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Funnel IQ and Matt Volm
Signing contracts with just a design prototype before any code was written, and growing a community for RevOps leaders to complement their core product
I heard about Matt Volm and Funnel IQ when I was researching Seattle-based startups. For those that don’t know, my partner and I recently moved to Seattle, after spending 10+ years in San Francisco. I’ve been making an effort to get connected to the startup community in the Seattle area and thought interviewing a few Seattle startups for One Year Wiser would be a good way to start.
My conversation with Matt was a great way to kick this off because as a PM at Reddit, I’m often asked by startup founders for advice on if/how/when to start a community as part of their go to market strategy. With Funnel IQ, Matt has launched a growing company-sponsored community and managed to strike a balance with self-promotion within the community.
While Matt is no longer based in the Pacific Northwest, he spent a number of years here working at various tech companies and also founded his first startup, Tali. In researching Funnel IQ I discovered a Medium post Matt had written about how Tali had failed. I was really curious how this prior failure informed how he went about building his new company. Through our conversation, I learned that this first failure prompted him to take an interesting approach with Funnel IQ, where he brought a design prototype to prospective customers and signed contracts before any code had been written to build their product.
Funnel IQ offers software to help Revenue Operations teams (or RevOps for short) manage their go-to-market analytics and measure the effectiveness of their marketing, sales and customer success teams.To complement their core product (which launched a year ago in October ‘20), they also started a very successful community with over 3,000 people from the RevOps world. It’s not overtly branded as Funnel IQ and they keep the self promotion to a minimum. The community has become a good avenue for them to acquire new customers.
Prior to founding Funnel IQ, Matt was the VP of Business Operations at Ally.io. This is where he was exposed to the problem that RevOps teams face. As he put it, “our team was frustrated by the lack of tools and software to support revenue operations teams. After all, RevOps is supposed to be the glue that holds the go-to-market function together, but the only thing they are given to do their job is spreadsheets.”
In our conversation, Matt talks about:
His strategy of taking a design prototype to prospective customers and signing contracts before any code had been written
How the product evolved over the past year when they realized they were missing a key element
How his prior startup failure informed how he went about building his new company
The two approaches to company sponsored communities and how they balance the self-promotional aspect within their RevOps community
My questions are in bold; this interview has been lightly edited for clarity.
Let’s start at the beginning. Can you give me an overview of how Funnel IQ started?
Matt Volm: Sure, this is the second startup I co-founded. I started my first company in 2017. It was in the legal technology space. I raised about a million dollars for that business, ran it for roughly two and a half years before shutting it down. We just never found product market fit.
Shortly after I shut that company down I was trying to figure out what to do next and was introduced to the CEO of Ally.io. I decided to join Ally as the VP of Business Operations. The team was small, roughly 25 people. During my year and half with Ally the company grew from 25 to 125+ people and they raised about $76 million. As VP of Business Operations one of my responsibilities was revenue operations. During my time revenue scaled about 9X. While it was great to see revenue increase that much, one of the challenges I had was tying things together across marketing, sales and customer success.
There is a big trend happening across the industry for centralized revenue ops teams, as well as marketing, sales and success to all be accountable to the business with clear drivers of revenue growth. I was getting all these questions from my CEO and leadership team about how these departments were connected. For example, of all the customers that churned in last quarter, what marketing channels did we acquire them from? Or, of all the deals that salesperson A closes are they more or less successful than salesperson B’s deals? All of these types of questions were popping up, but all the data and systems that these teams used were all disparate and disconnected. It seemed kind of crazy to me that there was no software solution dedicated to what is ultimately the most important and critical metric for any business, which is revenue. So that's ultimately where the idea came from.
I started the company in July of 2020 with my co-founder, Ganesh. We had met at Ally, where he was the VP of engineering. We had faced this problem internally together. I was always trying to get his help to solve some of these problems and challenges that I had. As you can imagine, as an engineer, you would rather build customer facing products rather than support internal stakeholders. So we were experiencing this pain point together and ultimately decided to launch our own company to solve it.
What did the first version of your product look like?
MV: We initially came up with three or four different potential solutions that we thought would help revenue operations teams do their jobs more effectively. We went out and pressure tested them by speaking with a bunch of different prospective customers. I basically filled my calendar every day with as many conversations as I could get with people in revenue operations.
Ultimately, we landed on focusing on the problem space of go-to-market analytics and how you measure the efficiency and effectiveness of your revenue engine, which involves tying together different data sets. We wanted to tie data sources together and provide turnkey reporting dashboards and analytics to help folks measure the performance of their go-to-market strategy.
We focused on that particular area for two reasons. First, it was the thing that we seemed to always gravitate towards in customer discovery calls and conversations. Second, was my background. There's always this element of product market fit, but you know, the thing that people talk less about is founder market fit as well. For me, my background is on the business side, the strategy side, the analytics side. I have a background in finance and accounting. So this was also the thing that was the best fit for me to go out and tackle.
Once we landed on that problem and potential solution, we drew out some mockups then turned the drawings into a Figma prototype that was clickable. Then, I went to the market to see if I could sell it. We had the prototype in September, and I signed our first paying customer in October 2020. Based on the demand we had we began the engineering work to actually build it.
I feel like a lot of people talk about signing a contract before they build the product, but no one actually does it. I love that you actually did that. Were you afraid or nervous trying to sell a prototype to prospective customers? What was that experience like?
MV: Yeah, I was afraid to do that as well. This is my second startup, but I was still afraid to do all that. One thing I learned from my first startup is that if you're not painfully embarrassed by the first version of the product then you haven't released it soon enough. I'm a big believer in being transparent and direct. Also, the more opportunities that you get to talk about the product you are building, the more reps you get in, the better. Because of all that, you can't start that process soon enough.
There were actually a couple of angel investors that really pushed me to go out and sell it. One investor, Samir, told me a story from back in the day, Cisco or some other hardware company was considering building a brand new hardware product and so they published newspaper ads for it. The ad basically said, send us a check and you’ll get it in a couple of months. Suddenly, all of these people send in checks and they realize uh oh, we aren’t ready to build this yet. They send everyone back their money, but tell them that once we build it, you’ll be first on the list.
We took a similar approach. We told prospective customers here's what we're doing and here's where we're at. By going to the market early, we were able to test out our customer personas, the people we were going after, and what messaging would resonate.
In some cases in the first five minutes when people learned all we had was a Figma prototype they’d get concerned, but I’d tell them, “we're early, but I don't want to talk to you about whether we have a prototype or a product. I want to talk to you about the solution and if it solves your problems, because if it does, then we can figure something out in terms of how the deal gets structured.”
We were always straight up with people. We weren't trying to sell them something that they wouldn't get value from. Early on we structured the deals as six month pilots. We’d get the signature, but it wouldn’t start for a couple of months. In some cases we provided an opt out within the first 90 days just to de-risk it as much as possible for them.
Has your product evolved over the past year from that initial prototype?
MV: The first six months were focused on building out the prototype and getting feedback from more prospective customers. We learned a lot of things, but one of the main things we learned, which I think applies to any analytics tool, is that providing data visualizations and dashboards is great, but people need to be able to take action. They want to be able to easily see the story that the data is telling and then easily take an action based on that. They need to get work done within your tool or within your product. They can't just go and look at nice charts. That’s not enough to get people to engage and derive value from your product or solution.
We started with being focused on building a turnkey reporting dashboard with lots of analytics, but we realized that people needed help consuming the information and knowing what’s relevant. What does the data tell them? That's what we're now focused on for our product strategy. How does our product allow people to actually make data driven decisions. We want them to take action based on what the data tells them. We also want to automate the monitoring and the playbooks that people run across their revenue engine. Ultimately, how do we help them drive predictable revenue growth?
How did you realize that you were missing that “insights” or “actionability” part of the product? Was it from conversations with customers or product analytics?
MV: So I'll say it was both. It started with us looking at our own product analytics. We were seeing that logins were decaying over time. We held interviews with all of our users and we got some feedback that started us down this path of how can we proactively push insights to them?
We began to think of experiments that we could run that wouldn’t cost us anything. One was, what if we sent them an email with some interesting insights from their dashboards? Naturally, we started talking about how we’d do it technically, how it would be automated. Then we decided that I could just be the business analyst and go through their dashboards, looking for insights. So that’s what we did. I went through a bunch of dashboards and we wrote up emails to send to our customers.
The engagement was great. 100% of the people who received the email opened it, read it, and typically re-opened it multiple times. It also drove people to log in and explore further. So that was validation of, yes, if you push stuff to people and it's relevant, they'll consume it and they'll get value from it. So that was an example of an early problem that we recognized and figured out what was the most simple experiment that we could do to validate the hypothesis and help us go in the right direction.
That’s great, you were really following Paul Grahams “do things that don’t scale” advice. You saved a lot of engineering time by first validating that those emails would be useful.
I read the Medium post you wrote about your learnings from your first startup that failed, Tali. Of those learnings, which one has shaped Funnel IQ the most?
MV: So upfront, call it in the ideation phase, it’s really important to take a hard look at, not only that your solution solves the problem, but that the market opportunity is good. With Tali, we had a solution to a real problem, but the legal industry was not a great market for two reasons. One, it's not that big. And two, our customer was a lawyer and they are typically hard to sell to. Lawyers are trained to identify risk. It’s less about the value your product brings and more about eliminating risk. Now there's some examples of companies that are doing extremely well within legal, like Cleo. Anyways, making sure that you are in the right market is important. The customers we are selling to for Funnel IQ are typically the revenue organization of a B2B company. I don’t want to say it’s easy, but it’s less hard to show the value that our product adds.
The other learning, which we already talked about a little bit, is the importance of getting your product into the hands of customers as quickly as you can. We did that with our Figma prototype.
One of the things that I did, and I don't know if this is a mistake I made twice or something that I just didn't recognize at the time, but I pushed on the go to market efforts too soon and tried to ramp into growth mode too quickly. I think every startup has a tendency to want to move from a small startup to a “real” company too quickly. When you do this you may pick up on the wrong signals that indicate that you might be further ahead than you actually are. It’s important to find the right balance of getting feedback from customers early without trying to go all out on, go to market and sell that particular product to everyone. There can be ramifications by introducing an immature product into the market at scale too early.
The last thing I’ll mention is that your team is everything. Make sure that you're really, really transparent and honest with yourself about your own gaps as a founder and make sure to have a co-founder or team that fills those gaps. I’ve been really fortunate to have that at Funnel IQ.
Thanks for sharing those. Is there anything that you’ve done in the past year that you now kick yourself for not doing sooner?
MV: There are two things. Something we did pretty early, but could have always done earlier is that we started building an online community for people in revenue operations called RevOps Co-op. It's a Slack group and newsletter. We also have other programming, networking events, etc. It’s aimed at people in revenue operations. We started that about a year ago and there’s almost 3,000 people in the community. We started that community about three month after we founded the company, but if I could have started that community the same day as the company I would have. It’s been paying off a lot in terms of building brand awareness and relationships. Community building is one thing that can be a big differentiator. It seems like everyone's trying to build a community these days. I think that’s because a lot of people recongize that the sooner a startup can do that, the better. You don’t need a product to start a community, it just takes time.
The second thing that I wish we had done sooner is narrow down the focus of our product. Scope creep is a real thing, especially when it comes to startups because you’ve got all these ideas and trying to narrow them down to truly the most impactful slice can be difficult. We started too broad in terms of what we were building which meant the product was relatively shallow in each of those areas and it was hard to deliver value with our limited resources. When you go deep and narrow, you find your wedge and later you can go broad and branch out.
I totally agree with you about the importance of keeping your product super focused in the early stages of the company.
There are a lot of companies trying to shoehorn a community into their product. I like how you’ve kept your community somewhat disconnected from your brand in that it’s not marketed as “Funnel IQ’s Community.” How do you balance the self-promotional aspect within the community so that it doesn’t feel like the only purpose of the community is to promote your product?
MV: Our number one goal with the community is to deliver value to people in revenue operations, day in and day out. We can do that through all these programs that we run. It's not a place to sell or even really promote Funnel IQ. We did all of that intentionally.
There are two options folks can take when it comes to community. One, you can build a, let’s called it a company driven community. A good example of this approach is Lattice. Lattice’s community is called Resources For Humans and they have an invite form you can fill out on their website to get invited to their slack group. You don't need to be a customer, but it's very much Lattice’s community.
We took the other approach which is to build a community for the types of people that could be our customer, but give the community it’s own unique name and website without having it tied too closely to our brand. An example of this route is Community Club, which is an online community for community managers. It’s run by Commsor which is a company that provides community management software. Spendesk also has one for CFOs, called CFO Connect.
We participate in our community with our real names and titles, but we only bring up our product and solution when it’s relevant. Everything else we do is to encourage dialogue, discussion, networking, and because of that, we believe we'll derive business value. We've definitely seen inbounds asking us about our product from people that had first joined the community. We build trusted relationships with people who we believe will someday, when the time is right, become Funnel IQ customers, if there's a fit.
Thanks for sharing your insights and speaking with me today. I really appreciate it.
I hope you enjoyed my interview with Matt and learned a few things. If you did, give it some love on Twitter with a RT or Like. This helps more people discover my newsletter 😊 -Tyler