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(Here's the full analysis behind the excerpt that TechCrunch published yesterday)
After spending 6 years with startups in the Salesforce.com ecostem, I’ve spent the last 6 months as an Entrepreneur in Residence at Foundation Capital, helping find the next big SaaS business. One of the things I hear repeatedly from entrepreneurs as they illustrate their startup’s potential is their plan to “disrupt Salesforce.”
Of course, Salesforce is still the one doing the bulk of the disrupting in the enterprise software industry (Exhibit A: their recent $55B takeout offer from Microsoft, and recent inclusion in the Fortune 500). And most startups will publicly talk about how they complement Salesforce, not compete with them. But Salesforce’s rapid expansion certainly leaves entrepreneurs thinking about potential vulnerabilities to Salesforce’s dominance ...some of which Salesforce has already responded to with big ticket acquisitions.
After talking to over 150 startups as an EIR, I’ve started to think about Salesforce as the large, dominant fighter at the center of a dojo, taking on all comers. Small competitors know that direct attack is fruitless, so each attempts to apply leverage from a unique angle to gain advantage. Most of these attacks will fail. Yet even when unsuccessful, each provides valuable new insight into opportunities in the CRM ecosystem.
Allow me to be your sensei as we walk through four different types of attacks I see attempted on Salesforce: a blow to the heart, a blow to the head, a sweep of the feet and an attack from the flank.
1. Blow to the heart
Some startups go for the heart of Salesforce’s user base, targeting individual salespeople and how they prefer to work — in email, in meetings, delivering content, on their mobile device. Salesforce is vulnerable to this attack because they primarily deliver value to sales management and operations. Startups typically avoid these decision makers at first, instead driving adoption from the bottom of the sales organization up. Attacks to the heart are difficult for startups, as evidenced by recent acquisitions, pivots, and failures. Full disclosure: my last startup tried and failed an attack like this!
Via mobile: Salespeople are among the most mobile employees at an enterprise. It makes sense that the battle for their hearts would start on their phones. Companies that are attacking Salesforce on mobile typically focus on a specific mobile workflow, so you’ll see mobile-first attackers using each of the attacks below.
Via content: Most salespeople give countless presentations, leading an early wave of potential Salesforce disrupters to focus on improving the experience of delivering content to customers (e.g., Clearslide). Other attackers here include LiveHive, OneMob, and Showpad.
Via meetings: The lifeblood of sales is customer meetings, but calendars are terrible at helping salespeople prepare for and follow up on their sales meetings. This is an attack that some startups have pivoted away from (e.g., Clari, Selligy, the acquired Refresh) while others persist (e.g., Roobiq, SalesMesh). Salesforce has responded here with the recent acquisition of Tempo, which was a double threat because of their AI expertise.
Via email: Salespeople live out of their inbox, but email clients aren’t designed to help salespeople prioritize messages, respond appropriately and update their team as they work. Email-centric CRM is not a new idea, but has seen increased activity driven by browser extensions (e.g., Tout, Yesware), and the greenfield opportunity to capture the salesperson’s mobile inbox (e.g., Cirrus, Smarter.me, Immediately, and the recently acquired Stitch).
Via relationships: The sales funnel represents sales management’s view of the sales process, not the salesperson’s. The final attempt to win the heart of salespeople is to support the salesperson’s relationship management process, either through an email-centric approach (e.g., Streak, Contactually) or through a focus on the individual salesperson's mobile workflow (e.g., Tact, Heighten).
2. Blow to the head
Some startups aim for the head, attempting to reduce Salesforce to a dumb, low-value database of historical customer data. They do this either by adding a layer of smarts on top of sales and marketing data, or by targeting the pain of an empty CRM database by providing data about your prospects -- this is an area where LinkedIn itself already poses a significant threat. Salesforce is aware of this vulnerability, and has tried to counter it by acquiring companies like Jigsaw for data, Edgespring for analytics, and most recently RelateIQ for relationship intelligence. But the attacks continue, coming from startups harnessing predictive analytics and big data.
Via predictive analytics: By applying algorithms and business rules to a company’s CRM data, both established players (e.g. Lattice Engines, fresh off a $28M series D) and smaller startups (e.g., Infer, Fliptop, Leadspace, Mintigo, 6sense, C9, Everstring, SalesPredict, CustomerMatrix, post-pivot Clari, and many more) aim to more intelligently guide the activities of customer-facing employees with a “score” to prioritize leads and customers. They view CRM systems as a mere container for the insight that their software generates. “Sure you need a wine glass to drink wine,” one entrepreneur in the space told me, “but you pay a lot more for a good wine than a good wineglass.”
Via big data: CRM systems traditionally rely on salespeople to input data about their customers and prospects, resulting in notoriously unreliable information. Established players like InsideView and Avention (along with even larger companies like LinkedIn and D&B) have long aggregated data from multiple sources to help salespeople sell. New startups are using “big data” techniques to assemble their own unique sources of data on prospects (e.g., Accompani, Spiderbook). Often, aRevTech' RevTech market for multiple winners. Think about whether there’s a way to earn your lower belts before picking a fight with Salesforce.
This analysis has also left me with a passion for advising and investing in startups in the RevTech ecosystem-- drop me a line at [email protected] if you’d like to discuss further!