One of the startup areas where we've been seeing renewed activity in the last few months is in the enterprise software space--specifically, in software-as-a-service applications targeted at corporate customers. One of the local firms attacking that market is Los Angeles-based FunnelSource (www.funnelsource.com), a developer of software-as-a-service tools that provide analytics to sales teams. We spoke with the firm's CEO and co-founder, John Hanna:
How'd you end up starting the company, and what is FunnelSource all about?
John Hanna: I'm from the Bay Area, and spent twenty years working for multiple, venture backed companies. I and my business partner moved to Los Angeles, less than two years ago. I needed a change, and wanted to start a new company, and came to L.A. to find some new blood and new talent. Coming out here, I wanted to focus on what my specialty was, which is driving sales as a VP of Sales. The common denominator of what I'd done was sales, sales, and sales. I'd used every CRM tool out there--Oracle, Siebel, PeopleSoft--you name it, I've used it. The biggest hurdle with those tools, we found in talking with multiple people, was that the CRM was great, and so was the sales force automation--but a lot of the sales guys didn't use them to maximize their sales, they used them because they had to, because management makes them. They don't use it because it can help them close opportunities and to win business. My business partner and I kept thinking, what is missing to help solve this problem? The number one reason the CRM or sales force tools fail, is because of user adoption. Users fumble with the CRM systems to get information, and they waste time and energy not knowing where to start. People are spending time in sales call, telling reps to update this and update that. The next week, those accounts are still not properly updated.
We put something together to streamline the process, and which would accomplish two major things. The first, is it gives executives top down visibility. You can go from the CEO, all the way to the VP, to the director, to the rep, to the opportunity--all in a single screen--to understand exactly what is happening with the health of your pipeline. What is unique, is we tie this to quotas, and as a quota-centric app. At any time, if your revenue goal is $50M annually, an executive will be able to understand, during whatever time period--this quarter or this month--how they are tracking to their revenue. On our application, every time you logon, whether you are a CEO, VP, or manager with a quoat tied to you, you know exactly how your are tracking to revenue. It's always in your face, and always on screen. What we've also done, is allow you to understand the health of your pipeline. What opportunities are hot, or cold? What is closing, what's the run rate, what's the conversion rate, how is the team doing, how are they tracking. You can look at any team member and see exactly what they are working on, and what's hot.
The other part of what is unique, is we've allowed this application to work at the sales rep level. A lot of people in this space, doing kind of what we're doing, are management tools. We're a front end, actionable tool, which allows reps to get in and get out. I don't know if you're familiar with LucidEra, a company in this area which shut down earlier this year, but we're different in that their application is designed for five executives in a company. People were spending a considerable amount of money on the software, but they realized they were not getting true ROI, and cut back because of the economy. They had to pull the plug. We're different, as our application is designed not just for executive management, but for users. We're empowering both the executive team so they can see the health of their pipeline, and empowering reps on what they're dealing with day-to-day.
One of the other big benefits we have is helping our customers understand the health of their pipeline, and understand the health of their sales organization as well. One of our customers bought this, and it's the biggest weapon the manager has. They were able to spot weaknesses in their sales team very early. Instead of hiring a rep for six to nine months, with them just telling you what you want to hear, you can get much more visibility into what they are doing, and can call--excuse me--bullshit on what they're saying. You have complete visibility on exactly what is happening in their pipeline, and make necessary changes to the health of the organization, whether that is giving more training, or terminating the person.
So, to sum it up, we have a tool that answers multiple, critical questions--right on the fly, in a single view--and allows you to go from top down, bottom up, and drill into sales opportunities and see where they are at any stage, see stage movement, which opportunities have been pushed in and pulled out. It's complete transparency on the fly.
What CRM software does this work with?
John Hanna: We developed the application for Salesforce.com, it's a bolt-on. Salesforce has 55,000 customers, and 1.5 million users, and we can just bolt onto them. We're developing this to also work with Microsoft Dynamics and Oracle in the future. Salesforce.com is an industry leader and a pioneer in the software-as-a-service area, and they've been a nice success, with real, enterprise, paying customers. Customer there have already bought into CRM, and the sale has been done.
Can you talk a bit more about how this is different from running a report in Salesforce?
John Hanna: What we do compares to using a horse and buggy, and we've turned your horse and buggy into a Ferrari. You have to jump from one screen to screen within Salesforce.com to do this. With us, you can see it all in one screen. Plus, any time there's movement, it reports back real time. Any executive who logs in, refreshes in real time. You don't need to see a static report, which often has changed between when you ran it at night and in the morning. It's real time--every time an opportunity is moved within the pipeline, you see those changes in real time. You click save, and the information is up to date. There's no need to stop the car and run a report, it's always there right in your face.
Does this do anything to help, for example, to flag stale opportunities in your pipeline?
John Hanna: One of the things we've built into our application, has been a huge hit. There's an alert button, which is much like driving a car when the check engine light comes on. it signals to you that something is terribly wrong with your engine. One of the biggest problems in Salesforce is people do not associate every opportunity to a dollar amount, or every opportunity to a close date--things that happen to happen within your CRM or sales force automation tool. Our application has alerts that pop up if those don't take place. If you're a rep, and you long on, you'll see an alert button which takes you to the three opportunities you hadn't property updated, or missed. They just click, and it brings up those opportunities, so they can make changes, and that "need to happen" light goes off. The same thing goes for executives and management. One company when they bought our app, saw 150 errors based off of their criteria, and all they had to do is bring it up and it helped to clean up your data. Data integrity is clear, and a report with bad data is a bad report. The tools built into the application really clean up data integrity.
One of our other things is we have a module which can be used as a incentive tool. The module is designed, if you're a company doing a President's club or incentive club, which will track revenue, and can pit reps or territories or managers against each other in a race. Say you had ten sales reps, and you wanted a competition to see who could get the highest percentage of the quota--you can put them together and see it. It's really cool, like a horse race, and you can see visually how they are doing against each other. Our customers really like that.
What stops someone like Salesforce.com from just building these tools into their next release?
John Hanna: Salesforce is obviously the big elephant. But, it's hard for them to move in certain directions. With Salesforce, they have two things to look at, including trying to figure out how to monetize Force.com. They'v got 850 stores bolting onto their software. If they have a cool company taking market share enhancing them, to copy what they've done would do a couple of things. First, it would hurt them in the Force.com space, because the word would get out quickly that they'd copied someone on their platform. On the second hand, Salesforce's reason for the Force platform is to get into the enterprise space, and compete with the Oracles of the world. They know their core competency, and let companies like us enhance and enrich their current offering--which just makes them stronger. We'll sell our product bundled with them to help them close deals, and they look at us strategically. By buying Salesforce, you're also getting 800 applications that make your offering that much stronger. We've even been contacted by a VP at Salesforce.com, who heard about our product, and we're going to get into a discussion about helping them to bundle our product to win deals, because of our ease of use in what it does. Lots of people do ask that question. Plus, the good thing is we're not just stuck on Salesforce, in 3-6 months we'll be ready for Oracle, SurgarCRM, and other open source platforms, too.
Speaking of Force.com, how has that worked for you in terms of generating sales for you?
John Hanna: We released eight weeks ago, and have already closed two customers directly from the Force.com application. We did no advertising, and it came just the storefront there. We've also got a big demo scheduled with a huge enterprise customer, from Salesforce.com directly. We're happy with the exposure we're getting from the platform.
Can you talk a little bit more about your background?
John Hanna: I've worked for several technology companies. I worked at Avnet Electronics, which is a Fortune 200 semiconductor distribution company. I was a channel manager there, and went to OPI Software, which provides workflow management and procurement software. I was running sales over there. They were venture backed, and raised about $30M. I went there to E4enet, a collaboration software firm in Boston, and ran the Western United States for them. The last company I came from was a pipeline procurement company, an outsourced professional services firm which did sales consulting and pipeline fulfillment. A lot of it has revolved around driving revenue and sales, and running organizations--revenue, hitting revenue goals, and driving sales. That's how this application came to me, figuring out how we empower sales reps so they can maximize their ability to sell, so they can go in and identify companies where they want to spend their time, and get out and do what they do best--identify new deals, and close business.
How are you funded?
John Hanna: Our company right now is funded through an angel round and private placement. We haven't yet reached out to venture capital companies, and we're still figuring out if we want to explore the world of venture capital or not. We think we're on track to be profitable in the first quarter of 2010, and thinking what kind of investment strategy we might follow.