Thursday, March 22nd 2007 | Ismael Ghalimi
For a consumer-oriented Web 2.0 startup, eyeballs might be all it takes to get funded. But for an Office 2.0 upstart, paying customers are required to get investors even remotely interested in your venture. This creates an interesting challenge for entrepreneurs: where to find prospects willing to try new products, without having to spend any money on marketing? Part of the answer might be provided by our friends at Salesforce.com, in the form of the AppExchange.
Salesforce.com’s marketing team is good at highlighting the large number of applications that have been deployed on the AppExchange (more than 500 to date), or some success stories about customers using them. What is missing from the picture though is the success that third-party developers are getting in signing new paying customers, using the AppExchange as a cost-effective sales channel.
If you are in the process of developing a business plan for your Office 2.0 startup, the Salesforce.com ecosystem might not be that impressive to you. With “only” 29,800 customers and 646,000 subscribers, it’s no match to the mind-boggling 450,000,000 users of Microsoft Office. But don’t get fooled: these 646,000 users are as close to a qualified prospect as you’ll ever be able to find without spending massive amounts of marketing dollars. The reasons for this are pretty simple: they already bought into the concept of Software as a Service, they are not afraid of putting their most mission critical business data in the hands of a third-party, and they are paying a meaningful amount of money for it. In other words, they are your low hanging fruits.
There is more than anecdotal evidence to prove that the model is working for a new breed of SaaS vendors, but some examples might help paint a clear picture. Two vendors that I am quite familiar with, EchoSign and Koral, each managed to sign tens of paying customers through the AppExchange in less than six month. Xcellery, which launched less than a year ago, signed their first customer last December, and got their first AppExchange customer this week. By any measure, this is fast.
So my advice to you is the following: if you’re developing an Office 2.0 application that could add value to the Salesforce.com platform, make sure to join the AppExchange sooner rather than later. This will encourage you to architect your application with open APIs in such a way that you can integrate it with third-party solutions, this will force you to focus on your core value proposition rather than developing yet another jack-of-all-trades that nobody really needs, and this might help you get your first couple of paying customers, before you bring any sales and marketing staff on board.