Why focus on targeting a niche market for Software as a Service (SaaS)? What value comes from it? Today’s episode features a fireside chat between Margie Ramos, sales and marketing coordinator at Block 64, and Jono Landon, founder and CEO of Hubbli.
Hubbli is a Customer Relationship Management (CRM) and SaaS company that helps small private schools find prospective parents and engage them throughout the enrollment process. Jono shares his experience with niching down to accelerate growth at Hubbli and empower school leaders to deliver education through its easy-to-use technology and marketing platform.
Topics Include:
- Why create Hubbli? Solve communication problems and prevent liability issues that lead to lawsuits in education sector
- Parent Engagement: Positively impacts students’ outcomes
- Why call it Hubbli? Serves as “hub” for communication management tools
- Multiple channels of non-relevant and repetitive communication makes lives difficult
- Revert to Paperwork patchwork? Offers consistency and standardization of information
- Public vs. Private Schools: Target niche market to develop strategic partnerships, relationships, and investments
- Marketing Metrics Make Money: Focus on niche to improve conversion results
- Stay or Go: How long should you stick with a niche market, before moving on
- Disadvantages of not defining or targeting your niche market
- Hubbli’s niche is CRM for private schools; and uses beachhead marketing strategy
- Avoid natural instinct to be broad; narrow your focus to one customer with one problem
- Product vs. Marketing Niching: Grow a healthy business by not outpacing product sales with onboarding customers
- Entrepreneurs: Start your own company; do it yourself, if you don’t believe in others
- Competitive Edge and Lead Gen: Cold calling to schedule demo for decision makers
- Different Demographics: Parents and school administrators have different expectations and experiences with communication tools
- Skills and Drills: Narrow scope of product and marketing being offered to be successful
Links and Resources:
Toronto Software as a Service (SaaS) Meetup Group
Crossing the Chasm by Geoffrey Moore
Episode Transcript
Jono: Hello and welcome to the Kick SaaS Podcast. I’m your host, Jono Landon. In this show, we’re going to be sharing excerpts from live in-person SaaS growth events that I run here in my hometown of Toronto, Canada. A little about me. I’m the founder and CEO of Hubbli, a B2B SaaS company that helps private schools find prospective parents and engage them throughout the entire enrollment journey.
This episode is a recording from a recent fireside chat that I hosted here at Hubbli HQ, where Margie Ramos, who is the Marketing Director of another tech company here in Toronto called Block 64, interviewed yours truly on the value of focusing on a niche market.
We’re going to jump right into this episode and I hope you enjoy the format of the content we go through here and I look forward to sharing a few episodes with you from these live SaaS growth workshops.
Margie: Hello, everyone. Thank you for coming to tonight’s meetup. We have an amazing crowd here and thank you all for coming despite the weather. Before we begin, I would like to introduce myself. Some of you have still not met me. My name is Margie Ramos and I’m a new organizer of the Toronto SaaS Meetup group or Toronto Software as a Service meetup. I’m also a Marketing and Sales Coordinator for Block 64, which is a technology and services company that is focused on helping CIOs and other IT leaders make the right decisions in software licensing, infrastructure management, as well as cloud migration.
Now, something more interesting about me other than what I do for a living. I’m from Montreal and I moved here to Toronto a year-and-a-half ago to join the thriving I’ve seen here. I am also trilingual. I speak English, obviously, as well as Tagalog, which is a Filipino language for those of you who don’t know what it is, and in French. I had to learn how to speak French growing up in Montreal.
For today’s meetup, I will get to sit down with Jono Landon, CEO and founder of Hubbli, to discuss the benefits of targeting a niche market for Software as a Service companies and why SaaS companies should be doing it.
Hubbli, for those who don’t know what it is, it is a CRM for small private schools across North America. Some of the things that I will get Jono to share with us is how defining and focusing on a niche market has helped him grow his own Software as a Service company.
Please note there will be a Q&A in the end of our live and recorded conversations, so everyone in the audience as well as those who are remotely watching the live discussion get to participate and ask questions. Please note that this fireside chat and the Q&A will be recorded and will be uploaded on YouTube. Everyone, please welcome Jono Landon.
Jono: Thank you. It was wonderful. Thanks, Margie. Thanks for coming, everybody. Nice to see you all here.
Margie: We have an awesome crowd here today. A lot of people showed up because they want to learn about the benefits of targeting a niche market when it comes to Software as a Service companies, and also to learn from your experience with that.
Before we get into the nitty-gritty of targeting a niche market and its benefits, can you please tell us something interesting about yourself?
Jono: I think probably most interesting about me is I didn’t start as a software person. Actually, I grew up focusing on the performing arts. I went to performing arts high school and I got a degree in Jazz performance. When in was 21, I was actually part of an orchestra where we won, like a world youth music competition. So, I’m a world-champion musician.
Margie: Wow, that’s amazing. As everyone already know and like what I said earlier, you’re the founder and CEO of Hubbli. Can you please tell us something more about what your company really does or done? It is a CRM for small private schools. Can you please elaborate on that?
Jono: Sure. The reason why I created Hubbli is because I saw that there was a big problem with communication in the education sector. I had an opportunity to start looking for problems to solve in the pre K-12 education world. I very quickly notice that parent engagement is the Holy Grail. Everyone’s talking a lot about it. Twitter is going crazy with their parent engagement. There’s a lot of academics doing a lot of research about it, how important it is, and how it has incredible impacts for the outcomes for students when parents were engaged. When looking for why is this such a big problem, it came down to some basics around communication management that aren’t really happening well in the education sector.
We called it Hubbli because we wanted to create a hub. What we saw was schools were using a patchwork of 20–30 different communication tools. Schools are businesses, but they’re run by teachers. These aren’t people that have MBAs. They’re not people that learn how to use marketing tools. Really when it comes down to it, parent communication is just customer relations for a school.
What schools are doing is they are using every kind of communication marketing tool you name. They’re using it because they’re trying to keep up with the demands of the parents. They’re patching together all these tools and then every teacher is using their own little patchwork of communication tools. Parents end up having 20 different streams of communication, mostly repetitive, 90% of it is irrelevant to them because everyone’s just sending everything through every channel. They’re basically training parents to ignore them.
Schools are businesses and not businesses. What other kind of business is where customers have to be there and where customers will fight through 100 horribly written long emails to find information? You’d lose your customers pretty quickly in any other industry. Schools are remarkably getting their customers fight through this, but for the most part, they’re just making their lives really difficult. Not because they want to, but just because they don’t really know what they’re doing.
The IT people that work at schools are not necessarily the cream of the crop from Stanford. The folks that do IT at schools are usually just somebody that said, “Oh, I’ll do it.” They know a couple of things about Microsoft Word and they become the IT expert. As you can imagine, things are challenging.
And they’re still using insane amounts of paper. The truth is, these schools will be way better off if they just reverted back to 100% paper. At least parents would have consistency and standardization. They know what to expect, they know where to go for information, but now they don’t even have that. In any event, it’s a whirlwind of patchwork of a haphazard communication structure and it’s across the board.
That’s what Hubbli is. We took the components of all of these different communication tools and put them into one hub, so the schools got one database. Every single one of those communication tools is a separate database. They have one database of all the little valuable bits from Facebook, Twitter, Google, SurveyMonkey, and all the things they’ve been trying to use, put into one place contextually, that was our mission with Hubbli, originally.
Margie: Since we’re talking about targeting niche markets, we know that Hubbli is for small, private schools across North America. But what kind of small, private schools?
Jono: When you’re looking at the school sector, that’s a niche in and of itself. When I say Hubbli is a CRM for private schools, I don’t say that to our customers because they don’t know what a CRM is. Really, it’s a CRM, but we call it something else to them, something that they just naturally get.
When we first started working on the school sector, that in itself is a niche, obviously. CRMs can be for all sorts of markets and there are all sorts of niche CRMs out there. But even within the school market, public schools and private schools rather have a lot of similarities, especially around parent communication, and a lot of similar challenges. They do have distinct challenges and their challenges are weighted differently.
I have a long history of product management and when I build a product, I try to understand that a lot of markets need similar features but they prioritize them differently. A private school have different needs than a public school does. As an example, they actually both need payment processing because parents in public schools pay for a lot of trips, pizza lunches, and a lot of incidentals, but in private schools parents pay for those and they pay for tuition.
In a private school, tuition is the most important thing in their lives. If they don’t have tuition, they don’t have a school. They’re not publicly funded. The prioritization of the tuition system bubbles right to the top very, very quickly, as an example.
The more we were originally working with all kinds of schools, we found a good fit between our natural inclination towards marketing and sales because selling to private schools is different than selling to public schools, and that just fit would be better. It’s just small B2B SaaS sales funnel or something that I’ve been doing well for a long time. Whale hunting someone at the TDSB takes two years to get a sale is not my wheelhouse. So, I didn’t try to go that route because I went for the path of least resistance.
We just found that with the call through the company, the needs, and just this fit that we’re having, we were selling successfully to public and private schools, but we just saw there was this much simpler path with private schools. That’s the way we’re doing it.
Margie: All right. What are the benefits of targeting the niche market, based on your experience with Hubbli?
Jono: Right around the time when I started realizing that I needed to pick either public schools or private schools and sort of become an expert in either one of those sales experiences. I read the book Crossing the Chasm by Geoffrey Moore. If anyone hasn’t read that and you’re in SaaS, read it right away. It’s a phenomenal book. Even if you haven’t read it, you probably heard a lot of concepts from it.
I’ll just give a quick synopsis. The point of the book is crossing the chasm. There’s a technology adoption arc that a lot of people know. Early adopters, mainstream market, and then the late adopters. There’s a chasm. The real challenge for a new and innovative technology company, adoption-wise, is going from early adopters to enthusiast into the visionaries, and then getting into the more pragmatist side.
There’s a big, big difference between the early adopter ramp-up and then going into the mainstream market because pragmatists like to have a lot of proof. You’re coming into a market where there’s well-rooted competition, they want safety, and they want to cover their butts when they make a decision that work and things like that.
He uses the analogy of war, so to speak. You’re going into a pretty busy warzone where there’s a lot of competitors, there’s incumbents, you’re coming in to disrupt something, and that’s not easy to do. If you think about the analogy that Geoffrey Moore uses is storming the beachhead. When the allied forces stormed Normandy, they had to take the beach.
The beachhead market is something that is really, really critical and I guess it’s just like my personality. When I read books that makes sense, especially when they have a bit of a framework around them and a pragmatic process, I really like to drink the Kool-Aid and try it out, so I did that.
I started looking at the different kind of customers that we had and I saw that within private schools, which is a pretty big market in and of itself, we had a bunch of customers that were Montessori schools. When you’re looking for a beachhead, there’s some elements you want to find because again, you’re going into the mainstream market, you’re going into a market of people that are more pragmatic, they’re not looking to be visionaries, they’re just looking to get their job done, and keep everybody happy.
You want to find a market that is small enough that you can actually come in, and make some influential relationships, get some shadow partnerships. In our situation, Montessori schools are private schools, just like all other private schools, they’re very similar, you wouldn’t know there’s a difference unless you went into the school, sat in a classroom, and saw how they approach educating kids.
Montessori’s a pretty large market, actually. There’s about 30,000 Montessori schools worldwide, between the US and Canada there’s probably about 7000 and there’s probably about 20,000 in Europe. It’s a growing market. It’s a market that’s growing in popularity and acceptance. It’s nothing kind of weird. It’s not like a religion or anything. It’s just this lady Maria Montessori came up with a philosophy around educating kids and it really picked up. But they’re just schools.
What do you want to look for in a beachhead is that they are referencing markets. Montessori schools have their own associations. You can go to Montessori conferences in different states or national ones, there’s a few national ones, but those schools that go to Montessori conferences also go to other school conferences. They’re also just schools like all the other schools.
We’re well-known in the Montessori world now and because of focus on it, I’ve actually developed strategic relationships, strategic partnerships, and even strategic investors with the largest and most influential Montessori luminaries and organizations like the largest Montessori teacher training company owns shares of Hubbli now. Interestingly enough, they started out as customers.
Everything I’ve done is like the textbook example of what Geoffrey Moore was talking about Crossing the Chasm and I guess I’m lucky that I found some good Kool-Aid to drink. It’s really worked out wonderfully. Interestingly, we get a lot of non-Montessori schools setting up because nothing that we do as a product or a service is specific to Montessori. We just created this referencing market.
We appear much bigger than we are because everyone’s like, “Oh, those really popular Montessori guys.” Nothing in our product is Montessori, but people come into our marketing funnels that are not Montessori schools are just Christian schools or Jewish schools or boarding schools. They have nothing to do with Montessori or anything in there; totally unaffiliated, but they attend our webinars. I happen to say this applies to all schools, not just Montessori schools because I want them to know that, and they sign up.
What’s happening is that because I’m so focused on marketing to Montessori, my marketing metrics have improved so much. One of the other benefits of focusing on a niche is that there is lingo in the Montessori world and they do have common challenges that other schools don’t have. These are very subtle nuance things, but when you really learn the language of this very little niche market, they really appreciate that, too.
You get the best of both worlds, but you do have to make sure that this market is not too small. It has to be big enough that, even if you don’t go beyond it, you make a lot of money. So, it has to be a big enough market, ideally a growing market, but small enough that you can go to a conference, as an example, and make a really strong strategic relationship that ends up catapulting you. You want to be looking for those kinds of elements. Those are the benefits of this beachhead approach.
Margie: All right. That was very detailed and that’s it. So, your niche markets are Montessori schools or private schools?
Jono: When I talk to investors, I do say, “We are a CRM for small, private schools,” which is 80% of the private school market is small. So really, it’s a CRM for private schools and we have some pretty large private schools that use us as well, of course, but again that’s our niche.
Our marketing strategy is this beachhead marketing strategy. If you go to our website, it doesn’t say anything about Montessori. We’re not positioned or branded as a Montessori product, but it is how we market. When I spend money to reach out to my market, I have a really great impact with really good conversion rates because I’ve honed in on a niche that responds. I’ve tested value propositions, language, and things like that and it’s a lot easier the smaller your market is to get to optimize every stage in your funnel.
Margie: How do you know when you found your niche market? How long should you stay focusing on one niche market and when do you know when to pivot? Should you say, “We done for a year”? What if you’re starting to lose money after a year-and-a-half, or after two years, should you stick with them, persevere, and be like, “There’s money to be made here.” How do you know that this is the right niche market?
Jono: If you’ve given it a really solid focus and you don’t see any positive, at least incremental improvements on your marketing funnel in a few months, and you’ve given it a good try and solid attention into it, then I would say it’s probably time to consider if you’re on the right path or not.
I find that these types of results are pretty quick. You should see some results after a few test runs. When you’re creating a test, you have to set up your test properly and come up with some hypothesis and some outcomes that you’re going to test against. You could be reasonable, but I would say you got to make sure you’re going in the right direction. If you’re not seeing a result from it, then I would say give it three months. Again, full-time focus.
Margie: All right. What are the disadvantages of not having a defined niche market and not targeting one either? Because there are […] service companies who don’t seem to have a niche market. They’re a bit everywhere. They’re serving all industries, all markets.
Jono: That’s not wrong for every company. I don’t want people to think that you should never or only niche always. I just think there’s great benefits to it, especially for bootstrap companies. I think for even most funded companies, they should probably take a niche approach. By the way, going niche doesn’t mean you can’t plan or you can’t be your business plan to go very horizontal, but why wouldn’t you first grow a very healthy core business before you move?
The idea for a lot of companies is they build these multiple S curve grow strategies. A CRM is a great example. CRM is great for schools, it’s good for summer camps, and it is good for non-profit organizations. These are very similar businesses. They’re all different niche markets and they have their own idiosyncrasies and nuances. It’s better if you focus on one at a time.
There are also good examples of public companies that do all of them at the same time because they’re public or they’re just really well-funded. They have the resources to actually do that properly.
The disadvantages that I’ve seen, first for myself and for other companies, other CEOs that I know, in mastermind groups and things that I meet with, I’m the guy that’s always […] everybody until niche down. I’m like, “Here comes Jono again. He’s going to talk about niching.”
A good friend of mine—I won’t label his company or anything—I’ve finally convinced him to do it. There’s three companies in Toronto that have started off really, really broad, and I see everybody hitting the same wall. Again, when you’re getting out of the enthusiast early adopter market and you’re going in this pragmatist market, you waste so many resources trying to figure out all these different markets. It takes so much to understand each different market.
I sat down with somebody recently. He’s got a decent technology. He’s got a few obvious applications in different markets. One of them is for young children and the other one is for seniors. It’s very different markets. There’s actually some interesting commonality with them, but very different markets still. He’s got this hardware, he’s got the SaaS platform around it, and he just keeps on finding new avenues and new applications to take this technology and customize it for those different markets and different use cases.
This is a guy that is very, very good. He’s very different from me. He’s very talented at networking and going into really big companies, enterprise, whale hunting. He’s really good at that. He keeps on doing that because that’s his natural inclination. One of his products is the one product he has which is just totally wrapped in a box top to bottom, complete solution, and it’s perfect for retirement homes. It’s selling to retirement homes. It’s just working naturally and I said, “If you just sat down a year ago and did nothing but focus on retirement homes, you’d have hundreds of retirement homes using your product right now. Would you rather be there today or where you are right now?” and he’s like, “Oh, I’d much rather have 300 retirement homes using this thing.”
It’s so easy to do that when you focus on one customer. When you solve one problem for one person, you can improve your conversion rates by multiples. That’s been my experience as well, even with Hubbli as a platform as I was talking about it. We were solving too many problems for too many people even inside my niche market. We were doing this for public schools, we were doing it for private schools, and we niched down into private schools. There’s marketing niching and then there’s also product niching.
Margie: I didn’t know that.
Jono: Yeah. Again, it comes down to resources and wanting to get the business to be healthier. We were running into this problem where we were growing in fits and spurts because our ability to sell the product was outpacing our ability to get our market successfully onboarded because again, our market is really on the tail end of the late adopters there. They’re not looking to rock the boat, but they know they have a lot of problems they need a solution for.
Our sales experience is we’re teaching them that they actually have problems. That’s not true. They know they have problems. They kind of know their hair is on fire because they can kind of smell the smoke. They can’t really understand where the smoke is coming from, but then know they’ve got some problems and it’s getting hot up there. We just life up the mirror in front of their face and then they actually see, “Oh, yeah. That’s my hair that’s on fire.” Our product is the water, essentially, but again, these people aren’t sophisticated business people. They’re wonderful educators.
We got really good at selling to them, but getting them to adopt technology was not easy. We were solving a lot of problems. We were going very broad in the platform, we kept on going wider and wider and solving more and more problems, and then we kind of buried ourselves under this customer success challenge.
We got to the point where I said, “Okay, well either I need to raise a whole bunch of money or I need to figure out something. I was thinking about this for a while and basically what we did was we took our product—we haven’t changed our product—instead of solving 10 problems for 10 different people, we solved one problem for one person.
Really, the most painful and obvious problem in the market that’s the biggest problem in the market which is one of the things we were solving, which solve by one component or one use case of our platform, and we went deeper with that. That improved all of our metrics by multiples. Now, we close deals with one call. It used to be an average of four calls. Our lead to close rate is now seven days. It used to be three months. We used to have to do so many painstaking demos.
By shortening all that stuff we also increased our revenue per customer by over 100%. Literally, every metric just shot through the roof. That’s because we have already started niching down on the Montessori schools and then we niched down into actual problems. The business just became so much healthier and we were able to start growing far faster. Also, the resources it took to onboard the customer successfully and then get them to a successful place was reduced by 90% as well. Now, we’re just dealing with one person and one particular use case. Everything that they need to do with our platform, we can now just template and it spins it up right away rather than having to teach them how to build it into the platform themselves.
One of the main features that we have is marketing automation with automated workflows, like try to get a teacher how to use marketing automation. It’s not an easy thing to do and we learned that the hard way. Now they don’t have to learn it because they just start from done. They just need to customize 2% of it.
I can give a whole bunch of examples. Another company I know they have got a project management platform. They’re at the same place. They’re further along than us, but they go really, really horizontal. It’s like project management platform for enterprise companies. So, it’s very complex, it does a lot of things, but they’ve found that there’s two markets.
When I really pushed the CEO to think about the niche market, when I started telling him, “Wouldn’t you rather hire people that were much less skilled and able to produce a better outcome for your customers? Because every customer needs the product the same way. When everybody needs to use the product the same way, your customer success team members, which are the people that really get the customers up and running, don’t need to be 20 years consulting experience. They can just be fresh grads and trained to do certain things. Everyone’s getting the same thing, so everything becomes more efficient.” Now, he’s picking one of those markets that they’re going to go after.
Another one I know is a social media analytics. Now, they’re picking a particular market to go into because it helps in the product, but it’s the marketing, too. When you understand, when you’re like, “Okay, we’re going to do social media analytics for marketing agencies or something,” now you can setup one funnel that works as opposed to having to figure out a funnel for every different market you want to go into.
Building a funnel and optimizing a marketing funnel takes serious resources. Time, effort, a lot of risk. When you can just get one going the right way, it doesn’t slow down your growth, you’re growing faster, and there’s no end in sight, why wouldn’t you do that? I just can’t think of a reason why you wouldn’t do that. It is important on that note to make sure that you’re not going to hit a ceiling too soon. You got to look at the market and say, “How far can I go here?”
Margie: Wow, that’s a lot of very good examples there. What advice would you give to sales and marketing professionals who work for companies, whether it’s a startup or an SMB, who are working in these companies that don’t really have a niche and they know that they need to niche down?
Jono: You’re saying someone that’s working there and not their CEO?
Margie: Exactly. For example, a sales and marketing coordinator or maybe a director. They don’t really have any niche, they know they should niche down, but then their CEO is a bit all over the place, they want to target everything, they want to be everything, they want to take over the world.
Jono: I would say leave and start your own company. That’s what I did. It’s really tough. Everybody’s different. My advice would be really check yourself to make sure that you have the personality to lead from the middle because that’s a really hard thing to do. I would say come prepared with a lot of data. Think of it like it’s your own company, you’re the startup, you’re going to your investors, and you put up a full pitch deck together for it. Then if you’re going to do that, you might as well just go get investors to do it yourself. Why not?
But in any event, not everybody is that entrepreneurially-minded. Probably everybody here is. If you put that deck together and there’s no good reason not to do it and your CEO or your executives still just doesn’t do it and you’re not sold that it’s a bad idea that the company shouldn’t do it, I would say leave. I can’t work in an environment where I don’t believe in the people that I’m working for.
That’s has always been sort of my problem in the past, I’ve been sort of unemployable just because I have a hard time working for people that I don’t believe in. I’m not the best guy to ask for advice on this because I’m just like, “Yeah, quit. Just start your own company,” but I know not everybody can just do that tomorrow. Ultimately, that’s probably my real advice on that is just start to do it yourself.
Margie: That’s a pretty good advice. I guess that’s also the reason why there are a lot of entrepreneurs, they just can’t work for anyone, like you.
Jono: Right. I find it very hard.
Margie: We can start the Q&A now. Do we have anyone here in the audience who would like to ask Jono some questions? We have a gentleman here. What is your name, sir?
Arman: Arman.
Margie: Arman. I’ll give you my microphone.
Arman: Why did the revenue go up per customer when you specialized?
Jono: Because we narrowed down the scope of what problems we were solving and we were able to go deeper on the value by taking our customer success resources and our support resources and layering on some—I didn’t coin this term—they’re called Proc Tie Services. As an example, one of the main use cases of Hubbli was as a CRM. Again, they don’t know they were using it like a CRM but they were and it is. But that’s the software component. That’s the communications management. What we did is also because we had a lot of validation that the market wanted and they were actually asking for us over a year to provide a Facebook ad lead gen service.
Because we were working with such a narrow market, enrollment lead gen campaigns for Montessori schools is something that you can essentially get right one time and clone for every other customer. We then were able to offer far more value and of course value is you price things on the perceived value of the buyer. We could just clone an existing campaign that’s working really well and it works. We’re charging for them as if we’re like a marketing agency, working for them from scratch, but we’re not. We don’t charge like we’re marketing agency, actually, we are cheaper but we were able to increase our revenue per customer by over 100% by layering that on top. It’s just as scalable as software.
Arman: Your input cost on what they were paying was way lower?
Jono: Way lower, far lower.
Arman: But were you charging more for those services?
Jono: Yeah, it went both ways.
Arman: Oh, fantastic.
Jono: Yeah, very fantastic. It was very exciting to see that happen. Literally overnight, I just did a marketing, I just sent an email ad to the list and said, “Okay, we’re going to pilot this thing that everyone’s been asking for. Here’s a form to sign up for it.” I was just closing customers in one call for over twice as much as I’ve ever charged them and it was pretty cool.
Arman: Did you reduce the feature set in the offering after that or you just kept it there?
Jono: It’s just there but we’re just not supporting it. They’re not being sold on it. Technically they have access to those features but they’re not using it.
Margie: We have another gentleman here who would like to ask a question.
Man: Have you gotten negative feedback from the instructional staff in particular which in the private school […] that’s a business would be extremely unlikely? But I’m still very unclear what it actually specifically does. That’s a big first question. But the real concern I have is the technology that a private school, if they’re wealthy enough for the tuition, they’re wealthy enough to track, as you said, and follow their sons and daughters, what’s the big deal about a communication tool that you’re showing them the light of the day?
I don’t necessarily agree with that. Technology is so pervasive and immersive that why they need in a more or additional or other software eludes me. I don’t understand that and especially because you didn’t explain what Hubbli specifically does that’s unique or distinctive can contrast to other software or even to other standard traditional email, cell phone, or mobile phone, whatever, I’m very unclear. Do you want to clarify that?
Jono: Sure. There’s a few different questions in there. This is a product that’s, like I said we were solving a lot of problems for a lot of people so for the parents, teachers, and the administrators. Now, we’re really just solving a problem for the administrators. It’s a tool that’s used by the school administration to help them be found by and manage the communication process with prospective parents that they don’t know. These administrators aren’t well-trained on marketing so they don’t really know how to get these parents into the school for tours which is how they sell their school. We’re just helping them connect with parents in their area that are looking for a school like theirs.
Man: There’s no word about any negative response as to the disadvantaged areas of Hubbli for learning or education […] or anything?
Jono: It’s not education technology in that we’re not a tool that teachers use to educate the kids so that’s just not really relevant. But if you wanted to learn more about Hubbli, I can certainly direct you some content online for sure.
Margie: Thank you very much, sir. Anyone else? That gentleman there raised his hand earlier also. What is your name?
Simon: I’m Simon.
Jono: Hey, Simon.
Simon: I came in a bit late but we were talking to a prospective client so we have an excuse.
Jono: Good reason.
Simon: You may have said this, we would have missed it, but how long did it take you to break even in terms of your business? Did you have a plan for that or did it just come sooner or later? That’s my first question. Then the second question is what’s your overall exit strategy? Is it five years, seven years, all this kind of thing but I’ve been interested to find out a bit more.
Jono: I kind of always broke even because when I launched Hubbli, I didn’t do so until I was able to start selling it. It was a side hustle until I had enough customers that I could rely on the sales. I didn’t really give my history but I started out in sales and marketing in the early 2000s in the internet world. Then I became more technical and then moved into product management, but sales and marketing has always been a very strong suit of mine.
Once I was able to get Hubbli 1.0 at the door, I could start selling it. I was always funding everything through my sales and I never really dipped down. That’s not true. More recently, I did. Once we hit a certain milestone, I felt it was time to put some money in. But I didn’t raise any money and I didn’t really have a burn rate that I was working against. It was always tracking head-to-head with revenue and expenses. The exit part, I don’t know. We’ll see where it goes but I don’t have a particular year in mind.
Margie: What’s your name, sir?
John: I’m John.
Jono: Hey, John. Thanks for coming out, man.
John: Just a quick question, so when you’re starting out Hubbli, what was the process of interviewing Montessori schools and finding out they get a solid product that solved their hair being on fire? How long did that take?
Jono: I started doing that in 2012 and it was really the only thing I was doing. I would say I probably had about maybe 40 or 50 conversations. At that time it wasn’t specifically Montessori. It was just anybody in schools like parents, really all the adults, like parents, teachers, and administrators. You ask people and you learn all the problems that they’re experiencing and then you try to map them out and find the themes like groupings of problems. I just went through that process.
I really just did everything that Lean Startup said to do. I was just starting to read that book and I was like, “Yeah, this is exactly what I need to do,” and I just followed it like a textbook. Again, I drink the Kool-Aid, I tried it out, it worked out really well for me, and helped me discover a problem that we had the capability to solve.
John: Cool. I’m not sure how Montessori schools are structured, but what was your outreach program? Did you send a cold email? How long did it take you to get that person who made that decision?
Jono: The great thing about schools, private schools specifically, is that lead gen is really easy, depending on the product. I’m always at ed tech meetups and stuff because I’m in the education sector, but we’re not an ed tech product. We don’t facilitate education. Our customers are the people that literally pick up the phone at the school and have to pick up the phone at the school.
When we started out, we were just cold calling. For every 10 calls, I booked a demo. I had a good sense of the problem and at that point, I could speak their language and just quickly say, “Hey,” because the person picking up the phone is either the decision-maker or a big influencer in the decision. She’s is going to be the one that’s using it day-in and day-out and it’s going to save her three to five hours a week of redundant busy work.
Once you understand your profile, speak to their problems, and get them to check out a solution, it’s not that difficult. If you want to have an easy thing to sell, sell something to executive assistants or secretaries that answer the phone as opposed to the CEO. If that’s the lesson that’s pulled from that, I guess.
Christopher: Thanks again for hosting it.
Jono: You’re welcome, thanks for coming.
Christopher: My name is Christopher and I just like to ask what would your competitive advantage be? For example, if a school just choose to email all the parents, there’s a search function. They can find all the information they need or for example Twitter. How would you prevent or keep the market as opposed to having them move over to a different platform? Thank you.
Jono: It’s interesting. When we first lodged Hubbli, we were focused on a broader problem set and everything was built around a private social network framework, and it still is, that’s still there in the platform although that’s not really what we’re promoting right now. In any event, whenever you talk about using social network type tools to a market, everyone’s like, “Why wouldn’t I just use Facebook? Why wouldn’t I just use Twitter?”
The thing is that it’s exactly what they are doing. That is their problem in that market. Parents can just do this and parents can just do that but the problem is that the school is giving them 10 different places to search and from the school’s side, they need the parents to have this information. It’s really crucial that the parents know when this field trip is being picked up or when this thing is happening or when parent-teacher conferences are.
Man: When you said […] 10 different […] what do you mean by that sending email, sending a query on Facebook […].
Jono: Literally, yeah.
Man: But my question was they chose to […].
Jono: The other problem is that schools have communication liability issues. Just to name a few like Twitter or Facebook or any of these public channels, teachers and schools get sued on a daily basis because somebody posted something where that shouldn’t have been. These are quite problematic. From the school side, on the liability side, they need those features.
Our social network is really similar to how Facebook works because actually that is the architecture, that’s why they’re trying to use it. They also use Shutterstock and Doodle. They use this whole insane list of different tools you see everywhere in these schools because they work really well and they’re good products, but they all have some issue.
Even to your point, they also could technically say, “Okay, everyone’s going to use Facebook but you’re going to do it this way and we’re going to train you.” If they were capable of actually enforcing communication standards across their staff, then there would be less of a case for Hubbli. But they’re not able to do that because again, these are teachers that are now running a business. They’re not managers and it’s surprisingly consistent how this personality profile acts across the board.
Again, another benefit of learning a particular niche is that when it comes to the education world, teachers and educators have these very common similarities in person. People that actually stay at this profession, like it, and don’t want to do anything else, they’re really consistent. It’s so much easier when you have a really tightly-defined selling persona as opposed to jumping from industry to industry because if you’re trying to sell to mechanics, those people are so different, but what Hubbli does would help mechanics, too. But I don’t want to deal with mechanics. I don’t know them at all. Maybe I should. I don’t know, but I don’t know them.
When you niche down, you focus, you learn things that are really surprising, you don’t seem obvious like, “Why wouldn’t they just use Facebook? Why doesn’t the school just get everybody to use Facebook the right way?” They just don’t. They can’t.
Man: That’s a great answer. Thank you. I just have two short follow-ups, if you don’t mind.
Jono: I don’t mind. I’m here all night.
Man: For example, you said Hubbli trains the teachers or the administrators to use the software properly and make communication with parents more consistently, what would prevent them from using what they learned with your software and applying it to say Facebook which costs considerably less?
Jono: They would have to figure out how to do that.
Audience: But you said the architecture is similar, yes?
Jono: Yeah, it is. But they’re not going to put in the time that it takes to figure out how to apply it. It’s not exactly the same. We offer benefits that Facebook doesn’t come with the service layer and those other things. What they really, really want is to be in the classroom. They don’t want to fiddle around with this stuff at all. They just want it out of their lives. It’s a necessary evil to them. They know they need it. If they could just completely drop it and sidestep it, they would, but they can’t because their customers require it.
One of the things I always talk about in my sales pitches and everything, I talk about the differences in demographics between the average school administrator, average age is 49 years old, the average mom that they’re marketing to try to get them into the school is 20, 28, 30 and it’s a mom. We have a lot of marketing data and we know that 90% of the people that engage the enrollment process are moms, the initial engagement.
These two demographics, their behaviors, and their expectations around communication is so different. This will change over the next decade but right now, school administrators and parents have wildly different relationships with communication tools.
Your generation would think the way you think and 49 is the average age so we have customers that are literally in their 70s. These are people that need serious hand-holding and for some of the components that they’re using, we literally manage it for them because they all do the exact same thing. So, we basically automate the service layer of it because they want to log in and touch this stuff as little as humanly possible but they know they have to have it. We present them a solution and they’re like, “Okay,” but we had to learn that.
First, we were just selling them the platform, trying to get them to use it, and trying to train them on way too much stuff at one time. Again, by narrowing the scope of what we are offering to this market, we were able to get them successful, we offer a few coaching sessions with every new onboarding. It’s like skills and drills. We’ll do a Zoom call and we watch their screen. We’re like, “Click here, click there.” We literally coach them where to click to log in and stuff. We do it a few times just to get muscle memory. That’s our market. We’re not selling to millennials or the younger folk.
Man: Thanks for the clarification.
Margie: Very good questions. We can take a couple more questions. There’s a gentleman over there if wants to ask a question.
Flavian: Hi there. My name is Flavian. Great talk.
Jono: Thank you.
Flavian: You mentioned using a lot of data to find your beachhead early on. How did you go about identifying something as you say small enough but big enough?
Jono: We were getting to that point where I was saying, “Okay, I need to pick public or private,” and then I read the book Crossing the Chasm, I was like, “Who would my beachhead be?” I just started looking at our customers. Because I was in the process of marketing, selling, onboarding and all that stuff, I just started seeing this pattern with Montessori schools for whatever reason. I started just interviewing them specifically, trying to understand why they seem to be easier to sell to. Then I looked at that market to say, “Is it big enough? Does it have referencing lateral markets that we can easily move adjacently to?” It just checked off all the boxes.
Flavian: Is this, at the time, you’re doing the side hustle or full-time?
Jono: No, by this time I was full time on Hubbli.
Flavian: Okay. When you say we, is it yourself as founder?
Jono: Yeah. When I say we, it wasn’t only me. Since I went full-time, I’ve always had people joining the company. I started off with an SDR person doing cold calling and one customer support person. That just grew from there.
Flavian: One of the questions would be, early on you mentioned conferences, you mentioned associations and whatnot, did you do anything around the branding, the awareness? How early did you start?
Jono: Branding has never been my concern because we don’t grow our product through branding, we grow product through lead generation. What our homepage looks like and says doesn’t really play a role in the sale. You have to pick your marketing strategy based on how your customers make a buying decision. In our case, it is through a sales call.
My marketing strategy is laser focused on getting the right person in the school. It’s been evolving over time, but what it is now is I target Montessori owners, directors, and heads of schools, get them to attend a webinar, and out of the webinar they book in consultation with me. Every step along the way, I’m trying to basically say, “If you’re not a director, owner, or just take a hike, I don’t want to talk to you, basically,” in nicer words.
Branding doesn’t play a really much of a role in that as long as we’re not offending people or turning them away. The fact that is called Hubbli doesn’t matter, whatever my logo looks like doesn’t really matter to them when they’re making a buying decision. What matters to them is the value proposition that they’re seeing all along the funnel that they think that I know what I’m talking about in the webinar and then in the sales call, I know what I’m talking about and that they trust me and that I’m credible and that I’ve got social proof because we’ve got a whole bunch of customers and these strategic partnership affiliations. All of that is what sells it. You could say that’s branding. Some of that bumps into branding but it’s not a branding strategy. That’s sales.
Every human being makes a buying decision the same way. Wherever you are, we all go through the same cognitive model when we make a buying decision, whether it’s a $1 Coke or it’s a $10,000 tuition for your child. The size of the decision determines how long that process will be, how long that person psychologically is going to take to go from step to step to step, and really it’s just a process of the customer building trust.
With Coca-Cola, the biggest brand in the world, all they do is brand and marketing. They don’t do lead gen. You don’t have to fly to Atlanta and book a meeting with the CEO of Coca-Cola to buy a drink. Their customers look at a wall of a hundred different drink options multiple times a day sometimes, and Coke just wants their customer to spot the red in their logo and think about that cute polar bear in the commercial that they were interrupted with 30 times that day, which is crazy because Coke is the biggest brand in the world and they spent hundreds of millions of dollars on branding. Could you imagine anybody forgetting that Coke exists? But the minute they stop spending that money, they’ll cease to exist. Pepsi will just completely eat them. I’ve never worried about branding because customers don’t need branding to make a buying decision
Flavian: In your case with the data, it was really drilling down on your monthly recurring revenue and seeing exactly where and what it meant to get to that decision of the beachhead?
Jono: Yeah, it was the result of it on our revenue for sure. The metrics I was looking at wasn’t really MRR to validate the beachhead, it was the different conversion rates of our funnel and ultimately a gut feeling on how much easier it was to close as I started to really focus on just the Montessori market.
Because we’re in sales calls, I’m talking to these people and when I started adjusting my slide deck to, again, focus on Montessori schools, the response I got, even just hearing their response was like, “Yeah, you get me,” your customers want to know that you get them and that you’re there to slay their dragons. It’s a lot easier to do that again when you’re dealing with a more specific unvarying profile.
Flavian: Great, thanks.
Margie: All right, I guess that is it for tonight. Anyone else have any questions? Oh, one more. That would be the last one.
Thomas: We appreciate you being here. My name is Thomas. Just as kind of a higher-level type question, just more general, more philosophical. You mentioned in your last answer how you prepared your slide deck and your presentation. What stuck out to me almost immediately in the interview portion was where you mentioned entrepreneurship. Could you speak a little bit about how you prepared your slides and your presentations? You’re obviously very knowledgeable about your market segment. How you prepare for that, how you present it, and just kind of take us through how that process works for you?
Jono: What do you mean? My sales deck?
Thomas: Either sales deck or investors decks.
Jono: Okay, because they’re pretty different. It might be helpful to pick one.
Thomas: Investors decks.
Jono: I do have a lot of experience raising money. I haven’t raised that much for Hubbli but I have raised for other companies in the past. I have gone through some phases where really did start building a deck and focusing on it. I had to do it at different times. We were in the DMZ, so I had to put a deck together to get into the DMZ, and then to get different programs, grants, or whatnot. It’s a very similar process. One thing I would say is very interesting and important to know is that there’s a big difference—to what I said at the beginning—between a sales deck and your investor deck. My investor deck says that we’re in the business of private school tuition processing.
As a product we’re a CRM for private schools but our business model really, we’re in the business of private school tuition processing because that’s a way bigger business opportunity. We’ve validated that but I don’t talk about that ever with our prospects because they don’t need to know. They need to know what the prices is to use our platforms, as an example. It took me a while to learn. The process of building a deck is like a full-time job and that’s why I haven’t done it because I’ve always defaulted to growing the business and I’m really good at sales and building sales and teams and stuff like that, it’s like why wouldn’t I do that if I get a pick one. If I can make that happen, I’ll just keep on doing that as long as possible.
The thing that I found very challenging with building sales decks is who you’re doing it for. You need to have so many versions of it and you really have to consider who you’re presenting to. Are they an angel? Are they an angel in Canada in Toronto? Are they an angel in the Valley? Because here, you talk to an angel and you’re like, “I’m looking for $600,000,” they’re like, “You should be asking for like $150,000,” and then if you go to the Valley, you say, “I’m looking for $600,000,” they’ll say, “Don’t talk to me unless you’re looking for $2.5 million. Are you stupid?” Literally, they’ll just say, “You’re stupid. Go away.” You’re like, “Whoa, what?” You learn that stuff.
But that’s been my biggest takeaway from that process is really focus, I would say, niche down on who you want to raise money from right now and do your best to figure out who that should be and what that investor profile is because it is sales. It’s really the same thing. If we’re looking to raise money from angels in Toronto, figure out how to do that. But if you’re looking for VC, that’s a totally different deck and a totally different approach because that person is looking for different kinds of returns. They want you to spend money in very different ways right. It’s like, “Wow, it’s really shocking.” You also have to align it with how you want to run a business. I lean towards bootstrapping. Not that I’m against the idea of raising money, I just haven’t needed to and it’s a full-time job. Until I can actually do it full-time, I’m not going to unless I make that choice and never needed to. Does that help at all?
Thomas: It does.
Jono: Those have been my learning opportunities from trying to hone a deck.
Margie: Okay. I guess that would be it for this evening and this meetup.
Jono: Okay, thanks everybody.
Margie: Thank you all for coming. If you haven’t joined the Toronto SaaS Meetup group, please do join so you can stay updated for our next meetup. I guess our next meetup is going to be sometime in August. We haven’t decided the date yet.
Jono: We’ll let you all know. Please join us on Meetup. If you haven’t also, we have a Slack group, we don’t have a registration thing here, but we can invite you all to the Slack group, torontosaasmeetup.slack.com I guess is what it is, but if you connected to us on Meetup, we send that out as a message through Meetup as well regularly to join our Slack group. Raise your hands, are you all on meetup.com? Yeah. Have you all joined us there? Okay.
Margie: All right, that’s awesome.
Jono: We’ll keep you updated there. Awesome.
Margie: All right. See you again all next time.
Jono: Yeah, thanks guys. Also, a good friend of mine here, Armand.
Armand: Thanks. I also have a group meeting next week on the 25th at the WeWork 240 Richmond, InnovationTO. We’re talking about the impact of customer experience and AI. If you have time next week, join us. We’re also on Meetup InnovationTO and registration is on Eventbrite. Thanks.