How To Build A Client Base For Your Enterprise In PropTech & Real Estate

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How To Build A Client Base For Your Enterprise In PropTech & Real Estate | Roger Smith & Zain Jaffer

This is all about prioritization, which comes down to a function called Product Management. Looking at what’s being asked and questioning, “Do these set of features represent a need in the bigger market? Is this something that is unique to customer A or is it something I can find customer B, C, or D for and use customer A as a good case study?” It also comes down to the psychological relationship you have with your first few customers. If you turn into a dev shop unwittingly, the leverage is lost. They have a lot of pricing power over you, and it’s scary. Do you agree with that?

Yeah. I think about that a lot. I completely agree with you. It’s hard, especially when you’re early stage. You need them to use your product so you can build more products, they give you the case study, and you can get more customers. It’s a constant balance of this idea, “We’re customer-driven. They’re helping us build our product, but we’re not a consulting company. That’s not what we’re doing.”

If you don’t have a startup yet and you’re thinking of one, it’s beautiful to think, “I’ve got this major large customer that wants to work with me and I can build a prototype for them.” You’ll be tearing your hair out, wishing you never started the company if you figure it out and realize later, “I’m so dependent on them. They could crush my business overnight. I just built new features for them, but I’m an underpaid consulting firm.”

What’s the beauty of building software companies? The beauty is you write one piece of code and deploy it to potentially hundreds of thousands of customers. If you’re not doing that, why start a software company? That’s the whole point.

The other thing is saying no and learning to manage expectations. Underpromise and overdeliver are important. One strategy with enterprise is if you’re entering a crowded market. A good way to enter the crowded market is to build around a few key customers that identify a niche that’s not being served. Carefully, go after a segment that’s being unaddressed or isn’t being addressed well. Get those key customers and be careful.

Don’t go head to head for the flagship accounts. Otherwise, your competitors will crush you. They’ll price you out. They’ll do anything they can to retain the crown jewels. What you want to do is go after the segment of customers that your competitors are like, “That wasn’t really a valuable customer anyway. It was small for us.” As they focus and retrenched to the core of the market, you’re capturing the mid-tail and downstream. Before you know it, as those mid-customers become large customers, they’re your customers.

Some small customers are further along in their data journey than the large guys. You have to grow with them.

To add something else, and I’m sure you’ll agree with this, the beautiful thing about having an enterprise customer is that there is a lot more revenue to unlock. Once you’re in and you’ve got that relationship, you can launch new products and features. You can easily test it out with them and get customer feedback. The beauty of having so few large customers is that you develop a tighter relationship with them, and there are opportunities for you to be a preferred vendor.

When you launch other products, it’s much easier to get in. In some ways, the more enterprise customers you have, that’s strategic value. That’s sometimes why acquisitions happen. The customer base that you have as a startup that you’ve built with these key customers, those relationships are valuable to a potential acquirer. It’s something not to forget if you’re an entrepreneur.

I completely agree, especially in the B2B and enterprise space. The classic problem is, “Why go after 10 clients when I can get 1 who will pay me 10 times what they’ll pay me.” That’s the classic problem, especially when you’re trying to hit quotas. That’s what oftentimes people try to do. One of the core values of our company is to build for the long-term. What that means is not only building a product for the long-term but making long-term decisions when you’re building a product. Don’t make short-term ones. That also means in terms of how we think about customers.

We don’t think of them as hitting quotas. We look at these customers wherever they are on their journey. I will argue that there are some small customers who are further along in their data journey than the large guys. Wherever they are in their journey, if we can capture them and grow with them as they go through this journey, then we’ll be their solution of choice. This has happened to us. Someone has left a company who was a customer of ours. They went to the new company, and they said, “We should use TermSheet. I'm familiar with it.”

That’s a massive driver, and that happens probably 1 year to 3 years out. A lot of people change jobs and they tend to work in the same industry. Those people who you are maintaining a relationship with will become evangelists. To that point, one thing I see a lot of startups in the B2B and enterprise sales side miss or get wrong is the importance of having the right ratio of account management or customer service to clients.

When you’re budgeting, it is easy to budget for sales and budget for engineers. You forget you’ve bitten off more than you can chew. You’re now spending time servicing these accounts and this is often a ratio that’s used in industries depending on your product. You have one account manager per X number of accounts. All functions of the products and revenue make it from the clients.

You’re completely right. That’s part of the good problem as you’re building your company. Don’t forget the things that got you there. Your accessibility to clients and willingness to hear their feedback is just as important to the 100th client as it was to the 1st. They want the same thing, so you have to build your business understanding that. You can’t forget, “The 100th guy, you don’t have to worry about him. He’s just the 100th guy.”

I found it quite difficult to balance when I was CEO of my startup. We had won over 100,000 customers. Some of these customers are bringing $10 million to $50 million in revenue, so you can appreciate how important they are. One day, we couldn’t even get $100,000, and suddenly, you’ve got a customer that is bringing that much revenue for your company. It’s fun and easy to do.

I highly recommend that at the early stage, you need to do everything but to go out, go for the big guns, get the big sales, and focus on the big accounts. There is something to be said as a CEO or even as an executive. Sitting down with your key clients every now and then, having quarterly meetings, chatting to them, and trying to understand, “What is it you’re trying to do? What are your problems? Let me put myself in your shoes. What are you trying to do? What are your strategic priorities?”

Map back on how my product helps you do that and learn from key accounts what’s working and isn’t working. It is sometimes more important than going in and giving a presentation and winning another sale. People bring in the CEO as the closer sometimes when there’s a key account. That’s fun and you need to do that. You bring in a lot of revenue, and you can help your sales team in that way, but you have to spend time with the whole segments of accounts. Constantly trying to pattern-match and understand, “I had this from this customer. Let me take a note of that and bring that back to my product team. Let me also see, does that feedback come up in other places too.”

Before you know it, you’re back to the startup phase. You’re getting new ideas. You’re seeing new trends happening, and that’s how you’d beat someone who is just like you, starting out in the basement somewhere. Those are the people you’re afraid of when you’re growing. Bill Gates used to say, “I’m not worried about the major competitors. I’m worried about someone like me who’s sitting in a basement regarded somewhere and building their startup. They’re the ones to be afraid of.” It’s true, and that turned out to be the case.

Can you elaborate on that more?

You have to deliver on your promise to customers.

It’s not your competitors that you see now that are dangerous for you. You even hinted at this. Some of the smaller customers can be more demanding. They have to be more demanding. They don’t have that market cap and big infrastructure. When a rocket ship is taking off, everyone gets credit for it even though there’s dead weight on the bus. In the same way, you’ve got to watch out for that tiny little startup that is on your market looking at what you’re doing, and they’re out there gobbling up some of the market shares.

That’s the case for you as a founder when you’re building your company. You’ve got to remember that you’re not competing with a startup. Even though you haven’t made it to the big leagues, you’re competing with that founder. Imagine that as someone who is hungry as you. There’s a saying, “The wolf at the bottom of the hill is always hungry.” I know you’ve never heard that before, but it’s a childhood joke I had with a friend of mine. The wolf at the bottom of the hill is hungrier than the wolf at the top. It’ll do anything to climb that hill. It’s got more hustle than hunger.

Once you’ve made it, you’ve got millions of dollars in revenue, of course, you’ve never made it. Anything can happen. When you’re going to your customers, keep pretending you’re that little baby startup and try to get signals from the market. It’s because that other founder over there is trying to get access to that market. You’ve already got access to that market. Start thinking about what’s the next product we’re going to build in a year and what does my roadmap look like 6, 12, or 18 months out?

Because I was so in touch with my key customers, I found out I’d have an advantage versus another startup that finally gets access to one customer. I’m already aware of that startup which helps a corporate development pipeline, but also, I’m getting way more feedback than that entrepreneur is. As a CEO and as your company scales, you have got to put yourself into that mindset of, “What’s the next iteration of this startup going to be?” I’ve got better access than any founder on the funnel because I already had amazing customers.

That’s an amazing way to think about customers, customer success, and value, but I have never thought about it in the sense of markets that you already have access to that someone else is trying to get access to. That’s interesting. I appreciate you sharing that.

You also have superior access and ability to take that feedback. Think about what it was for you to get a call or an introduction to a legitimate client for you to be taken seriously. Even when you got through, you probably weren’t even talking to the decision-maker, end-user, or customer. Once you’ve grown your startup and you’ve got some paying accounts, they’re an asset for you. Keep being a startup, never lose sight of that, and that’s why Bill Gates and others were always worried about not their major competitors but that small hustler who’s trying to go after that market. They’re the dangerous ones.

Thinking about key decision-makers is something you run into when you’re doing B2B as well. You might be talking to someone because you know them, you have a relationship with them, or how that might be. They may get you in the door, but oftentimes, the sale may not work because, ultimately, you were talking to the wrong person.

That other person who is that key decision-maker might be doing their own thing or running the same process on their own. I would say it’s important to leverage those relationships to get in but then, as quickly as possible, try to get to the key decision-maker. You hear it but we live it because they’re the ones who are ultimately going to decide whether this pilot or whatever it is going to succeed or fail.

Prioritization, no matter who you’re talking to and making sure you have a solid sales approach, good follow-up activities, and you build a relationship. Eventually, you will score that sale. You have to work at it. There were accounts I worked on for years, and I finally got them. When I got them, I got them big and they became big accounts. Sometimes, you need case studies, marketing enablement, and to work from many angles.

Sometimes, if it’s a big company, you need to work with ten different people in the company. You’ve got to also be worried about another thing. Turnover can hurt you too. The decision-maker you were talking to has been replaced and often, why is it the politics of a big company? The new person comes in and wants to change everything, and that may mean you too. That might mean getting rid of the vendor. You’re in a sticky solution so that your product lives on beyond the decision-maker being there and the power of being there.

I asked you this question. I’m interested in what your answer would be. There’s this approach of selling to large enterprises of enterprise-wide deployments. I usually see this as a bangle, where in order for the company to adopt your platform, it has to be deployed across the entire organization. As opposed to this virus model, where you can get one group that’s less pressure to make that decision, but get one group, have them adopt it, and then they can become evangelists throughout the organization. Oftentimes, especially in real estate, different geographic groups or asset class groups are their own profit center, so they do have the ability to make these decisions on their own. What did you think about that when you were selling to these large companies? Was it organization-wide?

Rarely. Even now, it’s still not the case. Portfolio-wide deployments and rollouts are hard to get. Most companies are risk-averse to trying new solutions and rollouts that are carefully staged and managed. It definitely is easier to go and get one group within the company to be your evangelist and then to use that group to champion you internally. That’s the safest approach. I’m not saying you can’t get those big portfolio-wide deployments. You want to get LPC’s entire real estate portfolio.

It's really hard upfront to get enough people. But if you manage to do it, it never stops.

It comes down to how the company is structured. Rarely are conglomerates structured so centrally. Disney used to have a strategic planning unit that would have a say in everything that rolled out operationally. When Bob Iger, the previous CEO of Disney, came in, he dissolved that group and gave power to each leader. On this theme, over the last decades, we have seen a shift in marketing and technology budgets. It used to be in the hands of the CFO. It’s now more in the hands of the divisional leaders and the CTO and CMO.

Nowadays, the CTO and CMO are controlling more and more of the spend, and the CFO has a lot less power there. The CMO, I would argue, has a lot of power in making technology decisions. Even the sales team now has decisions. The role of the IT function internally is diminishing, and it’s becoming somewhat redundant. IT is now being relegated to overall infrastructure and security, onboarding employees, setting them up, and things like that.

If that’s happening, you’ve got to realize that each department might have its own budget. Sometimes it’s annoying. You might already have a contract with the company, but it’s like you’re starting from scratch. The right hand and left hand sometimes don’t even talk to each other. Let me bring this to real estate as an example. I’ll give you one example. There are so many configurations.

In multifamily, you’re talking to a fund like Blue Field. You might think it’s so easy for us to deploy a technology solution throughout all of our portfolios. No. We have different third-party managers. We have Greystar managing a bunch of properties. We have AMC, other vendors, and smaller property management firms. Even then, in that property management firm, you’ve got different regional managers.

For me to deploy a hardware solution, a tenant communication platform, or whatever it might be, in one part of the portfolio within the property manager is a lot of work to have it work in 3 properties and then roll that out to 5 or 6. It does tend to be like a virus, but it doesn’t spread as viral as a virus does. Sometimes, you might secure that one. It’s going well and, for some reason, doesn’t spread.

You’ve got to be a chess player when you’re in an enterprise game. You’re the one that’s brought it up. You’ve got to know who the decision-maker is and research. You’re playing a chess game here. You don’t have this luxury all the time but you want to choose who your key contact is going to be. This is more for founders and CEOs here. Be strategic with which level you build the relationship.

I used to have my sales team. We had hundreds of salespeople and hundreds of millions of revenue so I know this is a different scale, but this did start to happen in the early days where I would only try to come in and I’m not trying to sound arrogant here. Don’t get me wrong. It’s what your job is as a CEO. You have to come in and be used a certain way.

My sales team wouldn’t let me take meetings sometimes with lower-level salespeople on the other side, especially in Asia. It’s important that rank is respected. I also found that when I came into heavy as a CEO and there were junior salespeople from the other side, they wouldn’t say a word. They would say that the product is great, and you wouldn’t get the truth. What I found worked well was a configuration where the sales team would bring me into the boss of their contact so the sales team can’t go higher than the director level.

Now, they arrange a meeting jointly where our sales team and our contact, the client, will get me a meeting with the SVP. The SVP is willing to take that meeting. That’s important. You go and establish a relationship with that SVP. Don’t get stuck at the lower level. Let your sales team manage that lower level. Now, you’ve got the relationship, so if anything happens, the SVP is going to call you.

It happened to me many times. I’m getting a text message, “We’re unhappy with your product. We’ll probably be going to switch you out.” I’m like, “Give me a chance here. Let me see what’s happening.” Sometimes the SVP would give me a notice before they would even give it a notice to the lower-level people. This is the world of enterprise and B2B, which is something that people don’t appreciate.

Once you go in, there’s a whole politics, usual role as a CEO, executive, or founder. There are some customers that you want to have contact with at the lowest level because they’re going to give you true feedback but in the other accounts where you have to get a CEO to see a relationship going. Sometimes, it’s a two-hour meeting. You’re going out to eat and doing all the fun stuff people envy CEOs for doing, like golfing, wining, and dining.

At the very end, if it comes up, it’s, “How’s business going?” “Great.” “By the way, there was this one issue.” “No worries. We’ll sort it out. Your people will talk to my people.” That’s what it used to be like as you scale a company. I’ll tell you it’s a fun thing but it’s deliberate. In enterprise, you have to do it like that.

I completely agree. Not that we’re out yet wining and dining, hopefully, one day.

You need to start doing that because here’s the thing you need to remember. It’s not about your revenues. Founders have a lot of respect for founders. CEOs have a lot of respect for other CEOs. It’s normal, okay, and appropriate for you to ask for a meeting with the CEO of the enterprise company. Set your sights high. If not the CEO, then the divisional leader. Come in and get respect. This is all about the dynamics too. You don’t want to be a slave or a dev shop, as we said in one of the earlier segments here. Go in and establish yourself as an equal and it will move mountains for your company. You’ve got to know how to play that.

It’s like what we said earlier. In some respects, starting a B2B company, there are a lot of advantages because you can have a well-defined problem. You can work in a niche and know who your customers are, but then, when you start going into things like this, you have to maintain those clients. You have to ensure you’re talking to the right people.

On the front end, I wouldn’t say it is easier. I don’t want to use that word, but on the back end, you have to deliver on that promise. Whereas oftentimes, people think about consumers as it’s hard upfront to get enough people, but then if you can do it and that one product hits. It’s like, “I can build this one product and keep going.” My point is it never stops.

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About Zain Jaffer:

Zain Jaffer is an accomplished executive, investor, and entrepreneur. He started his first company at the age of 14 and later moved to the US as an immigrant to found Vungle, after securing $25M from tech giants including Google & AOL in 2011. Vungle recently sold for $780m.

His achievements have garnered international recognition and acclaim; he is the recipient of prestigious awards such as “Forbes 30 Under 30,” “Inc. Magazine’s 35 Under 35,” and the “SF Business Times Tech & Innovation Award.” He is regularly featured in major business & tech publications such as The Wall Street Journal, VentureBeat, and TechCrunch.