Ilya Semin, the CEO of Datanyze, once received a kernel of wisdom that has always stuck with him. “If you want advice, ask for money. But if you want money, ask for advice.”
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By following that recommendation, Ilya was able to bootstrap his way to startup profitability (and growing 25% every month) with an early prototype of Datanyze, a now incredibly robust web-crawling tool which provides real-time data on the technologies every website uses. More specifically, it helps sales teams better engage with potential customers by learning if these leads are using their competitor’s software.
But how exactly was Ilya able to get started? Simple. He had a hypothesis for a product and talked to people about it. “You have assumptions that your product might work or be useful to other people, but unless you start asking your potential customers directly, you’re not going to find out.”
By reaching out to future customers, Ilya was able to figure out if he was on the right track to product/market fit. Not only that, but he also ended up finding his cofounder, his first real customers and future business advisors. (Editor’s Note: Holy moly guacamole, that’s a lot of things.)
At Gusto (formerly ZenPayroll), we’re all about helping small businesses and startups do what they do best. We spent some time chatting with Ilya about his process of building an early product that his market loved, in addition to his surprise at the generosity of strangers.
Here are some of our favorite takeaways; we hope you’ll find them valuable as well!
Listen to your friends.
After spending some time with his friends in sales, Ilya noticed they kept checking the HTML code on potential customers’ websites — they were looking for the signatures of their competitors. Ilya thought it was a shame they had to do this manually. And, as luck would have it, he was an engineer with extensive experience in building web-crawling tools. Eureka!
Don’t build something nobody wants.
This is also known as achieving product/market fit, which, according to Marc Andreessen, is “the only thing that matters for a new startup.” Basically, it means discovering a market (with tons of real customers) and designing a product those customers really, really want. This runs counter to, say, spending countless months building a product first — only to find there’s no market for it.
How did Ilya approach this? “If you ask for feedback on your product and people want to buy it, that means you’re on the right track. If they don’t want to buy your product, they’ll tell you why and how you can improve it.”
Ask your future customers for help.
Ilya knew the best people who could give him advice would ultimately be his potential customers — and he wasn’t shy about reaching out. He decided to target about 20 different people (mostly VP of Sales roles) and emailed them with the following points:
- I’m a first-time entrepreneur.
- I’d love your guidance developing this product.
- Here’s the idea.
- Here’s how it works currently.
- If you can give me some feedback and tell me if you’d find it useful or not, I’d appreciate it immensely!
He ended up getting about a 50% response rate — not too shabby for cold emailing! “People were saying, ‘Yes, absolutely. Let’s schedule some time for the demo,’” says Ilya. “That’s how I got started, basically.”
Ilya graciously shared his typical cold email template with us below:
I’m a first time entrepreneur and I’m trying to validate whether my idea is worth pursuing before investing too much into it. I was looking for experts in this space and your name came up several times, so I was hoping that you could give me your feedback on whether or not you think it might work.
I built a prototype of a tool that can crawl millions of websites every day and see when somebody starts or stops using a particular web technology. For example, I can see when a website starts using <THEIR_BIGGEST_COMPETITOR> and we can assume that they just started a free trial.
Do you think this might work? Please let me know if my idea sucks – you will save me several years that I’m going to spend building it. 🙂
Don’t be afraid to ask (and a little flattery never hurts!)
Most people like entrepreneurs, says Ilya, especially if you’re trying to do something innovative in their space. “When you say things like, ‘You’re an expert in this space,’ people definitely respond to that. Most people are open to help if they see you’re not trying to sell them something. When you try to sell, they can feel it from a mile away.”
- For self-identified mentors, the response rate goes up drastically. “If I saw on their Linkedin profile that they’re advisors to other startups, it was almost guaranteed that they’d reply to my email and be willing to spend some time with me.”
- Get introductions from mutual connections if you can. “When I was able to get an introduction, the conversion rate went from 50% to 90%. You can do this by going on LinkedIn, finding the people you want to target and seeing if you have any connections in common. I’d reach out to the connection and say: ‘I’m working on this, can you introduce me, I just want to get some feedback, nothing else.’ Usually, people are totally fine to make these kinds of intros for you — and it really helps.”
- Find people’s email addresses by reverse-engineering Rapportive. You can use the Rapportive plugin for Gmail to find almost anyone’s email address. Can’t find their email? Ilya also recommends reaching out to people on Twitter.
You might just find your first customers (and co-founder!) this way.
“This is how I met my cofounder, Ben Sardella (formerly VP of Sales at KISSMetrics). I met him at a coffee shop and showed him the product. First, he shared some feedback with me. Second, KISSmetrics became our first customer — and eventually Ben became my cofounder.”
The initial product doesn’t have to be perfect.
“Because I’m a developer, I already had a working prototype. I put it together using Twitter’s Bootstrap framework; it was very basic. However, it wasn’t just a slide deck either. It was a website where I could show them the product. Some of the people I spoke to said, ‘I want to buy this,’ and I said, ‘Right, I’ll have to create a payment page.’ I didn’t even have a payment page at the time.”
Keep those early relationships going.
“I still keep in touch with the people I met this way. Some of them even turned into something more; for example, Kyle York (Chief Revenue Officer at Dyn) is now on our advisory board. They bootstrapped their company to hundreds of millions of dollars, which is why their experience is very relevant to us.”
A million thanks (and a flurry of panda hugs!) to Ilya Semin, Jon Hearty and the rest of the Datanyze team for taking the time to chat with us, and of course, being incredible customers. Stay tuned for Part 2, in which Ilya talks about Datanyze’s culture and rewarding his employees, which is obviously something we are very into at Gusto (formerly Gusto).
And, of course, we can’t help but think we’ve had a part in Datanyze’s continued success as well:
Just sayin’ is all.