And that’s okay, because it allows us to focus on what matters.
What You Lose When You Raise Money
Money has a tremendous impact on how a company makes decisions.
When a company takes on large amounts of investment capital, that money comes with a set of expectations that don’t align with the needs of customers. Being on the hook for tens of millions of dollars means you have to constantly find ways to multiply your customer base and squeeze them for more revenue, in an attempt to make lots of money for your investors.
It’s an arrangement that means your customers will never come first. Since your company has to provide its investors with a strong return on every dollar raised, more money means more pressure to focus on things that “scale.”
Scaling refers to strategies and tactics that allow you to earn more revenue from the same set of resources. For example, it’s generally accepted that phone support is less scalable than email or chat support, because support calls require individual team members to field them and can take up a lot of time. It’s a lot easier and cheaper to outsource your customer support overseas, and have those support reps reply to customer messages by email or chat on their own schedule.
So, if you were ever wondering why large, well-funded companies with massive teams don’t pick up the phone and provide free assistance when you call in for help, there’s your answer: It doesn’t scale.
One of the advantages of funding is that you can spend a lot more on marketing. However, while that will get you a louder bullhorn to reach potential customers, a bigger marketing budget comes with some pretty consequential baggage, since your investors will be expecting you to frantically drive customer growth with that money.
It doesn’t mean you’ll grow efficiently in terms of revenue, either. Now, I don’t know the precise amount of revenue each of our competitors is pulling in, but I know enough to make a very educated guess. And even though other companies in the CRM and sales automation space have raised anywhere from eight to twenty times more money than Nutshell, they sure as hell don’t have eight to twenty times as much revenue. Not even close.
They’re also not creating a product that’s more technically advanced or well-liked by users. Just take a look at any software comparison site and you’ll see that generally speaking we all offer fairly similar features. Our product is just as highly regarded, and often outscores our rivals in user reviews, particularly when it comes to ease of use. (It’s kind of incredible that CRM users can’t tell the difference between a product that was built with a few million dollars and 20 people and a product that was built was $90M and 300 people, but of course very little of that VC money actually trickles down to customer experience.)
So where does that leave our competitors? They have lots of money and people, but their teams don’t necessarily build a more functional product nor do they service it any better. They have more revenue but they have to make decisions based on what scales.
In other words, money influences the product and experience you offer your customers, in ways that are guided more by the needs of your investors. At some point, the chickens come home to roost and when they do you’d better have a big fat nest waiting for them.
Controlling Your Own Destiny Is Priceless
People ask me all the time what makes Nutshell different than our competitors. I usually describe our relentless focus on design and how it impacts our customers’ ability to get their jobs done. I also talk about the importance of being able to document and automate your sales process, and our belief that companies should be able to use whichever software works best for them, and it should all play nicely together in a single platform through seamless integrations.
That’s all true. But it’s not quantifiable. So, here’s another way we’re explicitly different than our competitors:
Nutshell has barely raised any outside funding and what we have taken on is from people who we can genuinely call our friends. In fact, over 80% of the company is owned by founders, friends, employees, and myself. That means we control our destiny and Silicon Valley venture funds don’t drive our decision-making.
From day one, we’ve been very deliberate about how much money we raise, when we raise it, and from whom we raise it from, because like all things in life, money comes with strings and the more money you take the more complicated those strings become.
Our competitors, on the other hand, have raised a ton of capital from Silicon Valley investors: