Welcome to another in our One on One series of conversations with some of the most thought-provoking entrepreneurs, authors and experts in business today. Greg Gianforte, Founder of RightNow Technologies, spoke with Brent Leary in this interview, which has been edited for publication. To hear audio of the full interview, page down to the loudspeaker icon at the end of the post.
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Small Business Trends: You wrote a book called Bootstrapping Your Business. How did bootstrapping help you get started creating RightNow?
Greg Gianforte: I am an engineer by training. I started RightNow back in 1997. I recognized that the Internet was changing the way companies were interacting with consumers. I called 400 people, mostly technical organizations and customer service, and asked, “How is the Internet affecting your business?” In the first dozen phone calls, I knew the answer. They said, “It’s all these e-mails. I have a certain amount of money to answer the phone, but I don’t have a budget to answer e-mails, and they keep showing up.”
These people thought that if they had self-service capability on the website that allowed consumers to get answers without having to pick up the phone or send an e-mail that would be goodness. I asked them what they would pay for that, and they threw some numbers out. I spent six weeks building the first product. I called them back and said, “I have it now; would you like it?”
A lot of entrepreneurs, particularly technology entrepreneurs, confuse shipping and selling. They are two distinct and separate activities. You don’t need a product to try to sell something. Immerse yourself with prospective clients; understand where their pain points are. If you can solve a pain point for less money than they are willing to pay to solve it, you have the basis for a business.
At RightNow, I had forty customers before I hired the first employee. Then we doubled revenue every 90 days for two and a half years without raising any outside money.
Business schools do their students a real disservice. If you get a hundred MBAs together and you ask them, “How do you start a business?” one hundred of them will say that you write a business plan and try to raise money.
Small Business Trends: You did it the opposite way. You got customers to build your business.
Greg Gianforte: Honestly, I am not that unique. If you look at the businesses that start in this country every year, less than 1 percent raise professional money. I wrote Bootstrapping Your Business because I saw so many entrepreneurs doing this.
Small Business Trends: RightNow is a publicly traded company making close to $200 million in revenue. If you were starting a business today, would you do things differently?
Greg Gianforte: I’d approach it similarly. One of the things you have to recognize is that when a $100 million dollar company wants to find their next opportunity, they have to find a $10 million opportunity. When a $10 million dollar company wants their next opportunity, they need a million-dollar opportunity. An entrepreneur starting up can attack a niche within a niche within a niche. If an entrepreneur can find a $200,000 opportunity, that’s enough to support them and maybe a couple of employees.
Small Business Trends: Let’s talk about going public. What was that process like?
Greg Gianforte: It was the right thing for us. It’s not the right thing for most organizations. We had always built our company with the understanding that we were going to go public. The bar is pretty high and honestly, if a company can’t get to $75 million or $100 million a year in revenue with a plan to get to $200 million or $250 million in revenue, [going public] is not the right solution.
Small Business Trends: You really rode out the whole CRM on demand wave. Thinking back to 1997, did you ever think we’d be at a point where everything would be so cloud focused?
Greg Gianforte: I am a pragmatist. We built our applications and found that if we ship somebody a disk, it often got installed wrong. If we connected it to the Internet, we could [help them more easily]. It shortened our sales cycle and it cost the customer a lot less. Those are pretty appealing advantages.
Small Business Trends: Was there any point where you thought, Maybe we need to go in a different direction?
Greg Gianforte: We believed in cloud delivery long term. We’re unique among cloud vendors. A majority of our revenue comes from large enterprise. In the early days, we had somewhat of a hybrid model and did some on-premise deployments. When our clients saw the benefits [of cloud], demand for on-premise solutions went away. Today we are 100 percent in the cloud and 100 percent subscription based.
Small Business Trends: If you could leave the audience with one or two pieces of advice, what would they be?
Greg Gianforte: Sales is Number 1. At the end of the day, if you haven’t sold something you haven’t done much. I would start by immersing myself with my target customers. Go in, talk to them, and decide if your skills can be applied against their problems. Once you have a clear path to some value you can create, go off and build a product or service.
Don’t go build a suite of applications, or a product, or even build a feature. Build a featurette you can charge money for to get cash flow started. You have to get the wheels on the bus turning, even if it’s a tiny fragment of what you are going to do eventually.
Small Business Trends: Where can people learn more about you and Right Now?
Greg Gianforte: Our website is RightNow.com. Bootstrapping Your Business is available on Amazon.com. We have also adapted it to an economic development program in our home state of Montana that provides microloans for Montana entrepreneurs (BootstrapMontana.org). If anybody is interested in starting a similar program in their state, I would love to talk to them.[display_podcast]