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About This Episode
Q: How do you sell a solution before you have a product?
A: By giving it away for free.
About five years ago, Scott cofounded Troops to help salespeople on the front lines not hate the software they have to use.
Scott and his cofounder asked this: “What problems have we experienced firsthand that we are uniquely positioned to solve? It was really using the CRM effectively. The data was never right. People hated it. Yet this is the thing that we run our businesses on.”
The next question was this: What if it could be as easy to update a database as it was to send a text message?
That was the origin of Troop, investigating how to use natural language processing to take unstructured data and put it into a structured system — with the goal of making software use more human.
“The future of work is really about empowering people and enhancing their ability to do what they need to do in interfaces that they’re already familiar with,” Scott said.
Overcoming fear in entrepreneurship
I asked Scott whether it was scary to put the kibosh on the mobile app and move everything over to Slack.
“Especially in the beginning, it really feels like life or death,” Scott said. At some point, you have to take what you know and make a big bet.
Scott really related to Wayne Gretzky’s quote: Don’t skate where the puck is, skate where the puck’s going.
He and his cofounder asked themselves some essential questions.
- Do we think this way of communicating and interacting with data is so much better than the old way?
- Is it inevitable that eventually someone will get everyone there?
- In that case, why shouldn’t it be us?
Once they gained that conviction, they had to hustle to promote the product (which wasn’t even made yet).
They prioritized having a hook that was easy for people to understand. (A sales gong in Slack to celebrate wins.)
And they gave it away for free.
“We’re going to try to get it into as many companies as we can via hand to hand combat,” Scott said.
A year later, he had around 500 companies in the free user base.
From there, Scott did customer development.
Which is where it gets even scarier.
Sell before you build?
Scott didn’t start out asking for money for a product that didn’t exist. Instead, he gave away the product, asked for feedback, and built something from the bottom up that was exactly what his customers wanted.
Eventually, he had to ask for money. But it wasn’t a cold ask
This was the process:
- Do discovery through customer interviews
- Identify a problem that’s compelling enough for you to solve
- Ask customers how valuable they viewed a solution
- Price accordingly
“If you had a checkbook today, how much would you pay for this? People will tell you,” Scott said.
Let them know you’ll have a beta in 6 months. You’ll be charging $500 per company… but if they want to be a design partner, their price will be $100. If you don’t deliver on time, you’ll waive the whole agreement.
“How good of an entrepreneur and salesperson are you? How persuasive are you? How big of a need are you solving?” Scott said.
Scott landed 3 companies at $50/month per user for 50 users.
Went to VCs.
Built a product.
Even after his success, Scott still uses this process of discovery, value, and build.
“What you’re doing is trying to understand the commercial viability and value of what you’re doing before putting resources into it,” he said.
“Pricing and packaging is one of the biggest levers for a business, period,” Scott said.
Test a bunch of different models with this analysis:
- Where are my customers getting value?
- How can I create pricing that aligns to that?
“We have adjusted our pricing over time by looking at how people use the product and how we impact their business,” he said.
Scaling helps bring the price down, obviously. But even that aligns to customer value.
Something else to keep in mind as an entrepreneur, Scott said, “When you start a company, the value that you think you’re delivering isn’t actually what the customer’s getting.”
Which is why discovery is one of the most important parts of pricing, too.
Troops itself is still somewhat niche from a target addressable market perspective. But Scott believes that Troops is the direction that the world is going.
“As an entrepreneur, sometimes you just have to listen to your gut and go with it,” he said. “Learn to get comfortable living in that intuition.”
Reach out to Scott about entrepreneurship on LinkedIn.