nrmehta

For what it's worth, the mistakes that happened were completely on our end (actually I take full responsibility as they were under my watch). Zuora was nothing but amazing in supporting us to get us back to health. Luckily, thanks to Zuora and my team, we were able to get things going great. And the team (even post-acquisition) still uses Zuora to this day.

Thanks (I'm the author). At a high level, the tweak was a big change but I didn't realize it. We used to pre-bill a customer for the next period (e.g., quarter) based upon the previous period's usage. So if you go from 10 users to 20, then in the next period, we'd pre-bill for 20. This obviously is great in that it captures maximize cash flow upfront but it's tricky in that you need to use usage that you're getting right now to calculate future bills. In addition, the variety of our billing plans and legacy customers made this more complicated. Truth be told, I don't think I even fully understood the complexity (my finance and engineering team could give the full story).

That's a good question and thanks for reading it (I was the author). I don't have a magic formula but I have concluded that when I decide to switch, the switch needs to be binary not gradual. I do agree you can't sustain it for long periods of time - I have another blog post in my head on that one related to other crises :)

This was a good post by Chris and I think there are a number of companies who are shifting in this direction. Overall, I think Marketing is getting a bigger share of spend in enterprise IT vendors vs. sales from previous days. That being said, I also note that several of the most prominent enterprise startups of recent times (Box, Splunk, WorkDay, etc.) have made huge investments in traditional, direct sales. My 2c is a lot of this is driven by the ASP (average sales price). In a market where the ASP is low (< $10K/year), you need a marketing driven approach to grow cost-effectively. But for businesses with ASPs > $100K or > $1 MM, direct sales is often still very cost-effective. I'm not making any comments on the "goodness for the world" of sales here, just its efficiency as a growth engine.

Totally agree with you. I think this is about hiring the right type of people. Honestly, marketing has a bad reputation with many technical people. So if you tried to hire a CS grad into an online marketing role, it might be tough. Hence the new title. Whatever works!

Definitely agree with the comments here. One thing to add is I think some of this comes down to ex-ante versus ex-post thinking. Ex-ante, many things are required to make any substantial change. Ex-post, we can scrutinize and analyze and sometimes create a version of history that points to one as the key factor. As others have pointed out, sometimes this is simply a top of the stack situation (last piece of effort is most important but would be true for whatever is last) and sometimes it's a genuine catalytic change (the last thing really was the biggest). But since our decision-making about the future is fundamentally ex-ante, there usually is no silver bullet. Also ex-post analyses are often based upon human surveys / analysis, which is highly flawed. If you ask people, for example, why they love a certain product, they may respond with one feature and you might think that was the "that one thing" when in reality, they might love the overall experience, branding, support or something else entirely.

Really appreciate the post - especially the thought in making the content relevant for the readers (e.g., the video).

Really appreciate you sharing this so openly. Excellent stats for the community to leverage.

So awesome. Nice work and very good for the startup community. One minor "nice to have" request would be to show the VC Series A ownership in a dynamic calc. Since many VCs optimize for 20% ownership or whatever, it's helpful to plan out various scenarios to see the ownership there (obviously it's easy to calculate so no big deal but might be helpful).

In disclosure, I'm a "backer" of app.net and am on the alpha. And as a hardcore Dark Knight fan, I can fall for any DK quote.

But while I respect MG's other writing, I don't agree with all of his conclusions here.

Some thoughts:

1. He states that "the web is simply not conducive to a user-supported service reaching the scale of a Twitter" to imply that success = scale. I actually believe the app.net could become a lot like HN - a relatively (web-wise) small group of people who all get value from the service - enough to pay for it. Does it kill twitter then? Probably not? But does that mean it's a failure? I don't think so.

2. Furthermore, let's examine this point that the only services that can get to scale are ad-supported. He certainly has good empirical data (facebook, twitter, etc.) to back him up. But in the software world, open, non-commercial efforts (e.g., linux, smtp email and more broadly the internet) have had gigantic impacts in terms of scale. As others pointed out, wikipedia is an example of a service in this vein. I think we haven't played out the experiment yet of what do open, non-commercial distributed services look like. I wouldn't give up on that. I personally think that any true communications utility long-term needs to be open (like email). app.net is still commercial so not fully there - but clearly (IMHO) more transparent and open than an ad-supported model.

3. MG also doesn't talk about one of dalton's meta-points which I also feel passionately about. The conventional wisdom seems to have accepted that an ad-supported future state - where ads follow us around, personalized to what they think we want, making us think our services we're getting are "free" when they really aren't - is the only possible future state. I know Tom Cruise got followed around by ads in "Minority Report", but that doesn't mean it has to be our future. I personally believe that humans will recognize over time the real cost of advertising and eventually converge to a more balanced world of paid and faux-free (ad-supported) services. I'm not saying ad-supported will go away - just that there will be choice (which was actually the main point dalton made in the first blog post he wrote on this topic).

Overall, I think Dalton should be commended whether his effort works or not. He re-sparked some very important discussions and was willing to take a chance on his ideas.

If my dad were on Hacker News, he'd be all over this. I clearly don't value his advice enough even though it's been pretty dead-on. One thought to add though. I think one problem people have with advice (at least a problem I have with advice) is sometimes, when delivered the wrong way, it oversimplifies the complexity of the situation you're in. You're in a situation and the decision looks hard. And someone comes in and gives you advice which is great but sometimes in the process makes your problem seem simple. If you struggle with a problem that to others seems simple, how do you feel? Answer = dumb. So when I'm asked for advice, I try to keep this in mind - to not minimize the significance or complexity of the person's struggle.

BTW I don't disagree with what you just said - was just trying to explain this middle bucket because I don't think it's a clear no. Sometimes (very rarely) those middle bucket interactions turn into funding. But I agree w/ you that it's usually a waste of time.

The article is good but I don't think it delves into the "middle ground" which is so common for startups. A very small percentage of companies elicit huge interest (i.e., fast action, term sheet quickly, etc.) A surprisingly small set of companies that meet with VCs elicit signals that are clear nos (e.g., not responding to emails and so on). These are usually ones where the idea is so dumb or the pitch is so bad, the VC questions the entrepreneur's capabilities. I'd say the vast majority of meetings turn into this netherland where the VC isn't sold on the idea but also isn't sold on NOT funding the idea. S/he either doesn't know the space well enough, isn't sure his/her partners would agree, doesn't have enough clout in the firm yet (see previous point), doesn't know the entrepreneur well enough to feel conviction, etc. So s/he doesn't say yes. But s/he doesn't say no yet either because s/he wants the optionality in case (a) another VC firm who is well respected or know the space decides to go after it (which creates the super-annoying lemming effect), (b) another partner and his/her firm gets "conviction" on the company independently, (c) s/he hears other good things about the entrepreneur, etc. I think for most entrepreneurs, this is the most annoying category to be in.

Thought-provoking post. To me, one way to determine whether a system will have network effects or anti-network effects is to ascertain how much of its usage is driven by fashion versus utility. Take email as an extreme example of the latter. It's valuable because it's so universal - but it's not fashionable at all. It's a pure utility. So no anti-network effects (perhaps beyond spam but those are less about #s of participants as behavior). I put Facebook in an intermediate category where it's transitioned reasonably well from fashion to a utility, though the folks that looked at it as fashion are now getting more turned off by it. Indeed, the anti-network effect isn't simply about numbers - it's about who is coming into the network and a lost feeling of exclusivity (which honestly sometimes picks on very base human emotions) when the network grows with certain types of people. I think twitter has moved further up the utility value chain than facebook has so I'd posit it's less vulnerable to anti-network effects (not to mention the asymmetric follow model that dalton talks about).

Good question. In the last few years, the term has been overloaded to talk about a new engineering-like approach to marketing and user acquisition. But the confusion is understandable. I personally think it's kind of cheesy but whatever works for people :)

Nice work. Definitely going to use this.

From my experience, his tips are very practical. In particular, if any of you end are founders / leaders or end up being founders / leaders, I can't overemphasize how important it is to communicate and repeat your message, strategy, goals, etc. As an organization gets larger, unless you're bored of your message yourself, it probably hasn't sunk in for others.

Really interesting - particularly how much of a theme there is around getting more product/technical knowledge throughout the company.

Thanks for the response and I think I probably should have been clearer. Zynga is fundamentally tied (today) to factors outside of its control (like airlines) but that are (a) controlled largely by one entity (facebook) and (b) opaque to the outside world. By comparison, airlines are tied to factors (GDP, fuel cost, etc.) that are not controlled by any single entity and that are more transparent (e.g., real-time markets for fuel, widely available forecasts for GDP). Regardless, I wasn't defending the stock - on the contrary I was saying this is going to be a very tough public company in general.

For the layperson (like me), the below is an intriguing and related TED talk from Brian Greene. A big conclusion is that we now believe the universe is expanding at an accelerating rate based upon the edge of the observable universe. But Greene posits that 1000s of years in the future, this accelerating edge will be too far away for us to observe and the universe will look to future mankind to be more static and small. I'm not physicist so I can't criticize this claim but I found it intriguing.

http://www.ted.com/talks/brian_greene_why_is_our_universe_fi...

I think Zynga will be a very hard stock for wall street to understand for some time. Since it's revenue is so tied to usage (meaning unpredictable after hockey stick growth flattens) and since usage is so tied to external factors (e.g., Facebook Open Graph changes), I think it will be a very difficult company to forecast. In general, it's tough to be a public company if you can't have some predictability to your financial results.

I agree HN needs tags but still think this was an interesting post. While the analogy could have been more thoughtfully constructed, I think the topic is very relevant right now for startup business models (ad-supported versus paid).

This is a good and relevant article based upon my experience (last company was SaaS company with 60% of revenue from partners). I would add that partners generally won't care much about your business (they care about their's, rightfully so) but when they decide to care (e.g., if a customer asks them for integration with you), you need to be top of mind and easy to work with. This is why I'm a huge fan of thinking of partners like customers - using drip marketing techniques to continue to stay on their radar, making partner content really easily available online (videos, etc.), giving them self-service options and so on.

I enjoy reading your essays. I think the concept of heroes is a worthwhile one and I might compile my own list. Einstein would be there for me but probably as much because my mom put a poster of him in my room when I was six (which remains there today) as anything. I'm also from the 'burgh :) and as I grew up in the next generation of Steelers football, Hines Ward would be my Jack Lambert. His love for his work is truly inspirational and infectious.