter Caputa (03:22):
And so at this point, our user or customer base, especially our partners, use and recommend all different types of marketing software. But yeah, we've done it one at a time. We kind of had to with this business in that our product is useless without an integration. And it's actually not that valuable for a company unless they use multiple integrations because you're pulling in performance data from these other tools. And so if you're not using these other tools, there's really nothing to look at inside Databox.
Peter Caputa (03:48):
But I'd say we haven't been a hundred percent focused. Like if you go to our homepage, it doesn't speak directly to marketing agencies or even marketers. It really talks about I'd say the product at this point, which has a very horizontal use case. So we have developers using the product to monitor product stats or engineering stats. We have accountants and financial people using us to track their financial performance. We're a little all over the map in that the product is fairly horizontal.
Peep Laja (04:16):
Is that a strategic decision on your part then to target horizontally that anybody who needs to pull their data and build dashboards is a customer rather than we do agencies or SaaS or whatever?
Peter Caputa (04:30):
Yeah. So a big portion of our customer acquisition comes in through SEO, our content strategy, and specifically people looking for dashboard software or reporting software. We've optimized for those terms and ranked for a lot of related terms to that. So yes, that was a very specific strategy to be more horizontal and appeal to the people looking for that product.
Peep Laja (04:55):
Generally, this is a risky strategy, although it seems to be working for Databox for the reasons Peter explained. But all too many companies have unclear and unproductive positioning because they lack the discipline to say no to attractive looking revenues that don't fit.
Peep Laja (05:09):
If you go after the dollars in a market that's not your core focus, in the end you lose to highly focused competitors. By targeting broadly, you run the risk of getting flooded with numerous low potential, high maintenance customers that are taking increasing amounts of mind share, time and resources.
Peep Laja (05:26):
To drive maximum growth and profit, you need to focus on deepening the market penetration in the best customer segment. The winning strategy is choosing your customers. Many SaaS companies are so focused on growth at all costs that they neglect to build a sound account selection and management process.
Peep Laja (05:43):
That said, Databox are targeting marketing agencies behind the scenes, they just aren't turning business down on the homepage. It's shades of gray.
Peep Laja (05:53):
So did it stem from the fact that you guys get a lot of SEO traffic, and since that traffic is pretty broad, might as well cater to that SEO traffic?
Peter Caputa (06:03):
Yeah, I wouldn't say it was one before the other. There was no domain authority when I had joined, there really hadn't been any effective search marketing at least. And so we fully committed to content marketing strategy from the beginning. And so I knew that if we're going to do that, we might as well shoot for the relevant keyword terms. And there's times where we've drifted away from some of those and experimented with different stuff. But more recently we actually just updated our homepage, which is our largest traffic and signup producer, to be much more specific to the horizontal play, to the dashboards and reporting value prop.
Peep Laja (06:40):
So SEO as your key acquisition channel, did it come from the fact that you guys are a small business and so hence you can't really buy yourself into the market share like maybe monday.com and so SEO is something that you can actually play in and win on?
Peter Caputa (06:58):
Two things, well, three things maybe. First of all, I spent nine years at HubSpot, keep saying that, but content marketing was obviously the play there. I think they still spend very little on paid acquisition comparatively at least. So, that would be my first thing is just a bias towards that.
Peter Caputa (07:14):
But if we look at it strategically, I think there's two big reasons. One is we didn't quite know the market to begin with. And so I knew that an investment in search would give us options down the line as we figured it out.
Peter Caputa (07:25):
So, when I joined, there was literally 11 other people in the company and only one other person that was customer facing. And he was a support guy. So it was all engineers and product people. So, I had to pick, what are we going to do first? And so I started just getting on sales calls, doing onboarding calls, talking to customers, and then just producing content that helped me in the sales process. And it just stemmed from that.
Peter Caputa (07:47):
The other thing is this is a really difficult product to build and business to scale because we have to build all of these integrations. So the complexity of our product is really high. Not only have to get the front end and the back end and all that, we have to integrate with tens of different companies' APIs, pull data in in real time, be able to visualize it in real time, handle errors. There's a lot of complexity to it. And so we needed time to build the product up to the point where it was good enough to really retain customers.
Peter Caputa (08:18):
I made the decision that until we get to a certain point where I really feel our unit economics are good, then I'm not going to spend money on paid, and we'll spend money investing in either content marketing, selling, or better servicing. So we're really focused in on the content marketing to bring people in; helpful support processes, to help customers and prospects alike use our product and get set up; a very helpful sales process, that's very trial driven where we're getting them set up in the product so they can truly evaluate it. And then investing in free onboarding services as well as account management. So we have an enterprisey go-to-market strategy in terms of the functions and teams, but we're doing it at a price point that is affordable for our market.
Peep Laja (09:06):
Everyone wants to know what the key causal factor is in success, what's behind the growth, what can we attribute it to? Companies act in complex, adaptive systems that inherently lack linear causality. In other words, it's inherently impossible to know what the one thing to focus on is. We cannot know everything. We cannot attribute everything. Traditional strategic planning does not work to the extent most seem to believe. In the right context, planning can absolutely work, but it can also create the illusion of working.
Peep Laja (09:36):
In 2021, CXL had a six month period of zero marketing people. Results. Company grew 45% year over year during that period. If my team had been experimenting with PR or TikTok or whatever, and we had 45% year over year growth, it would've been tempting to say, I think the results are because of the TikTok thing.
Peep Laja (09:57):
Business is a complex system, meaning it has a large number of connected elements that interact in non-linear ways. And it's not an orderly system which would bring linear causality. Hence we should look to complexity science and enhance the depth of our thinking in these matters.
Peep Laja (10:14):
Steven Levitt told the story of a big box retailer who hired him to work out if advertising was offering a return on their 200 million annual investment. He suggested they simply stop advertising in certain markets to see what happens. Steven carries on the story in this clip from the Freakonomics podcast.
Steven Levitt (10:31):
And they said to me, "Are you crazy, we can't turn off the newspaper ads." One time we hired this summer intern and his job was to do the newspaper inserts for Pittsburgh. And the guy was so incompetent that he just didn't do it. And when the CEO found that out, he said, "If you ever do that again, you're all fired." So I said to them, "Well, okay, but when you looked at the results, what happened to the sales in Pittsburgh when you were dark for a month?" And they called me back about a week later and they said, "You're not going to believe it. We looked at the data in Pittsburgh and we saw no impact on sales when they didn't do any inserts for a month." So I said, "Oh my God, that's amazing. Okay. So when can we get started?" They said, "Are you crazy?" It was almost, if they found out they didn't work, it was far worse for these people than it was not finding out it didn't work because then they had to explain why for the last 15 years they had been wasting $200 million a year.
Peep Laja (11:30):
You said your domain ranking was zero when you joined?
Peter Caputa (11:33):
Well, I don't know if it was zero, but it was really low. Yeah.
Peep Laja (11:33):
Okay. Near zero. And just looked it up, it's 80 right now. So what happened in between there? SEO competition is fierce as well. Everybody's trying to rank for stuff and page two doesn't get you anywhere. So what kind of systems did you build out internally? How many people did you hire? How has your content machine evolved over the years?
Peter Caputa (11:57):
Yeah. So initially, 2017, it was one marketer working with me and he was doing the majority of the work and I was guiding and editing and doing everything to just get stuff live. Then a director of marketing, John Bernini, joined after that. Fast forward to today, we are eight people. And so it's a relatively small team. We do leverage a lot of freelance writers to help us with the content.
Peter Caputa (12:19):
What we're doing is producing a lot of content. We're producing about five pieces of long form content every week. And then we're also doing link building and regenerating, probably not quite hundreds, but near a hundred links on purpose every month through manual efforts.
Peter Caputa (12:33):
One of the challenges in our business beyond writing about reporting and dashboards, which we can write about, but there's only so many topics, but one of the challenges in our business was being an expert, trying to build a marketing team that has expertise in all the different integrations we have. I can't hire somebody that's a Google analytics expert and a HubSpot CRM expert and an active campaign expert, and a Semrush expert and all of that. There's some of those people out there, but they're really expensive. And eventually they'll get to the point where they don't know something.
Peter Caputa (13:02):
And so what we did is instead of writing it all ourselves, we started crowdsourcing content from marketing agencies and marketers. And so what we do is we come up with our own topics. We do the keyword research. And then we think, what questions would a searcher might ask? Then we go ask that question and maybe a few others related to it, to 10, 15, 50, sometimes a hundred, a few hundred people. And then we take that and we distill that into the article. We hand that off. And so we don't have to be experts, we just have to be able to judge expertise.
Peep Laja (13:34):
Yeah. I've participated in those blog posts myself. And the way I came across them is, one way to do link building is Databox has this thing. So everybody's who is writing about link building writes about you building links for you. So it's a reinforcing loop there.
Peter Caputa (13:54):
Yes, there's definitely a loop. And then people that contribute are often willing to also link to us. And we have processes around that where we'll build targeted links to converting pages and stuff.
Peep Laja (14:05):
What is the goal of marketing? That's a pretty broad question I know. I'm personally in the same camp with Byron Sharp, that marketing needs to ensure, one, mental availability, get the brand stuck in consumers' minds and make it easy to recall when there's a relevant trigger. And two, physical availability, the brand must be easily bought and found. Search ads and SEO are part of physical availability.
Peep Laja (14:36):
Once a tool gets established as number one in our minds for a particular use case that becomes a tool folks recommend first. Meaning it has highest mental availability. If I think heat maps for SMBs, I think Hotjar. When people wonder how their messaging is landing on their target customers, I hope they think of using Wynter. The curious thing about mental availability, which companies get into the top in our consideration set has little to do with personal experience, it can be, but it's mostly reputation based. Here's what Byron Sharp says about this.
Byron Sharp (15:10):
If you want to grow your brand, then you have to enhance mental and physical availability. And in doing so you'll of course get more customers if you're more available to the wider market. But also those customers will be a little bit more loyal because you will just be easier to be loyal to. Or another way of putting it is that you're a little bit harder to get away from.
Byron Sharp (15:30):
Have you ever done what I do which is, you eat a meal at McDonald's and then you slap your forehead and say, never again. But you know you probably will, you know there's going to be a time when you're short of time and you look down the street and you see a McDonald's and you know what they sell and you know how much you're going to pay and you know about how long it's going to take and all these things make it very suddenly easy and attractive. Even if you don't like the food terribly.
Byron Sharp (15:59):
In contrast, we've all been to a great little cafe or restaurant and said, wow, this is great, love the food, must come back here. And then we haven't. We never really quite remember the name or exactly the street it was on, we got no reinforcing advertising. Mental and physical availability is what makes companies valuable.
Peep Laja (16:19):
July of this year, 2021, you said that you are at four million ARR, what's 2021 going to end at?
Peter Caputa (16:28):
We should end around 5.3 million ARR.
Peep Laja (16:32):
What's that compared to last year?
Peter Caputa (16:34):
Last quarter was 48. The quarter before that was 52% year over year growth. So I haven't done the calculation yet for ...
Peep Laja (16:40):
So this is very nice strong growth for a bootstrap company. Yet you guys are venture backed. VC companies often expect a hundred percent year over year growth. Is that a problem internally?
Peter Caputa (16:51):
No. And so it's funny, I had this debate on Twitter the other day, but we've been cashflow positive for more than two years now. So when I joined, there was some money left from the seed round. The seed round was about 3.8 million. And there was less than 25% of that was left.
Peter Caputa (17:07):
I did do a convertible note where I raised another million dollars from some of the existing investors, as well as people that I had worked with and wanted to invest in my next thing. And so we didn't have a whole lot to work with, to build out a go-to-market team and continue building and refining the product.
Peter Caputa (17:22):
So we focused in mostly on product investment the first few years and customer support and kept our marketing budget pretty low, kept our sales budget very low. And so as a result, we've just been refining the product and through iterations, building out our sales and support processes and operating at cash flow break even. So, yeah, we still have a good portion of the money that I raised, actually most of the money that I raised, is still in the bank from four years ago
Peep Laja (17:48):
In your LinkedIn company description, you write that Databox is disrupting the $16 billion business analytics industry. And so you're at five point something right now, $16 billion industry. So what's the dream? And then what is the plan on how to get there?
Peter Caputa (18:10):
Yeah, I think I only ever post that on job postings. We do have big ambitions. This year, we will invest significantly more in marketing and really trying to scale the top of our funnel. We will also launch at least one additional product, most likely two additional products on top of our existing products. So I think we're a long ways away from 16 billion in annual revenue, but we'll definitely accelerate our growth, this coming year.
Peep Laja (18:39):
What's the main obstacle standing between you and the desired outcome?
Peter Caputa (18:45):
I see the path, so I don't see the obstacle. Just time. I'm probably an unusually patient CEO in that to me, I would rather build the building blocks that will help us accelerate growth as opposed to just investing in the things we already know can grow. So I could double the sales team, if I wanted to spend the money on that, and we would grow faster. We could simply just do more of the marketing doing the same. But we are taking some bets on things that we can do differently or on top of what we're doing that we think will help accelerate our growth. And we're leveraging everything we built to do that. So it's not like we're making it up. We think we have a low cost way to scale revenue. So we're going to try that.
Peep Laja (19:31):
You guys also have a freemium plan that you promote quite prominently on your website. How big of a growth driver is freemium for you?
Peter Caputa (19:41):
It's humongous. We wouldn't have this business without it. Nearly two thirds of our customers purchase without jumping on a zoom with us. We may help them in chat or something like that. But they're finding the product, signing up for it, connecting their data, building their dashboard, setting up their goals, and ultimately going into our product and just choosing the plan and buying. So a good portion of our customers, we don't have to talk to, so very low customer acquisition costs on the sales side at least.
Peter Caputa (20:12):
And so the freemium product enables that. I think freemium really helps us get people to sign up. And then I think the ease of use and the ease of setup of our product compared to our competitors gets people to buy. And so I think offering that free, no risk, no expiration date version of the product gets people to take action and check out the product. And then once they're in the product, it's pretty easy to use and they find what they're looking for at a pretty high rate.
Peep Laja (20:37):
Is your main marketing funnel on your website, drive everybody into freemium, and then some people upgrade or are you trying to drive more people into pay directly?
Peter Caputa (20:48):
So nobody goes from sign up to purchase if we can help it, because we want them to get set up and test the product. It's a unique software product in that you can't really evaluate it without setting it up. All the other products kind of work the same for every customer by email marketing or even SEO tools. You're going to get in there, you're going to plug your stuff in and you're going to know very quickly does it do what I want it to do or not.
Peter Caputa (21:09):
Whereas with Databox, you probably have a report you're already producing or dashboards or metrics that you know you want to track. You have to get into Databox to figure out, can it pull the data I want, can I visualize it the way I want. So we want them to get set up.
Peter Caputa (21:24):
And so we used to have a scenario where they would try the free product. And if they hit a limit or wanted a feature that wasn't in that free product, they would have to buy. And then we implemented a trial there. So instead if they hit a limit or they want a feature that's not in the free product, they trial the paid version. And so at that point, we're offering help as much as they want it to help them to fully set up and evaluate it.
Peep Laja (21:52):
The right offer makes a big difference. This has been true forever and still is. I know organizations with relatively low traffic volume, but generate a ton of sales ready leads because the offer is attractive. And free makes an offer more attractive. And hence offering a self-serve freemium plan is a popular choice for SaaS companies. I'm all for product led, but a lot of folks also want the human component. Even when your platform is a hundred percent self-serve and free to start, people want answers to every question before signing up. In my own experience, there's nothing more effective than live chat for this. A real time actually live chat. Freemium is a model that works for many companies, including ProfitWell. As their CEO, Patrick Campbell, explained in episode six of How to Win.
Patrick Campbell (22:38):
Our free product, that's a moat. Let's say we don't win the market, we're going to mess the market up enough for our competitors. You know what I mean? That was one of the toughest things I think for our competitors. We came out and it was initially it was free and good enough. And now it's free and it's better.
Patrick Campbell (22:52):
I was actually very anti-freemium back in the day, which is really interesting. But what ended up happening is we discovered when we did pricing research on the product that the willingness to pay wasn't great. And this is notorious for analytics products. Most of the time, unless you're niche, you end up going up market because people don't appreciate analytics that much. They don't appreciate how much work went into making that number somewhat accurate, if not very accurate. We basically were like, oh, this whole monetization path doesn't make sense. All of these companies are going to have to go up market to be a bigger business or pivot or go free. Which is what we did because our thesis became, again, sucking in that data, understanding it, and then deploying that understanding into products.
Peep Laja (23:35):
You're famous for building the HubSpot partner program-
Peter Caputa (23:39):
Hope to do something else in my life beyond that. Yes.
Peep Laja (23:42):
How have you used that at Databox, is partner channel a viable channel for you?
Peter Caputa (23:47):
Not like it is at HubSpot. So we do have a number of agencies using us, about 40% of our customer base is our marketing agencies using us to report results to clients. And the way we've set it up is very generous to agencies. They pay our base fee once and then they just pay based off of overall usage. So they can have as many clients as they want in there and just pay based on the number of data sources they connect. And so those agencies often use us for five, 10, 50, in some cases hundreds of clients. And so we do have a lot of agencies using us.
Peter Caputa (24:17):
However, they don't resell us like a HubSpot or even like a Constant Contact or how MailChimp is often resold. Because they're largely using it to retain their client. And so they're using the product to show the client their own results, the results that the agency's producing. I intend to change that with some new product launches this year. But right now I'd say they're a customer of ours, but not necessarily a partner. Now we do go to market with them a little bit on our marketing side, collaborate with a lot of them and stuff like that. But not at scale.
Peep Laja (24:49):
You wrote on Twitter something that caught my attention. Your approach to building a business is to add one building block at a time. And at first it looks modest because it's just a few blocks, but then you add the 20th and the 30th block, and then everyone realizes that you've built something amazing. Can you tell me more about that?
Peter Caputa (25:08):
Yeah. I feel like we're right there. So, because we've kind of bootstrapped, even though we're venture backed, we've kind of bootstrapped the business. Our investors are awesome by the way, they're very supportive. I think you had asked me before if that causes problems, it doesn't, they're extremely happy and pleased with what we've done. But the way I look at it is because we're bootstrapping I couldn't go and just hire a VP of sales, VP of services, VP of marketing, or two VPs of marketing, I couldn't go out and make those expenses on day one. So instead we had to think about how do we take someone maybe that's never even sold SaaS or even sold before and get them to the point where they can contribute in a specific role.
Peter Caputa (25:45):
We have a handful of senior people in the team with different experiences that are relevant in building this business. And generally their job is to hire and train. So we've done one department at a time for lack of a better way of dividing it up. So take marketing for example, our first approach is just get traffic, get our domain authority up, get content out there, build links, et cetera. And then we'll worry about conversion.
Peter Caputa (26:09):
Once we did that, it's like, all right, now let's figure out how we're going to get people to convert on the site. And we figured out a really clever way to get people to convert that connects our content marketing strategy to our product.
Peter Caputa (26:19):
And then on the sales side, we started with one salesperson, go and figure out some kind of repeatable process. We trained support people because we already had a support team to take phone calls, learn how to set an agenda, ask questions, qualify need, demonstrate the product, et cetera.
Peter Caputa (26:35):
It's really about building one piece of the business at a time. Same thing on the product side. They build a mobile app first and then we build a web app. And then we figured out how do we help people see it or how do we set it up so people can put data on a TV in their office wall. How do we let them send an update to Slack. Same thing with integrations, we built one or two integrations, like a HubSpot and a Google analytics that had a wide market, and then once we had a bunch of HubSpot users, we had to go and build the other products that they used, like Semrush or Whiskey and things like that. So it's really about building a piece at a time.
Peep Laja (27:07):
The concept you should be regularly thinking about, how can we increase our customer value footprint? In other words, how can we become more valuable to the customer? You become more valuable by solving more problems and/or higher value problems. By becoming mission critical, you become deeply embedded in their business.
Peep Laja (27:28):
In the physical world, raw materials are way cheaper and add less value than finished products. In the same vein, writing articles is not as valuable as doing content strategy and writing articles. By also doing strategy, you increase your value footprint. Commodity conversion optimization agencies optimize landing pages. Those are fungible. High value consulting partners help with experimentation program management. The value footprint is way higher.
Peep Laja (27:53):
By adding more value, you also make way more money, have better margins, stronger retention. Supplying companies with product X is nice, but managing their supply chain and doing inventory management would be of way higher value.
Peep Laja (28:07):
What other problems can you solve for the customers? Problems that are one or two levels above the problem you're solving for them right now. Aim to become more valuable, increase your value footprint, build stronger relationships and go from fungible to essential. So where do you start?
Peep Laja (28:23):
One, put in the effort to discover the pains and problems customers have about the areas you are already helping them with. Two, identify problems that are of high priority, but current satisfaction of solving those issues is low. And three, before you even start selling anything new, start consistently experimenting with new offers to see what resonates.
Peep Laja (28:46):
Something else you said, which is feedback is a superpower at Databox. So how does that work?
Peter Caputa (28:54):
Yeah, it's interesting. We're obsessed with gathering feedback in a scalable way. Part of it was because the engineering product team, they're all from Slovenia, they all speak English very well, way better than I speak any other language. However, I don't think they're confident in their speaking and they have to be thoughtful and sometimes it takes some time to get their thoughts out. But they are excellent communicators, excellent listeners.
Peter Caputa (29:19):
And so the feedback loops that we developed came out of the fact that they weren't really comfortable always jumping on calls with customers or prospects. Now they did it when they needed to, but wasn't their first and primary activity.
Peter Caputa (29:33):
And so what we did is initially our support team became the feedback loop. And our support team actually 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.
Peter Caputa (30:05):
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.
Peter Caputa (30:36):
And then our long term roadmap incorporates a lot of the bigger things that we get feedback on. We just spent 18 months re-architecting the platform just to give you an example. And the only customer facing feature it enabled yet is the ability to change the date range on your dashboard to anything. So like you literally put any date range at this point. Before it was hard coded, you had to pick five different date ranges that you wanted the dashboard to show. But we had to redo our whole platform. And that was the number one request was to be able to manipulate the date ranges more in a more sophisticated way. And so that became something that we built, even though it was an 18 month commitment. We didn't think it would be in the beginning.
Peep Laja (31:21):
Everything take always longer than you think.
Peter Caputa (31:23):
Yeah.
Peep Laja (31:25):
How has the strategy of Databox evolved between when you joined and what it is now?
Peter Caputa (31:32):
So we're in the middle of a strategy shift, which I can share a little bit about. So I'd say we spent the first three and a half years building a tool that quickly allowed people able to consolidate data into a dashboard. The last year we did a major re-architecture of the platform, which took us a little longer than we had hoped, but will allow us to move up into that BI space. Where we're enabling our customers to do much more in depth analysis of their data. We're enabling them to see how they should be performing, maybe benchmarking against similar companies, enabling them to start setting goals and OKRs around company performance, so that they're holding people accountable to it. And so we'll be positioning ourselves much more around helping companies improve their performance, not just track it. And so that's the shift that we're moving towards or moving into. We've done the hard work behind the scenes, and now it's a matter of the customer facing stuff.
Peep Laja (32:32):
My last question would be about your theory of advantage, meaning how do you win against other smart people out there also trying to win over the same customers?
Peter Caputa (32:43):
So there's some competitive differentiation. If somebody wanted to go rebuild our product, it's extremely complicated and you'd need to raise a lot more than we did if you wanted to build it from scratch. There's a lot of very small competitors out there that build a handful of integrations and then realize how hard the business is. A lot of our competitors, especially the big BI tools that you pay a lot more for, they're blank shells. They have all the abilities to manipulate, visualize, analyze data, but you have to get your own data into that system.
Peter Caputa (33:11):
And with the rise of SaaS companies, other companies using so many SaaS products, what we've done is said, hey, these SaaS companies are defining the metrics you should be measuring and tracking. And so what we do is we duplicate that, make it just click to duplicate the same metrics inside our product. I think that's a big competitive advantage. We've had one of our competitors try to copy that with moderate success.
Peter Caputa (33:34):
Another one is, and this isn't alive or active in our business yet, but is the partner ecosystem. And so we'll activate that next year. And I believe that'll give us both some virality in the product and some network effects around the data that we're gathering that will be difficult for other companies to duplicate.
Peep Laja (33:51):
Building a product around integrations with other SaaS tools your clients are using is a great competitive advantage. It's something Neha Sampat, CEO of multichannel CMS tool, Contentstack, has put at the core of their business strategy. As she explains in a previous episode of How to Win.
Neha Sampat (34:07):
I think that's probably the most important part of our strategy so far. We've had to think about incorporating a lot of integrations because in order to be really successful in a microservices approach, you need to be able to integrate with the best of breed of all the services that surround your ecosystem.
Neha Sampat (34:24):
So Contentstack being sort of the core hub of content infrastructure inside an organization, you want it to be able to attach to the best personalization engine and the best translation engine. And so we've put a lot of effort and investment into what we call a catalyst ecosystem, which is our partner network of technologies and SIs that help bring a solution together for a company.
Peep Laja (34:46):
So you have some technical moats, which is like building those integrations is just hard work. Second, you have an SEO moat. So how often do you find yourself thinking about moats in general?
Peter Caputa (34:57):
A bit. I'm obsessed with moats. Most SaaS companies look at other SaaS companies as comparables. So I know that at HubSpot we are, would never say it and they still might not say it, but they were obsessed with Marketo for a while, then obsessed with Salesforce. They're still obsessed with Salesforce. Salesforce was obsessed with the enterprise software companies. And I know just working with enough SaaS companies that they obsess over the company that's slightly ahead of them, maybe in a tangential space or whatever.
Peter Caputa (35:26):
I personally obsess over media and market places and social platforms. If you look at the Googles and the Facebooks, they're software companies, they just happen to give most of it away for free and monetize through advertising.
Peter Caputa (35:40):
And so when I look at how does a software company build a moat, I think it'll increasingly be through crowdsourcing. I think it'll increasingly be through building a platform that others build on. And the network that you're building, the actual people and companies that participate through your software. And so for me, it's much more about how do we build that into the product experience. So yeah, I think about it all the time.
Peep Laja (36:05):
Awesome. Thank you, Peter.
Peep Laja (36:10):
So how is Databox winning? One, they saw that their original market was a dead end and pivoted slowly and deliberately to a more sustainable long-term business model.
Peter Caputa (36:21):
First of all, I have to give credit to the founders. They had actually gone to market once and found some success, selling the ability to track their business metrics on their mobile device. It just didn't quite work. And so before I joined, they had already started pivoting to selling the software to smaller businesses. And the mission became really automating reporting through dashboards for small businesses because what small businesses were facing is just too much data.
Peep Laja (36:51):
Two, build up a strong SEO moat, and there's a technical product side moat that would be competitors will not be easily able to replicate.
Peter Caputa (36:59):
The complexity of our product is really high. Not only do you have to get the front end and the back end and all that, we have to integrate with tens of different companies' APIs, pull data in in real time, be able to visualize it in real time, handle errors. There's a lot of complexity to it.
Peep Laja (37:13):
And three, they are responding to their clients' behaviors and paying attention to the software and services they are using to define the product offer.
Peter Caputa (37:20):
These SaaS companies are defining the metrics you should be measuring and tracking. And so what we do is we duplicate that and make it just click to duplicate the same metrics inside our product.
Peep Laja (37:30):
A final takeaway from Peter.
Peter Caputa (37:32):
How does a software company build a moat? I think it'll increasingly be through crowdsourcing. I think it'll increasingly be through building a platform that others build on. And the network that you're building, the actual people and companies that participate through your software.
Peep Laja (37:48):
And that's how you win. I'm Peep Laja, for more tips, follow me on LinkedIn or Twitter. Thanks for listening.