Cracking the Very Small Business Market: PayCycle CEO Jim Heeger (Part 1)

For years, I have looked at the small business market as an opportunity that technology vendors need to attack. For years, however, the common wisdom in the venture circles have been that it is much too difficult to sell to small businesses. With the advent and popularity of Software-As-A-Service (SaaS), this sentiment has started changing. In this series, I will be speaking with Jim Heeger, CEO of PayCycle, a company that has mastered the art of selling payroll services to very small businesses.

Jim, in particular, is an authority in this discipline of building businesses around value propositions offered to small business customers. Before PayCycle, he ran Adobe’s Creative Professional Suite business. Jim also spent a number of years at Intuit running various pieces of Intuit’s accounting software business, also focused on small businesses.

My intent in bringing you this series (and subsequent ones on the topic) is that it would give you ideas on how to market and sell to this vast, untapped set of customers.

SM: Jim, I would like to start this interview with some background which explains where you are coming from. I know you have been involved in some very small business oriented plays which were vastly un-sexy until recently.

JH: In our own minds we liked to think they were more popular. We have had some really good success working with small businesses, and it has been a lot of fun. The ones that are probably the most notable are Intuit and Adobe. I was at Intuit for a long time, from 1993 to 2000. I was at Adobe from 2002 to 2005. In both of those cases, I was working with very small businesses. In the case of Intuit, it was all kinds of small businesses which were doing accounting and in the case of Adobe it was small design shops and studios … creative people … that were typically working with us.

SM: Let’s first talk about Intuit? Intuit was the first case study of a business being successful by selling into small businesses. It was not even medium sized businesses. It was actually specifically small businesses. What was the lay of the land when you got into Intuit?

JH: I guess, first of all I would say that I think there have been a handful of companies that have been successful in the small business space for different reasons. What was unique about what Scott Cook and others did at Intuit, was to apply the consumer products model to the desktop software business. It was about low prices, great customer satisfaction and the virtual loop of listening to customer feedback to create a better product, which then earned more customers.

This virtual cycle they were able to create out of customer satisfaction was all about listening to customers very carefully and responding to them. That is the DNA I picked up and used at other places, including here at PayCycle. The key insight around the small business space was realizing that this checkbook metaphor used at Quicken was being picked up by a lot of small businesses, and was used as a tool to keep track of their finances. Way before I got into it, Ridge Evers was the one who spent a lot of time looking at the behavior of small businesses. He was at Intuit and recognized the opportunity. From that came the idea of really focusing on small business accounting software and that was a niche that was really wide open at the time. By the way Ridge Evers is doing another deal called NetBooks.

This segment is part 1 in the series : Cracking the Very Small Business Market: PayCycle CEO Jim Heeger
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