Weekly Zoom Out #1— Sales Software

Week of Aug 16, 2021.

The weekly zoom out is a summary of a segment of an enterprise software market segment; containing a market overview, exciting startups in the segment, and a sample investment. To me, artificial intelligence and other revolutionary 21st century technologies, such as blockchain and mixed reality, are an incredible depiction of the creativity and intelligence of humankind. Following this fascination, I am writing this weekly in order to keep myself in touch with market trends and further develop my strategic mindset. My writing style may change be more casual and whimsical than a typical report, but I’ll try to make it fun.

Sales System Software Market

· Market overview & trends

For millennia, humans traded and bartered for items using coins with the insignia of a beloved (or feared/despised) emperor. Prior to that, goods were exchanged for seashells shaped as beads. Fast forward to 2021, a mere 1600 years after the fall of the Roman empire (close to 1% of human existence later [accounting for humans existing for 150,000 years, an admittedly contested number]) and we now have the largest auto manufacturer accepting payments for cars in Bitcoin via mobile app. It is evident the selling process has shifted a considerable degree over the course of modern existence. When we look at the enterprise sales systems and sales intelligence systems available today, it is so clearly apparent that there has been a recent clear inflection point in how humans interact through the process of sales. In this modern era of technological advancement, it is necessitated that the highest performing sales teams invest in AI and intelligent software in order to proactively address their customers’ needs and identify account risks. This is not to say that AI is replacing salespeople, in fact according to the Marketing AI Institute the vast majority of companies using AI plan to hire additional staff. Artificial intelligence can assist in key activities in shaping sales strategy such as pricing optimization, demand forecasting, and identifying prospects with a high potential to close.

Sales intelligence SaaS refers to software that assists sales teams in accumulating and using data to drive improved sales processes. By 2025, sales technology will be a $3.8B market, growing at a 12.3% CAGR. A key dynamic in this market is partnerships, as corporations seek to create internal data operability between software systems, competitors in this market must partner with competitors in order to create frictionless systems for their clients. Growth factors in this market include increased competition for sales conversions, demand for data enrichment, and a growing swath of companies in the space.

o Interesting companies in the segment

Note, I totally could include obvious market leaders like Microsoft and Salesforce, but am intentionally leaving them out to learn more about rapid growth startups.

· Drift

Drift coined the term “conversational marketing” and have had an incredible amount of success to date. Drift’s software contains tools empowering salespeople identify intent signals and focus efforts on the right accounts. Their products work together to qualify leads, saving time for top sales reps. If you’ve ever had a chat bot appear on a website you’re on, chances are you’ve seen one of Drift’s products. Across 4 funding rounds Drift has raised $107M, with their most recent raise coming as a Series C in 2018. Additionally, they have made 3 strategic acquisitions, including a conversational AI company in 2019.

· Crayon

Crayon provides competitive market intelligence as a service, utilizing AI driven software. Crayon boasts use cases with tech forward medium to large enterprises, including Intuit, Dropbox, and J.P. Morgan. Their platform operates by leveraging both internal and external data sources to generate insights from over 300M sources. In doing this, operators at their client companies are able to publish and share intelligence across their organization, leading to proactive strategic shifts. Their traction to date includes utilization by over 33,000 professionals with their current headcount being around 100 (they are reportedly looking to double this figure over the next year). They’ve raised $38M to date to fuel this growth, with Baird Capital leading their most recent Series B.

· Clearbit

Clearbit is a “marketing data engine for customer interactions”, helping organizations better understand their customers, identify future prospects, and act on real time sales alerting. Clearbit helps their customers win B2B contracts by enabling them to intelligently target potential clients in an efficient and personalized digital fashion. They are a rapidly growing team based out of the Bay area, and have secured $17M in funding through their Series A. Another cool aspect of this company is that they have open sourced some of their code through Github, allowing for ease of development for their clients.

· Aviso

Aviso focuses on empowerment of revenue operations teams through the lens of revenue intelligence, augmenting traditional CRM systems through guided-selling tools. Aviso claims to help sales teams close on average 20% more deals and reduce spending on non-core CRM systems by 30%. In today’s day and age, businesses are inundated with so many software systems and tools that the spend can often outweigh the benefit provided, in addition to the clunky employee experience of working across 20 different systems. To be able to simplify this not only can reduce SaaS spend for businesses, but also can work to create simplified, more efficient experiences for sales teams; allowing them to focus attention and resources on what’s important: their customers. Aviso has raised $46M to date through to their Series B, allowing them to reach a headcount of 130. They’ve sold into major customers including Dell, Microsoft, and SailPoint.

· Sample investment memo — Conversica

o Company description

Conversica is a cloud based technology company that focuses on helping businesses drive their customer experience functions such as marketing, sales, and support in an intelligent fashion. They are a market leader in artificially intelligent virtual assistants, helping companies save employee time in interacting with their customers. The company was founded in 2009, originally intended to be a CRM system specifically for auto dealers. The company quickly realized the value in being able to filter out low quality leads and the prioritization of potentially high value customers. The company then built out an AI assistant and renamed itself AVA.ai, meaning Automated Virtual Assistant. They have since expanded their target market outside of auto dealers, scaling to become one of the most innovative AI companies in the world, according to Fast Company’s 2019 report. They have raised in total over $100M through their Series D, with over 200 employees and touting 1,600 B2B customers. Their technological advantage comes through their natural language systems, allowing their customers to engage with prospects across multiple channels in a seamless fashion.

o Challenges to growth

Conversica may see challenges in growth from long standing market incumbents, such as Microsoft, Google, and Amazon. These companies offer immediate scale and data interoperability for enterprise customers. In focusing on small to medium sized organizations, Conversica can compete by empowering these companies to begin their digital journey. Additionally, Conversica can compete through partnerships with these incumbents, allowing their data to drive into existing systems for enterprise sized customers.

Another challenge to growth for Conversica comes in the status quo of hiring additional representatives. For companies that may be hesitant to digitize due to budgeting constraints, this may seem more attractive in the near term. As such, offering a freemium model would allow companies using the software to realize the potential benefits before fully committing.

o Future states if successful

The intelligent virtual assistant is growing rapidly, allowing Conversica to push innovation and become a market leader while providing software to their customers. With a 2021 market size of $9B, the CAGR is expected to be 28.5% through 2028 as companies in all spaces push to digitize their offerings, a trend only accelerated by the onset of the COVID-19 pandemic. As institutions digitize, they will be seeking to continue to provide customer support in a meaningful way. As many know, working with virtual assistants can be at times incredibly frustrating and thus deploying a unified customer experience digitally will be crucial for organizations in reducing customer churn. This technology has the potential to replace much of the first level of customer support, allowing businesses to reduce spend on customer experience and prioritize support escalations.

· Historical Fact

Sales as a process, like I mentioned above, has been around for as long as history has been recorded. But the first truly active sales team came through the insurance industry. Benjamin Franklin founded the Philadelphia Contributionship in 1752. At this point, salespeople employed by the company had 2 jobs: sell the service and collect money for said services. Eventually, the most successful salespeople would be bogged down mostly by the work of collecting money and unable to sell to additional prospects. This would eventually lead to a split of roles between account executive (those seeking to find new accounts) and account manager (those maintaining existing accounts). This structure of sales is largely intact to this day.