The SeedToScale interview with Shruti Ghatge, CEO of Zomentum
Zomentum was born out of the idea that small and medium businesses are scrambling to make sense of the large number of tools that are on the market, and to decide which ones they should adopt and use for themselves. Shruti Ghatge and Rahil Shah, the founders of Zomentum, wanted to provide a solution to this for SMBs.
So far so good. But to actually solve this problem, the approach they used for research really blew my mind, which we will get into.
As Zomentum announced its Series A fundraise of $13 million this week, we thought it was the perfect time to get Shruti to talk to us in a freewheeling chat about marketing strategy, how they found their initial customers and then amped it up from 0 to 1.
Please note that the interview has been edited for clarity.
Sairam: Hello, Shruti! Congratulations and all the very best! Let’s start with the question I really want to know the answer to. How did you figure out that this (MSPs) was the specific audience you were going after?
Shruti: Thank you, Sai. We’ll take all the luck we can get, too! To answer your question, SMBs are now a real force in the world. This means that they are growing and adopting technology but themselves don’t have time to figure out what is right for their business. And they use at least 10 products each: software, hardware, and so on.
Now consider this: To select a helpdesk software for a small office, you have a 100 choices. How do you pick what’s right? Imagine that problem multiplied by 10. The most obvious response to this could be why aren’t they hiring someone in-house to do it? They can’t, because getting someone to do that in the US is ridiculously expensive. The next best option is to outsource. Figuring out a trusted person who can not only select these products is one thing, but, now with SaaS coming in, you need these people who are giving you this IT advice to actually cater to you every month as well. Demand for these IT partners in the market was increasing.
So this was one part of it.
We also realized that the best products don’t necessarily win, the best distribution wins. And distribution as a problem was unsolved for SMBs. If we wanted to help the SMBs, we had to empower their IT partners. That’s how we finalized on targeting IT partners.
Sairam: So what was the next step? How did you know what to build for them?
Shruti: The first step was just researching — and we realized that all these tools had been built in the 2000s and have remained in that era. They were clunky.
Then we had to figure out where these people were hanging out.
We learnt that one of the places was Reddit. At the time we started researching, the subreddit/MSP thread had around 10,000-15,000 subscribers. We started pinging people. We were also creating anonymous threads, writing like a potential customer on different problems, and we saw that 10 other people would pounce on responding to that. If the post was getting traction, we knew it’s a pain point worth solving for. That’s how it was during the initial days.
At Reddit, you would assume that people don’t respond because it’s anonymous. But it was surprising that people pinged us back their real email ID, their phone number, and actually wanted to talk about what was clearly a real problem. We started speaking to them and had a one-on-one connection with all of these guys. I also think we got lucky because these are engineers: they love to build products and automation — something their industry hadn’t seen.
Since then, that subreddit has grown fast to 85,000-90,000 subscribers. Most of the discussions have mostly been around knowledge sharing because people didn’t know where to go and what tools to use. They all wanted to ride the cloud wave without having enablers to do it.
Sairam: Was this [Reddit] your first avenue to start researching?
Shruti: I would say this was the first successful one. Previously, we had done generic things like cold emailing. We got the email details of 2000 IT partners, drafted what felt like personalized emails, and hit send. No one responded. Then we asked ourselves this: How would a generic email with a survey get any traction? We had to have a one on one connect.
So we used that insight. The people we connected with through Reddit eventually came to trust us and our vision after 1-2 calls, and connected us with their friends who were facing similar problems. They also told us about different avenues to find people: communities and events. They redirected us to Facebook and LinkedIn groups — there were around 2,500 such groups for this community. The other thing they told us is that they attend events and conferences locally to research new products. So we also started attending them. Luckily for us, there were at least 2-3 in a month. So in a span of a few months, we attended some 10 of these conferences.
So as we were figuring out the problem and the potential solution, we also figured out how to find these customers.
Sairam: Is there anything else that you guys tried?
Shruti: We found 1-2 influencers who were kind enough to work for a minimal fee for the webinars that we hosted. And though we said it was a product demo, it was in fact just a powerpoint presentation where I clicked next, next, next.
We told the attendees that this is a product we are building and launching, and asked who wanted to sign up for beta.
Roughly 35 people attended and there was 100% attention time (Zoom gave us these analytics). 27 of the 35 signed up for beta.
Sairam: Those are killer conversion numbers. :)
Shruti: We wanted to first talk to a really small audience. I did not want to fan out at all because we didn’t know what we were doing. I was very careful with the influencers, and actually wanted an even smaller mailing list — 10, at most 20 participants. In the end 50 signed up, 35 showed up, and 27 signed up for beta access.
Sairam: So now you’re speaking to an audience that’s interested in the problem you are solving. You also realized that you don’t actually need to show the product. Was that instinctive?
Shruti: I think you have to make the first impression really nice, right? It just felt right — we were clear that even if this meant creating just one use case and solving for their problem, that would be alright. This was based on the knowledge that engineers are aware that products will have bugs, and that features will be incomplete. When they trust that you are actually trying to solve a problem for them, they will work with you and enjoy that process.
Sairam: Just thinking out loud here, maybe this approach would have worked only for this audience?
Shruti: Yes, I agree. We also did some fancy things later on. We held bi-weekly meetings calling the advisory board, and then made groups of 5-6 people, got them all on a Zoom call, and asked about their problems. Then we would build a solution for that problem, show it to them two weeks later, get feedback and talk more. That’s the methodology we have used for product development.
We are very cognizant of the fact that Rahil and I are not from the industry. So what we did was ask them for problems and not solutions. The advantage of being an outsider is that you can come up with creative solutions to their problems. And that’s the approach we follow till today. Customers drive our roadmap, period.
Sairam: That’s just brilliant. When was the first paying customer and how did they come in?
Shruti: Beta started in October 2019. Our first paying customer came in December. We had given the beta for free because we knew the product was half-baked. But in December, the customer said they want to pay [us] because it is earning them dollars. Even then I was more interested in getting it right for these 10 people so that I can amplify the message and the offering, versus looking at squeezing more out of the first customer.
Sairam: Okay so then you had this customer, how long did it take to get to the next 4,5,10?
Shruti: So what we had been doing in parallel is that we continued to do conferences, continued to generate lead flow. Sign up for early access was the CTA. But we started hitting the drums everywhere.
Sairam: What channel do you guys use to convert these lead flows? You don’t have a sales team at this point, right?
Shruti: We don’t have a sales team, yes, but we hired a go-to market consultant in the US. That’s something we invested in pretty early on because when we realized that we had to have booths at these conferences, we knew we had to have feet on the street. Moreover, we both couldn't go everytime or even if we did, we couldn't position ourselves as founders because then we would give away how small the company is.
Sairam: Are these leads converting on their own?
Shruti: With a demo, mostly. The conversion rates from demo to sign up has consistently been above 50%. Most months it’s upwards of 60-70%.
During our first year, we wanted to talk to as many customers to find out reasons for why they weren’t buying if they weren’t, and what features they would want to see in this product for them to buy. In fact, we have a Slack channel where every demo till date gets documented: why they came, where they came from, what is their pain point, if they are buying why, if they are not buying why.
It helps in reaching out to someone once we have developed that feature. It also aids product development.
Sairam: You have been really focused on the persona you are targeting. Do you think that is what worked for Zomentum to achieve these numbers?
Shruti: I believe that if you’re looking for fish outside your pond, it means that there are fewer fish in your pond. The very early thesis was: is this large enough? That was the criteria to even chase this opportunity. I think having that VC background helps, asking if the market is large enough, can a sizable company be built, and so on.
You can figure out the product, that’s the easy part. If you know this persona is large enough, it has some tailwinds that are affecting them, then can you ride that wave and become large. So that we were very sure of. Had we not built this product, we would have built something else for this persona because they were growing, their business model was changing, and there weren’t tools available to do that.
Having that Accel background, you won’t commit the obvious mistakes — maybe new ones. :)
Sairam: Pricing is a brand positioning issue as well, Shruti, we spoke about this before. How are you figuring this out?
Shruti: It’s still a discovery. I think pricing should always be iterative. And that’s a constant journey, because you are adding more, you want to value it higher. Initially we just wanted it to be a no-brainer and did not want to price it very soon. Later we would interview and figure out how much the customer was willing to pay. We don’t have pricing on our website. We used to have it, but we took it off because we were worried that people may think it’s too cheap and hence doesn’t do the job. In reality, it does, and doesn’t cost too much either.
Sairam: What’s your highest channel when it comes to lead flow?
Shruti: Interestingly, this industry does not have high search volumes. If you look at the search volume of any product selling to this audience, 80% is approximately the brand keyword search, 20% is the use case. This means the brand is being discovered somewhere and then they are coming and looking for the brand online. That discovery is actually happening at conferences. That’s what we did all of last year. We continued to do 2-3 events every month to continue to drive warm lead flow.
In the background, marketing started building content. We’ve been investing in content since the very beginning. Now if you see, there’s a repository of blogs which have been written over time. That takes 6-9 months to show results — you can’t wait. So we started off with events and in parallel we built content, used the demo feedback to run campaigns and see how they were talking about the product. With all this working together, our marketing team has actually outperformed during the pandemic, when compared to the month when we had the highest number of conferences.
Sairam: That’s really something, Shruti! Right, with the series A now, how are you looking to scale?
Shruti: We were heavily events-driven previously. I don’t want to do that anymore. So we are bolstering up the marketing team. Marketing is figuring out more channels. We also didn't do many things efficiently which we want to change now. There are a huge number of leads in our Slack channel which we have not nurtured. So we will now invest in marketing and get the lead generation engine going. We are also looking at how to make our demo more valuable and automate the mundane stuff.
What we built from our product perspective was the hook, and now we are building features around it. If a feature has a revenue impact on our customer, we build it — that’s how we decide on what feature to build.
We want to be known as that company which drives revenue for our customers, and helps them achieve momentum.