Tag Archives: Blog

News: The Equity crew riffs on the Intuit-Mailchimp news

Hello and welcome back to Equity, TechCrunch’s venture-capital-focused podcast where we unpack the numbers behind the headlines. We are back! From this morning, I suppose. But the news cycle doesn’t wait for our publishing schedule, so the Equity crew got together to yammer all about the Intuit-Mailchimp acquisition. A $12 billion deal composed of stock and

Hello and welcome back to Equity, TechCrunch’s venture-capital-focused podcast where we unpack the numbers behind the headlines.

We are back! From this morning, I suppose. But the news cycle doesn’t wait for our publishing schedule, so the Equity crew got together to yammer all about the Intuit-Mailchimp acquisition.

A $12 billion deal composed of stock and cash, it’s a big one. And as Mailchimp has both a history of bootsrapping and a founding story in a non-Silicon Valley city we had lots to chat about.

As a general reminder, if you do listen to the show, hit us up on Twitter as we are doing more and more of these Spaces. They are good and relaxed fun, so don’t take them too seriously. We like to have fun.

Alright, Equity is back on Wednesday with our regularly scheduled programming. Chat then!

Equity drops every Monday at 7:00 a.m. PDT, Wednesday, and Friday at 6:00 a.m. PDT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

News: Daily Crunch: Apple urges users to update all devices after hacktivists reveal zero-day flaw

Hello friends and welcome to Daily Crunch, bringing you the most important startup, tech and venture capital news in a single package.

Hello and welcome back to Daily Crunch for September 13, 2021. This is Alex and I am back! A big thanks to Greg for taking over last week while I was on staycation. It is lovely to be back with you all.

Before we dive into the news, a reminder that Disrupt is next week. So, make sure you have a ticket and get hype. More here. It’s going to be a heck of a show.

The TechCrunch Top 3+

  • The Apple-Epic war far from over: While the internet digests the recent, controversial ruling between Apple and gaming giant Epic, the latter party is not letting the decision sit. Epic is appealing. What’s at stake is the monetization of mobile applications for years to come. Given how much money is in the mix, it’s not a huge surprise that the legal wrangling is taking time.
  • Welcome back to IPO season: Toast, a software-and-hardware startup that is the, well, toast of Boston, is targeting a huge valuation gain in its IPO. So is Freshworks. We’re tracking both companies and will have more notes as they get closer to trading. Expect many, many more offerings in the coming weeks.
  • China’s regulatory crackdown could harm its cloud market: That’s the recent summary of a report that TechCrunch covered, discussing the larger Chinese software market. News also broke earlier today that the Chinese government may break up Ant, the Alibaba financial affiliate, and that the country wants to reduce the number of EV companies its market currently supports.
  • BREAKING NEWS TODAY: Apple has released a patch to a zero-day flaw “that affects every iPhone, iPad, Mac and Apple Watch,” TechCrunch reports. Update your devices, folks.

Startups/VC

  • GrubMarket lands $120M to connect food growers, consumers: Sure, you’ve ordered food delivery. That’s one plank of the food game. But for distributors, wholesalers and supermarkets, there are far greater needs to be served than just what you and I can consume for dinner. That’s the market that GrubMarket plays in, and it just raised a huge bloc of cash to keep its growth rates up.
  • BitSight raises from Moody’s, buys VisibleRisk: BitSight, a startup that “assesses the likelihood that an organization will be breached,” per TechCrunch, has purchased an Israeli cyber-risk-assessment startup VisibleRisk for an undisclosed price. The Moody’s round put $250 million into BitSight, funds that we presume it used to snag VisibleRisk. What’s the connection? Moody’s wants to use cyber risks in its credit ratings, we reckon.
  • SpotOn also raises, buys smaller company: Unicorn SpotOn, which provides financial software and technology to small businesses, has raised a $300 million round that values the company at $3.15 billion. It’s also buying Appetize, “a digital and mobile commerce payments platform for enterprises such as sports and entertainment venues, theme parks and zoos.” The round is notable not only for its size, but also because SpotOn raised at a $1.875 billion valuation in May and a $625 million valuation last year.
  • JumpCloud raises $159M: JumpCloud sells cloud directory services and a host of other cloud-based identity services. It’s now worth $2.56 billion, a tidy sum. Sapphire Ventures’ Jai Das led the round. He’s a nice dude in my experience. The company grew its customer base by around 40% since last November. I asked the story’s author Ron Miller why JumpCloud was cool enough for him to cover. He said that the company’s effort to “provide a range of identity services, such as single sign-on and multifactor authentication” is important.
  • I suppose it’s time to learn what DevSevOps is: Every technology wants its own neologism. DevOps. Adtech. Finservices. Hell, even Databricks’ Lakehouse. Add DevSecOps to your personal lexicon. Per our own Ingrid Lunden, DevSecOps is “the area of IT that addresses the needs of security teams and the technical work that they need to do in their jobs.” Startup Rezilion just raised $30 million for its efforts to serve that particular market.
  • Everyone loves an e-commerce platform play: Shopify is big. BigCommerce is growing nicely. And investors want to put capital into the next, similar effort. Enter Egyptian startup Capiter, which just snagged a $33 million round to “help manufacturers and sellers distribute products and [ … ] access them on a single platform” in Africa.
  • To close out our startup coverage, GM just invested into radar software startup Oculi. The move fits neatly into the trend of self-driving cars getting better and better over time, even if they are not yet there, if you will.

3 keys to pricing early-stage SaaS products

Every founder who launches an enterprise software startup has to figure out the “right” pricing model for their products.

It’s a consequential decision: Per-seat licenses are easy to manage, but what if customers prefer a concurrent licensing model?

“Early pricing discussions should center around the buyer’s perspective and the value the product creates for them,” says Ridge Ventures partner Yousuf Khan, who previously worked as a CIO.

“Of course,” he notes, “self-evaluation is hard, especially when you’re asking someone else to pay you for something you’ve created.”

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

Kicking off our short big technology section today, let’s pick back up with the automotive theme from GM’s news we discussed above. Ford also made headlines today by hiring Mike Amend to be its chief of digital and information. That it is not surprising that Ford would make such a hire is good indication of where the automotive market is heading.

  • Instagram thinks you follow too many people: That’s my read of the social service’s effort to build a product in its service that will allow users to favorite accounts and thus not miss their updates. Algorithmic timeline problems, I suppose.
  • Dutch judge makes Uber sad: Sure, that’s a slightly subjective summary, but news that a Dutch judge has ruled that Uber drivers are actually employees is antithetical to the ride-hailing company’s position. So it can’t be happy. And what’s the opposite of happy?

TechCrunch Experts: Growth Marketing

Illustration montage based on education and knowledge in blue

Image Credits: SEAN GLADWELL (opens in a new window) / Getty Images

Are you all caught up on last week’s coverage of growth marketing? If not, read it here.

TechCrunch wants you to recommend growth marketers who have expertise in SEO, social, content writing and more! If you’re a growth marketer, pass this survey along to your clients; we’d like to hear about why they loved working with you.

Community

A composite image of immigration law attorney Sophie Alcorn in front of a background with a TechCrunch logo.

Image Credits: Joanna Buniak / Sophie Alcorn (opens in a new window)

Join Danny Crichton on Twitter Spaces tomorrow, Tuesday, September 14, at 2 p.m. PDT/5 p.m. EDT as he discusses whether remote work will make H-1B visas redundant with Sophie Alcorn, a lawyer at Alcorn Immigration Law and guest columnist for “Dear Sophie” on Extra Crunch.

News: Amazon releases a Kindle software redesign to make navigation easier

Yeah, yeah, you don’t need to charge a real book — but you also don’t need to update a book’s software, and that’s also often true for Amazon’s Kindle, which rarely gets a software refresh. But now, our trusty Kindles remind us that they’re actually Wi-Fi connected, electronic devices capable of change as Amazon unveils a significant

Yeah, yeah, you don’t need to charge a real book — but you also don’t need to update a book’s software, and that’s also often true for Amazon’s Kindle, which rarely gets a software refresh. But now, our trusty Kindles remind us that they’re actually Wi-Fi connected, electronic devices capable of change as Amazon unveils a significant design upgrade for the first time in years.

To simplify navigation, the new look adds a two-tab bar to the bottom of the home screen, letting users easily toggle between the “home” and “library” screens. To access frequently used features, Kindle introduced an arrow on the top of the screen. When tapped, it reveals buttons to access airplane mode, bluetooth, dark mode, sync, or the rest of the settings menu. There’s also a brightness slider.

Image Credits: Amazon

Amazon notified customers about the update on Friday and says it will roll out in the coming weeks, but many users with eligible devices — Kindle (8th Gen and above), Kindle Paperwhite (7th Gen and above), and Kindle Oasis — have already downloaded the upgrade. If you’re not sure what kind of Kindle you have, you can check here, but if your Kindle is from 2015 or later, you’re probably eligible. If your Kindle is connected to Wi-Fi, the update will install automatically, but you can manually download it here.

The company says it will continue to improve the home and library screens later this year — users will be able to swipe left on the home page to see recently read books from their library. Then, the library screen will introduce new filter and sort menus, a new collection view, and an interactive scroll bar.

Image Credits: Amazon

This is the biggest design update that Kindle has released since around 2016 — but if you noticed that the user interface felt outdated while you wrapped up your summer reading, now you know that Amazon noticed too.

News: Use creative automation software to amp up your brand’s lower-funnel assets

In addition to driving a clear lift in revenue, automating digital marketing assets means cost and time savings, too.

Miha Mikek
Contributor

Miha Mikek is the CEO and co-founder of creative automation company Celtra.

With the holiday season around the corner, growth marketers are gearing up for their busiest time of the year. E-commerce brands are now leaning heavily on social sales and digital advertising, but should also expect an omnichannel shopper — 62% of shoppers plan to purchase both online and in-store this holiday season, according to Celtra.

The marketplace is crowded. Digital marketing requires high volumes of on-brand creative assets, and it is tough to produce them fast enough without compromising on brand equity or storytelling. While marketing channels have exploded in volume, most creative production workflows are the same as they were 50 years ago.

But marketing is a monster that feeds on creative assets, requiring more and more each quarter.

The reality is, any paid impression is also a brand impression and a chance to differentiate in the market. In fact, paid impressions are often the only chance you get to influence some shoppers. That’s why creative — your brand, your design and your message — matters. In growth marketing, traffic, subscriptions, direct-to-consumer channels, testing and, ultimately, revenue all rely on creative to succeed.

Yet, lower-funnel assets are rarely brilliant in branding or even remotely interesting. Teams are limited in meeting global demands across more channels than ever, and the creative they produce is suffering. Brands don’t have the luxury of spending time on design craft and storytelling at scale. Conversely, most creative automation solutions that can assist with efficiency aren’t currently equipped to scale high-quality creative that prioritizes branding and design excellence.

Enterprises are suffering from a creative gap where their content and asset needs are growing fast while team resources and budgets are stagnant or even declining.

Unfortunately, there isn’t a magic AI bullet to solve the challenge. You can’t just buy creative technology in the hopes that it alone will bridge the gap. You need to rethink workflows and team collaboration. If you’re serious about elevating your growth marketing creative, you need to invest in tools that are built for scale and brand governance at once.

News: Intuit confirms $12B deal to buy Mailchimp

This afternoon Intuit confirmed persistent rumors that it was in the process of buying MailChimp, detailing a $12 billion transaction that will bring the well-known email infra company to its corporate remit. Intuit is not a well-known player in the email marketing space. The company is instead best known for its TurboTax software — and

This afternoon Intuit confirmed persistent rumors that it was in the process of buying MailChimp, detailing a $12 billion transaction that will bring the well-known email infra company to its corporate remit.

Intuit is not a well-known player in the email marketing space. The company is instead best known for its TurboTax software — and associated lobbying of the US government to ensure its rent-seeking can continue — its recent purchase of CreditKarma, and its more dated acquisition of Mint.

The Mailchimp transaction will comprised both cash and stock.

The question rattling around your brain at the moment is the correct thing to ask: Why is Intuit spending 10% of its market capitalization to buy an email marketing company? 

Per a release, Intuit thinks that the deal “advances” its “powering prosperity around the world, and its strategy to become an AI-driven expert platform.” Normally at this juncture I’d convert the company’s corporate-speak to something in English, but I’m struggling.

The company had more to say, that its Mailchimp buy would allow it to “accelerate two of [Intuit’s] previously-shared strategic Big Bets: to become the center of small business growth; and to disrupt the small business mid-market.”

This is a bit more grokkable. Intuit’s Quickbooks service is a well-known product in the SMB space. Presumably Intuit reckons that it can sell more services to its existing small business customers. It still feels like a bit of a stretch, but we presume that the eggheads have come to the conclusion that ensuing corporate synergies will more than compensate for the sticker-shock that the deal includes.

Shares of Intuit are up a slim 0.15% in after-hours trading, implying something of a shrug from Wall Street concerning the transaction; given how well-leaked the deal was on its way to consummation, the combination may have already been priced into Intuit’s share price.

For Atlanta, where MailChimp is headquartered, the deal is a win. MailChimp is a famously bootstrapped company, so if you were looking for confirmation that you can build decacorns outside of Silicon Valley and without venture capital help, here’s evidence.

News: Twitch sues two users for harassing streamers with hate raids

Twitch filed a lawsuit late last week against two people on its own platform for running automated hate and harassment campaigns. The harassment, often targeted at Black and LGBTQ streamers, manifests in a unique Twitch phenomenon as a “hate raid.” On Twitch, creators regularly point viewers toward another friendly account after their stream concludes to

Twitch filed a lawsuit late last week against two people on its own platform for running automated hate and harassment campaigns.

The harassment, often targeted at Black and LGBTQ streamers, manifests in a unique Twitch phenomenon as a “hate raid.” On Twitch, creators regularly point viewers toward another friendly account after their stream concludes to boost their audiences, a practice known as a “raid.” Hate raids invert that formula, sending swarms of bots to harass streamers who have inadequate tools at their disposal to block the influx of abuse.

The hate raids leverage Twitch’s new tagging system, which many transgender users had requested to make it easier to build community and to discover content that resonates. In May, Twitch added more than 350 new tags to help viewers sort streams by “gender, sexual orientation, race, nationality, ability, mental health, and more.” Accounts spreading abuse now use those tags to target racist, sexist, transphobic and homophobic harassment toward streamers, another unfortunate misuse of a tool explicitly designed to give creators a boost.

We’ve seen a lot of conversation about botting, hate raids, and other forms of harassment targeting marginalized creators. You’re asking us to do better, and we know we need to do more to address these issues. That includes an open and ongoing dialogue about creator safety.

— Twitch (@Twitch) August 11, 2021

In the suit, Twitch described hate raiders as “highly motivated” malicious individuals who improvise new ways to circumvent the platform’s terms of service. Twitch named two users, “CruzzControl” and “CreatineOverdose,” in the suit but the company was unable to obtain their legal names. The users are based in the Netherlands and Austria, respectively, and their activity began in August of this year. Twitch alleges that CruzzControl alone has been linked to 3,000 bot accounts involved in hate raids.

While it’s possible that Twitch won’t be able to identify the real identities of individuals behind the recent harassment campaigns, the lawsuit could act as a deterrent for other accounts directing waves of abuse on the streaming platform.

“While we have identified and banned thousands of accounts over the past weeks, these actors continue to work hard on creative ways to circumvent our improvements, and show no intention of stopping,” the lawsuit reads. “We hope this Complaint will shed light on the identity of the individuals behind these attacks and the tools that they exploit, dissuade them from taking similar behaviors to other services, and help put an end to these vile attacks against members of our community.”

“This Complaint is by no means the only action we’ve taken to address targeted attacks, nor will it be the last,” a Twitch spokesperson told TechCrunch. “Our teams have been working around the clock to update our proactive detection systems, address new behaviors as they emerge, and finalize new proactive, channel-level safety tools that we’ve been developing for months.”

Prior to Twitch’s legal action, some Twitch creators organized #ADayOffTwitch to protest the company’s failure to offer solutions for users targeted by hate raids. People participating in the protest demanded that Twitch take decisive actions toward protecting streamers from hate raids, including letting creators deny incoming raids and screen out chat participants with newly made accounts. They also drew attention to Twitch policies that allow unlimited accounts to be linked to a single email address, a loophole that makes it easy to create and deploy armies of bot accounts.

News: Apple patches a NSO zero-day flaw affecting all devices

Apple has released security updates for a newly discovered zero-day vulnerability that affects every iPhone, iPad, Mac and Apple Watch. Citizen Lab, which discovered the vulnerability and was credited with the find, urges users to immediately update their devices. The technology giant said iOS 14.8 for iPhones and iPads, as well as new updates for

Apple has released security updates for a newly discovered zero-day vulnerability that affects every iPhone, iPad, Mac and Apple Watch. Citizen Lab, which discovered the vulnerability and was credited with the find, urges users to immediately update their devices.

The technology giant said iOS 14.8 for iPhones and iPads, as well as new updates for Apple Watch and macOS, will fix at least one vulnerability that it said “may have been actively exploited.”

Citizen Lab said it has now discovered new artifacts of the ForcedEntry vulnerability, details it first revealed in August as part of an investigation into the use of a zero-day vulnerability that was used to silently hack into iPhones belonging to at least one Bahraini activist.

Last month, Citizen Lab said the zero day flaw — named as such since it gives companies zero days to roll out a fix — took advantage of a flaw in Apple’s iMessage, which was exploited to push the Pegasus spyware, developed by Israeli firm NSO Group, to the activist’s phone.

Pegasus gives its government customers near-complete access to a target’s device, including their personal data, photos, messages and location.

The breach was significant because the flaws exploited the latest iPhone software at the time, both iOS 14.4 and later iOS 14.6, which Apple released in May. But also the vulnerabilities broke through new iPhone defenses that Apple had baked into iOS 14, dubbed BlastDoor, which were supposed to prevent silent attacks by filtering potentially malicious code. Citizen Lab calls this particular exploit ForcedEntry for its ability to skirt Apple’s BlastDoor protections.

In its latest findings, Citizen Lab said it found evidence of the ForcedEntry exploit on the iPhone of a Saudi activist, running at the time the latest version of iOS. The researchers said the exploit takes advantage of a weakness in how Apple devices render images on the display.

Citizen Lab now says that the same ForcedEntry exploit works on all Apple devices running, until today, the latest software.

Citizen Lab said it reported its findings to Apple on September 7. Apple pushed out the updates for the vulnerability, known officially as CVE-2021-30860. Citizen Lab said it attributes the ForcedEntry exploit to NSO Group with high confidence, citing evidence it has seen that it has not previously published.

John Scott-Railton, a researcher at Citizen Lab, told TechCrunch that messaging apps, like iMessage, are increasingly a target of nation states hacking operations and this latest find underlines the challenges in securing them.

When reached, Apple declined to comment. NSO Group did not immediately comment.

News: Instagram is building a ‘Favorites’ feature so you don’t miss important posts

Instagram confirmed it’s developing a new feature called “Favorites,” which would allow users to select certain accounts whose posts they would like to see higher in their feed. A similar feature already exists on Facebook where it gives users a bit more control over the News Feed algorithm. On Facebook, users can select up to

Instagram confirmed it’s developing a new feature called “Favorites,” which would allow users to select certain accounts whose posts they would like to see higher in their feed. A similar feature already exists on Facebook where it gives users a bit more control over the News Feed algorithm. On Facebook, users can select up to 30 friends or Facebook Pages whose posts get shown higher in the News Feed. It’s unclear what limit an Instagram Favorites feature would have, however.

The Instagram Favorites feature was recently spotted in development by reverse engineer Alessandro Paluzzi, who found a new pushpin icon for Favorites in the Instagram Settings menu, and other details about how the feature may work.

According to screenshots Paluzzi posted on Twitter, users will be able to search across the Instagram accounts they are currently following to create a list of Favorites. This list can be edited at any time, and Instagram notes that users would not be notified when they’re added to someone’s Favorites.

This is a similar level of privacy as offered by Instagram’s several years-old “Close Friends” feature, which instead focuses on allowing users to create a separate list of followers so they can share their more private and personal Instagram Stories with a select group of their own choosing.

#Instagram is working on “Favorites” 👀

ℹ Posts from your favorites are shown higher in feed. pic.twitter.com/NfBd8v4IHR

— Alessandro Paluzzi (@alex193a) September 9, 2021

Paluzzi tells us he was able to add contacts to the Favorites list, but didn’t yet notice any changes to the Instagram feed after doing so. That implies the feature is still being built and a launch is not imminent.

“This feature is an internal prototype that’s still in development, and not testing externally,” an Instagram spokesperson told TechCrunch. They declined to share any other specifics about the feature.

A Favorites feature could play into Instagram’s larger plans to better establish itself as a home for creator content. In other leaks, Paluzzi had also found the company was building out “Fan Subscriptions,” which would allow users to pay for elevated access to creator content — like exclusive live videos or Stories, for example. Paid subscribers may also be given a special badge that would highlight their name when they commented, DM’ed, or viewed the creator’s Stories.

Given that users who were paying for content would not want to miss a moment, it would make sense to give them tools to designate those creators as “Favorites” whose posts were also more highly ranked in their Feed.

Let’s see another step of the Creators’ onboarding screen of the #Instagram‘s Fan Subscriptions feature 👀pic.twitter.com/eBxIp6BtXw

— Alessandro Paluzzi (@alex193a) September 13, 2021

A Favorites feature could also be useful to those who had taken a break from Instagram and would rather see the important photos and videos they missed from favorite accounts upon their return, rather than just the most recent or interesting updates from across all of the accounts they follow.

And while not likely the main goal, the new feature could help to address users’ complaints about the algorithmic feed in general.

Today, there are still a number of people who want to be able to see Instagram posts in chronological order, preferring to not have posts re-ordered by an algorithm they can’t control. Favorites wouldn’t give in to this demand (though Instagram has tested a chronological feed in the past). But it would at least give users the ability to ensure they weren’t missing the posts from those whose updates they wanted to see the most.

Though Instagram did say it’s working on the development of Favorites, it doesn’t necessarily mean such a feature will launch to the public. Companies of Instagram’s size often prototype new ideas, but only some of those tests make it to a general release.

News: Ford hires new chief digital information officer as it seeks to expand into software and services

Ford Motor has hired Mike Amend as its chief digital and information officer as the automaker seeks to expand into software, subscriptions and in-vehicle connectivity. Amend, who was president of Lowe’s Online for three years, will focus on Ford’s “use of data, software and technology” — all areas central to Ford’s new Ford+ strategy, the

Ford Motor has hired Mike Amend as its chief digital and information officer as the automaker seeks to expand into software, subscriptions and in-vehicle connectivity. Amend, who was president of Lowe’s Online for three years, will focus on Ford’s “use of data, software and technology” — all areas central to Ford’s new Ford+ strategy, the OEM said.

The hire is just the latest sign that Ford is serious about beefing up its digital offerings for customers, as the company seeks to pivot toward high-tech segments. The company calls this plan “Ford+,” which it unveiled earlier this year. Central to this plan is electric vehicles, which Ford wants to comprise around half of its global sales by 2030, as well as expanding into new sources of revenue via subscriptions and digital services.

To that end, Amend will oversee a number of teams, including Ford’s technology and software platform function and its global data insight and analytics section.

Amend isn’t Ford’s only recent hire of note. The automaker also recently poached Doug Field — the tech executive who was leading Apple’s special projects team, and who also led the development of the Model 3 at Tesla — as chief advanced technology and embedded systems officer. The two will work closely, along with chief of product Hau Thai-Tang, Ford said.

Amend’s career includes growing the online businesses of major retailers, including Lowe’s, The Home Depot and JCPenney. Ford’s interim chief information officer, Sakis Kitsopanidis, will continue to serve as director of integrated enterprise resource planning.

News: 3 keys to pricing early-stage SaaS products

The pricing journey is long and, despite what some founders might think, jumping head-first into customer acquisition isn’t the first stop. Step one is making sure you have a fully fledged product.

Yousuf Khan
Contributor

Yousuf Khan is a partner at Ridge Ventures. Prior to joining Ridge, he was the first CIO of Automation Anywhere, CIO and vice president of Customer Success at cloud-based AI platform Moveworks, as well as CIO of Pure Storage, Qualys and Hult International Business School.

I’ve met hundreds of founders over the years, and most, particularly early-stage founders, share one common go-to-market gripe: Pricing.

For enterprise software, traditional pricing methods like per-seat models are often easier to figure out for products that are hyper-specific, especially those used by people in essentially the same way, such as Zoom or Slack. However, it’s a different ball game for startups that offer services or products that are more complex.

Most startups struggle with a per-seat model because their products, unlike Zoom and Slack, are used in a litany of ways. Salesforce, for example, employs regular seat licenses and admin licenses — customers can opt for lower pricing for solutions that have low-usage parts — while other products are priced based on negotiation as part of annual renewals.

You may have a strong champion in a CIO you’re selling to or a very friendly person handling procurement, but it won’t matter if the pricing can’t be easily explained and understood. Complicated or unclear pricing adds more friction.

Early pricing discussions should center around the buyer’s perspective and the value the product creates for them. It’s important for founders to think about the output and the outcome, and a number they can reasonably defend to customers moving forward. Of course, self-evaluation is hard, especially when you’re asking someone else to pay you for something you’ve created.

This process will take time, so here are three tips to smoothen the ride.

Pricing is a journey

Pricing is not a fixed exercise. The enterprise software business involves a lot of intangible aspects, and a software product’s perceived value, quality, and user experience can be highly variable.

The pricing journey is long and, despite what some founders might think, jumping head-first into customer acquisition isn’t the first stop. Instead, step one is making sure you have a fully fledged product.

If you’re a late-seed or Series A company, you’re focused on landing those first 10-20 customers and racking up some wins to showcase in your investor and board deck. But when you grow your organization to the point where the CEO isn’t the only person selling, you’ll want to have your go-to-market position figured out.

Many startups fall into the trap of thinking: “We need to figure out what pricing looks like, so let’s ask 50 hypothetical customers how much they would pay for a solution like ours.” I don’t agree with this approach, because the product hasn’t been finalized yet. You haven’t figured out product-market fit or product messaging and you want to spend a lot of time and energy on pricing? Sure, revenue is important, but you should focus on finding the path to accruing revenue versus finding a strict pricing model.

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