How did you get started?
One of the challenges with AppExchange development is that you have to develop the product. You can not just start the business on Monday and start selling the App on Tuesday. You can start the business, but you won’t have a product for many months.
I think the most common route for an app on the AppExchange is a consulting company that has identified a product or a gap. They implement that solution two or three times through custom development and unmanaged packages. Then they start spotting a similarity between multiple clients and think, “If we had this base level of unmanaged package, we could do our consulting work faster.” Then at that point, they turn it into a managed package and convert their business into a Software as a Service business.
I saw a gap in the market and I had developers that I could use. I threw them at that project and nine months later we had something that we could install. That was a lot of work. It’s a very hard way of doing it, especially if you’re self-funded. It took us years to get the product to a point where it could actually just be used by anyone. I was running a development company. We saw a gap in the market where clients were asking us to develop integrated solutions with Salesforce from a web application development point of view.
If you are a consulting partner, identify a gap in the market that you’re getting paid to solve time and time again. Build an unmanaged package as a way to reduce your cost of goods sold, effectively so that you’re not having to redevelop those same things. Every time you just install the unmanaged package. Keep tweaking that unmanaged package until you never have to tweak it after you install it. So it’s got all the different edge cases and things that you need, so it can be launched.
Ideally, get sales before you’ve sold it, which is what I got. Then build it, starting from zero all the way up. Now, that’s a very hard route. However, the benefit of that is you can sort of hold the line on what you’re developing a bit more tightly. You’re not having to modify it every time for every different consulting client that comes in. You don’t grow into a SaaS company that’s dependent on consulting income.
Now we don’t do any consulting work. We’ve signed 60 SI partners around the world to install and sell StoreConnect, which I think is a world record in terms of rate of growth for a new company. We are really primed for scale right now. We don’t have to go through the problem of weaning ourselves off the consulting income to scale up the software sales.
What Did You Learn Along the Way?
If you are serious about building a product and turning it into a business, start a second company. When you go to launch your managed package, have it as a separate business in a separate Salesforce Org and in a separate packaging org. It is a little-known fact that you cannot migrate a package to another Salesforce org. This means that the value of the asset is effectively zero. You cannot simply buy a package and migrate it to another org. If I had known this, it would have saved me a lot of pain and agony when I was building my business.
The second thing to bear in mind is that consulting and ISVs are different business models. As a consulting company within Salesforce, you can open a Salesforce consulting business on Monday, and you’ll probably have work by Wednesday or Thursday. If you know any account executives, you can just call them and say, “Hey, I’ve got this thing. Do you know any clients that need help?” and you’ll probably have work right away. Software as a Service is a very different proposition. You need to prove that you’re not going to disappear next month. Clients are going to be installing your package into their Salesforce org, which is the lifeblood of their business. They can’t afford for you to disappear. You’re not going to get those same quick wins as you can in a consulting business because consulting, from a client’s point of view, is very low risk.
Different Business Models
If you’re running a consulting company, think of yourself as a van with a set of tools, ready to drive to wherever the client needs you to fix their car. The upfront costs are minimal; perhaps you need certification, but you can often earn that on the job. For example, if you specialize in fixing car batteries, all you really need is a van, maybe 10 batteries in the back, and a socket wrench. That’s your business in a nutshell.
Contrast that with becoming a SaaS company on the AppExchange: it’s like building a battery manufacturing factory from the ground up. You won’t make a single cent until the entire factory is operational. If you can secure some pre-orders or letters of intent from customers, you’re in a good position—this is what we did. You might also consider offering sweetheart deals to your first few clients, giving them a reduced rate if they help you develop the product. However, understand that you’ll need a substantial budget to cover development costs. This includes not just the cost of developers but also your own salary and that of anyone else involved in the project.
An aspect people often overlook with ISVs is identifying the sources of new customers. There’s a naive assumption that Salesforce account executives (AEs) will simply sell ISV products, but that’s rarely the case. You have to start with the assumption that they won’t. Consider that a Salesforce AE might have more than 300 products they could potentially sell, and there are only around 200 business days in a year. So, if an AE were to focus on a different product each day, they wouldn’t even get through the full Salesforce product line in a year, let alone start on ISV products.
The key to gaining an AE’s attention is to offer something compelling that assists them in their role. For instance, we help sell Salesforce itself, which is our unique angle. More than 50% of our clients are new to Salesforce, so AEs love us because we help them sell Salesforce products. Therefore, you need to figure out your sales channel and strategy. If you don’t have an extraordinarily compelling reason for an AE to bring you into a deal, you’ll likely be forgotten. The reason must be so compelling that not including you would put the deal at risk; otherwise, you’ll just be one of the 300 demos they saw last year and promptly forgotten.
Our product, StoreConnect, is substantial enough to be its own project, allowing our partners to take on the consulting role for its implementation. This generates extra revenue for them. The revenue split typically sees consultants taking 60-70% of the deal, Salesforce getting 20-30%, and we get the remaining 5-10%.
If your app is something minor, like updating exchange rates in Salesforce every Monday, your primary channel needs to be advertising. This could include paid advertising on Google Ads, blog posts, and social media presence. If that’s your business model then your channel needs to be advertising on the AppExchange, paid advertising on Google ads, blog posts, social media. you have to be the first search result when someone looks for it. The landing page needs to show just how simple it is so that it becomes a no-brainer for a consulting company to install it and the client to sign up.
Development Pro Tips
As you start your own project, it’s essential to pick your battles wisely. Build features that will have utility for future clients as well. Strive to develop in a generic way, meeting about 99% of a client’s specific needs, and allowing for slight modifications as needed.
* Be cautious about making fields required. It’s tough to reverse that decision later, and it could inconvenience the client.
* Similarly, be careful with setting unique values on fields. If you realize later that the uniqueness should be scoped by another field, undoing this is difficult.
* Unused metadata is a big issue. I’ve heard that some larger packages have up to 30% unused metadata, so be deliberate in your development choices.
* Fields are immutable post-release, meaning if you’ve set a field type as a number, you can’t later change it to text. You’d have to build a new field, and you can’t reuse the original name.
If you’re not cautious, you can run into significant issues. We’ve been caught out maybe three times by these types of challenges. So, if you’re new to software development or accustomed to being able to modify fields easily, realize that once a field is released, its properties are pretty much set in stone. Make your development choices wisely.
I started with just myself and one full-time developer, prototyping the basic solution. Then we added another developer and spent about a year and a half as a team of three. By the time we got our first proof-of-concept stores live, our team had grown to four people. At this point, we still had no significant revenue. When we acquire a client, the revenue ranges between $2,000 and $40,000 to $50,000 per year. That’s barely half of one salary at a large company, and we were a team of five. So it’s important to expect a financial loss and to have funds available, either through investment or other means. The longer you can delay investment, the more ownership you can retain.
We eventually expanded to a team of about eight people, including one support staff, and maintained that size for about two years. I handled almost all the sales. Things began to look promising when we secured our first customers; it became clear that the business would expand. However, growth stalled for about a year when we decided to cease all consulting services and focus solely on partnerships. This pause was because we had to teach our partners how to sell our product effectively.
Last year, the company started to grow again. We recently closed a seed funding round securing a substantial investment. We’re now a team of 27, and this journey has taken us five to six years.
We now have 60 partners who have signed on to StoreConnect, multiplying our salesforce by the number of salespeople each partner has. We are well-positioned to focus solely on sales, as we’ve spent considerable time building our platform and client case studies. Our partners are seeing the value; some have even expressed a desire to shift 50% of their business to StoreConnect. This is largely because the platform is easy for them to install, and they can also build their own intellectual property around it without fearing that we will steal their consulting clients.
What other advice would you have for someone that is just interested in developing a business and getting started?
You really need to understand the specific problem you’re solving and be specific about your initial niche. The more targeted you are, the better chance you have of getting your product in front of the right clients. If you tell account executives that you’re solving a particular problem for a specific industry and market size, you can narrow it down to one or two teams per region who are genuinely interested in your product. This will significantly increase your chances of growth compared to trying to be everything to everyone.
Salespeople are experts in pattern recognition. They evaluate a product or problem and immediately think of a solution when a client mentions a specific issue. If you can clearly define the problem as a pattern and communicate that effectively in your sales pitch, it will greatly improve your chances of landing a lead. Consider having a slide that says, “When you see Problem ABC, think of us.”
Start attending events and locations where account executives frequent, and engage with them. Ask questions like, “Hey, we’ve got Product ABC; do you have clients who might need it?” Ideally, start asking these questions before you spend half a million dollars developing your product.
Approaches to Building an App
I think there are three routes to building an app:
- A consulting company identifies a gap in the market that they are getting paid to solve time and time again.
- Enabling integration to Salesforce from existing software, e.g., DocuSign.
- Spot a need by being active in the Salesforce ecosystem and build an app from zero.
You have two broad approaches. One, you can build many small products, each solving a specific problem and charging a low amount. This is a volume-driven model that focuses on solving issues found in the idea exchange. However, each product requires a security review, billing system, customer support, and a marketing strategy. So, you need to be efficient if you choose this route.
The alternative is to tackle one major problem that could serve as a barrier to entry for competitors. For example, building a competitor to StoreConnect now would take years and millions of dollars. The idea itself is less critical than the execution.
If you’re considering becoming an ISV for the passive income, you might not fully understand the business. There’s nothing passive about being an ISV; in fact, it’s more demanding than consulting by orders of magnitude, especially if you’re operating within Salesforce. If you’ve never run a software business before, starting on Salesforce isn’t recommended. I had already built and sold three other SaaS businesses, so I had a foundational understanding of the industry. Even then, the transition was challenging.
For those searching for an ISV business idea, the key is industry experience. Gather insights, become an expert, and then pitch your idea to clients to gauge interest. Even if they say they would have been interested six months ago, that’s still a positive indicator of market need.
Solve a problem. If you’re starting a business, you’re in for late nights, long hours, difficult problems and significant financial risk. There will be sacrifices. So don’t do it unless you’re exceptionally passionate about building it to solve a problem that you deeply care about and want to solve.
My dad said that as a founder and a business owner, you have complete and utter freedom to choose which 80 hours a week you will work. It’s true at 2 am on Sunday morning, while you’re trying to fix an issue for a client, you need to have a lot of reserve on why you are doing it. You can’t expect your staff to do it. So you have to be willing to take full responsibility. What do you do? You solve it. And if that takes you 200 hours of work, it takes you 200 hours of work. You better start now.