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Startups and the Challenges With CRM

By admin_onstartups.com admin_onstartups.com on September 21, 2006


Brian Halligan, my co-founder at HubSpot has a written a thoughtful piece today on the issue of CRM in startups: “Why CRM Initiatives At Small Business and Startups”.  This is on our Small Business 2.0 internet marketing blog, which I also write for regularly.  Its an excellent read and highly relevant for readers of OnStartups.com

Some thoughts on the article (and the issue):
  1. I totally agree that the issue with most startups is not counting customers (which most CRM systems are good at), but creating customers.  If you have only a limited number of customers, there’s only a handful of ways that you can slice and dice this data to make it interesting.

  1. Venture-backed startups (i.e. those with investors) have a special kind of problem in that the CRM system is often used to generate pipeline reports for the investors (they like to see how the “sales funnel” is looking).  But, the CRM system really doesn’t tell them anything about how the awareness and visibility of the company is growing.  Most of the interesting stuff is happening on the startup’s website, and likely never makes it into the CRM system.

  1. Startups in the early stage are often having much deeper conversations with their early customers.  It’s not transactional and high volume yet.  As such, classic CRM systems that don’t help capture that “conversation” don’t quite feel right.


What are your thoughts?  Are you using a CRM system today?  What’s your experience been?
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Another Startup On eBay: Why This One Is Probably Worth The $90k Starting Bid

By admin_onstartups.com admin_onstartups.com on September 20, 2006


If you’re a regular reader of OnStartups.com you’ll know that every now and then I diverge from my usual “advice for startups” theme and talk about specific news and other industry stuff (still usually related to startups).

As such, I’ve had a series of articles looking at the trend whereby startup founders place their companies for auction on eBay (most common reason is that they are no longer interested in the project and they want to find a more suitable acquirer to carry the company/project forward).

In part because of my past articles, one of the founders of CrispAds (which is up for auction now on eBay) contacted me.  I exchanged some notes with Hans to discuss the auction.  If I were a real writer, some might call this exchange an “exclusive interview”.  It was exclusive, and it was an interview, but I don’t have a journalism degree, so let’s just call it what it is:  Some questions I had, and that Hans was brave enough to answer.

ANTI-DISCLAIMER:  There is nothing to disclaim.  I have absolutely zero conflict of interest.  I don’t know
Hans, his company, his investors (if he has any) or his customers.  I have nothing to gain or lose regardless of whether Hans is able to sell his company or not.  It simply struck my curiosity. 

For the rest of this article to make sense, you should probably look at the eBay listing (I’m not going to repeat the basics here).

Hans and his partner Cadman have built the company over the past 18 months and it now has an inventory of over 300 million impressions per month (once again, not bad at all).

Revenues/Profits:  I asked as to what kind of revenue or profits the company was generating (didn’t think I was going to get a “crisp” answer, but hey, it doesn’t hurt to ask).  Their position is that since they are currently only monetizing about 10% of their inventory, and the current team is good at finding a need and meeting it – but not good at sales or monetization.  But, their trailing 6 month revenue is about $100,000.  Not bad.

Technical Platform:  PHP, MySQL, Apache.  No big surprises here (note to readers:  If you were on the “buying” end, ask yourself how their choice of platform influences the value of the company to you). 

Keeping The Lights On:  I asked about how likely it would be for the acquirer to at least “keep the company running”.  If I were the buyer (which I’m not), I’d be worried about having knowledge of the system so that things didn’t crash and burn before one of my team had a chance to learn how things worked.  They’re providing a 3 week transition period and
Hans believes that should be sufficient for someone to get up to speed.

Non-Compete:  I asked about whether or not they would be wiling to sign a non-compete with the acquirer.  That is, what’s to stop them (the founders) from repeating the same exact business after selling the current one and essentially competing with their old product?  Seems the founders are ready to “move on” (they tried the advertising thing, and don’t have issues “moving on”).  If I were an acquirer, I’d take them up on this and get some type of non-compete.

Motivation For Exit:  When asked why they were selling the company, the response was similar to what we’ve heard before:  “We are the wrong team to take this to the next level.” 

Why Sell On eBay?  “We talked to potential acquirers.  They were looking at the deal from an inventory acquisition point of view.  eBay makes sense because we can get in front of as many people as possible.”  Not sure I agree with them that eBay is the best vehicle for finding the right acquirer, but it worked for Kiko, and might work here.

Overall, I think this is an interesting opportunity for someone that is looking to get into this space, or extend an existing offering.  They seem to have created some traction.  Not sure what the right valuation is, but that’s for the market to decide.  If I had the time and energy, it’s probably something I’d look at seriously, but I already have too much stuff on my plate (including my own startup), so will demonstrate some discipline here. 

I wish them luck.  Always refreshing to talk to entrepreneurs that are candid and straight-forward.


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