“Bite the hand that feeds you” Counter-intuitive tips for new software entrepreneurs

Be Stupid
Be Stupid

Be Stupid

Urmas Purde didn’t know anything about software. Yet – ignoring most of what common sense told him – he managed to build a software startup that now claims thousands of paying customers. Here, he shares counter-intuitive tips from his experience.

Four years ago I was a sales trainer in Estonia. I knew nothing about software, other than the fact that our $50,000 customised CRM system from a well-known brand had been a waste of money.

I ended up co-founding Pipedrive, which today thousands of paying customers in more than 100 countries. The lessons this taught me make perfect sense in hindsight but were really counter-intuitive back in the day for a first-time software entrepreneur like myself.

Bite the hand that feeds you

Our team had been toying with the idea of building our own CRM solution for years, but never had the balls to start building. You didn’t need a very complex spreadsheet model to see that it would take years before software revenues would get even close to numbers we had gotten used to. So we kept putting it off.

After the dust from financial crises had settled we found ourselves in a situation where we had a lot less to lose. And while we didn’t have a good plan to tackle our little financial cliff we knew to appear, we decided to take a gamble and create a CRM software we ourselves would use.

I lived off my credit card for almost two years and one of our co-founders had his car towed away by the bank. While we didn’t enjoy it, it was necessary to make time for building the product.

Don’t touch the low-hanging fruit

low-hanging fruitConventional wisdom suggests to play to your strengths. We knew large sales teams in the region and knew how to sell $5k-50k training packages to them. In the beginning it was really hard not to pick up the phone and sell our beta version to the people we knew, and instead learn how to attract lots and lots of small businesses from around the world, who we didn’t know anything about.

It was a bit like giving up drinking. Apparently you have to say “no” to your vice every day for a long time before it comes a habit. And even today I sometimes struggle to wiggle out of meeting requests from one of our old clients who is used to buying face-to-face from someone wearing a tie. But you can’t conduct $29/month sales in the same way you do $10,000 sales.

This is not to say we completely ignored local customers. Our alpha and beta product could not have been built without the people we knew already. But once we had gotten our product to a usable state, we focused on efforts to reach new audiences.

Say “no” when you’re offered money

After the launch of our public beta we were approached by several large organisations, clients from the training days. They liked our product in principle but wanted some changes to it, for example hosting on their own servers. One of them offered $40,000 for a self-hosted version at a time when I personally struggled to put food on the table for my family. Our revenue was about $5,000 back then.

It was very tempting to accept this offer, but we knew it would be a detour from where we were headed. We said no, and stocked up on ramen noodles.

[contentad keyword=]

Do something you don’t have the skills for

In our early days several software developers thought we were crazy. For them the idea of us, sales managers and sales trainers, working on our own CRM was a little like inventing your own e-reader because you have “some experience in reading”.

It’s worth pointing out we weren’t quite so radical as to learn to code, instead we teamed up with experienced developers. We did have to learn how to design and manage a product, build a customer support function and such.

Some of these lessons were conscious, other we stumbled into, but all of them contributed to making Pipedrive successful. Looking back they seem quite basic, but this hopefully doesn’t make them any less useful for first-time entrepreneurs.

Image credits:
Be Stupid: Flickr user Michiel
Apples: Flickr user Memphis CVB 

FOR RELATED POSTS, CHECK OUT:

15 steps to launch your own startup in Europe – Parts I and II
Fake it ‘til you make it – 10 of the most dangerous pieces of startup advice
The top 10 startup founder blogs every entrepreneur should follow