Competing with Blackline: FloQast CEO Mike Whitmire (Part 4)

Mike Whitmire: It came to my attention that both of us were heading to this lunch under the assumption that we were going to quit on each other. That was how low of a point it was. We sat down and acknowledged that this wasn’t working. That was when we went back to the Amplify offices and we decided to just scrap the whole product and build a second version of it. It needed to be a lot less standalone and more integrated with the systems that they’re using today.

By doing that, we’re going to be able to pawn off a little bit of the security risks to other applications. We went back to Amplify. We white-boarded up our new idea and that’s the product that we’re selling in the market today. That would have been in Q1 of 2014 when that exercise happened. At the same time, Toba Capital was interested in giving us a term sheet and funding us. We haven’t discussed the product scrapping yet.

I had to go back and say, “Full disclosure, I want to let you know that we are going to scrap our product. We’re going to build a new one. We think it’s the right move in light of how the market is responding to what we have right now.” They still wanted to proceed. That was a $1.3 million round. We took that money and that was what we used to hire out a small team of engineers to build out the second iteration of our product and ultimately go to market and start selling in early 2015.

Sramana Mitra: It’s interesting. I think what your investors like is the fact that you were out in the market, got feedback from the market and were processing that feedback to address the kinds of concerns you were getting. That’s always considered a very good thing in the investor world.

Mike Whitmire: They certainly respected that decision.

Sramana Mitra: What timeframe are we at?

Mike Whitmire: This is now towards the tail end of Q1 2014. The first order of business was to hire three engineers. We went out and hired three software developers. That was the core unit that built the minimum viable product. It involved some more heavy work because it was integrating with a lot of different systems including cloud storage providers and accounting systems. That’s just complicated code to write. It required more team members and a longer time frame. It took four programmers about nine months to put out the first version of our product which we released in January of 2015.

Sramana Mitra: What about go-to market and customer traction? What happened once you got the product out?

Mike Whitmire: Throughout the course of 2014, I was still doing business development. My goal was not to try to sell them anything at that time but to show them what we’re thinking with the product and asking for their feedback. We got very positive feedback. A lot of the suggestions that were made from that set of eventual customers were put into the product.

When we launched in Q1, we had a handful of customers who were already lined up to start using the application. From a go-to market perspective, I hired my first account executive at the end of 2014. Then we hired what’s referred to as a business development rep.

We put in a sales methodology called Predictable Revenue. The concept is, you have a business development rep who figures out who your group of target customers are. They start to research those and figure out who they are. They start to reach out via email, LinkedIn, and phone to book a time to do a demo. We would do a demo online for them. Our account executive now takes that prospect, runs a demo for them online. We would sell completely over the phone. It was an inside telesales organization.

It was very much brute force upfront. We really had no marketing at that time. It was very poor marketing handled by accountants. I really preferred that model. Since my background is accounting, I’m very much a numbers-driven guy. When you use that methodology for go-to market, there’s a lot of certainty around, “If I have a person around here everyday and they’re going to send X number of emails, I know they’re going to book a certain number of demos. I know my account executive is going to close a certain percent of those.”

That said, it’s a bit more expensive than going to the pure marketing round but you get that peace of mind where you get to know you’ll get revenue.

This segment is part 4 in the series : Competing with Blackline: FloQast CEO Mike Whitmire
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