IT|Redux

Office 2.0 Startups Should Join the AppExchange

Thursday, March 22nd 2007 | Ismael Ghalimi

For a consumer-oriented Web 2.0 startup, eyeballs might be all it takes to get funded. But for an Office 2.0 upstart, paying customers are required to get investors even remotely interested in your venture. This creates an interesting challenge for entrepreneurs: where to find prospects willing to try new products, without having to spend any money on marketing? Part of the answer might be provided by our friends at Salesforce.com, in the form of the AppExchange.

Salesforce.com’s marketing team is good at highlighting the large number of applications that have been deployed on the AppExchange (more than 500 to date), or some success stories about customers using them. What is missing from the picture though is the success that third-party developers are getting in signing new paying customers, using the AppExchange as a cost-effective sales channel.

If you are in the process of developing a business plan for your Office 2.0 startup, the Salesforce.com ecosystem might not be that impressive to you. With “only” 29,800 customers and 646,000 subscribers, it’s no match to the mind-boggling 450,000,000 users of Microsoft Office. But don’t get fooled: these 646,000 users are as close to a qualified prospect as you’ll ever be able to find without spending massive amounts of marketing dollars. The reasons for this are pretty simple: they already bought into the concept of Software as a Service, they are not afraid of putting their most mission critical business data in the hands of a third-party, and they are paying a meaningful amount of money for it. In other words, they are your low hanging fruits.

There is more than anecdotal evidence to prove that the model is working for a new breed of SaaS vendors, but some examples might help paint a clear picture. Two vendors that I am quite familiar with, EchoSign and Koral, each managed to sign tens of paying customers through the AppExchange in less than six month. Xcellery, which launched less than a year ago, signed their first customer last December, and got their first AppExchange customer this week. By any measure, this is fast.

So my advice to you is the following: if you’re developing an Office 2.0 application that could add value to the Salesforce.com platform, make sure to join the AppExchange sooner rather than later. This will encourage you to architect your application with open APIs in such a way that you can integrate it with third-party solutions, this will force you to focus on your core value proposition rather than developing yet another jack-of-all-trades that nobody really needs, and this might help you get your first couple of paying customers, before you bring any sales and marketing staff on board.

Entry filed under: Cloud Computing, Office 2.0

4 Comments - Add a comment

1. Business Two Zero »&hellip  |  March 28th, 2007 at 3:14 am

[…] Ismael was also posting about Salesforce.com, with a “call to arms” to web 2.0 startups to get on the AppExchange platform and become part of their extended application footprint. […]

2. gokubi.com&hellip  |  March 28th, 2007 at 7:56 am

[…] Ismael wrote a post about how all Office 2.0 startups should join the Appexchange as a way to raise visibility and drive business. So, I’d like to give him and Zoho.com an idea for a nice Appexchange product that would be really easy for them to write. […]

3. Jason M. Lemkin  |  March 29th, 2007 at 11:59 am

Ismael,

Great piece, and AppExchange has been a big win for us, for all the reasons listed above. But, regarding “without having to spend any money on marketing”, perhaps not as true as it used to be.

Effective March 15, all new commerical AppExchange applications have to be Salesforce Certified, which is a rigorous process that also includes a $5,000 certification fee. It was a great experience for us, and helped harden our application and had other secondary benefits, but there definitely is a non-trivial hard and soft cost spent here now. Before, commerical applications could be approved at no cost but remain uncertified.

I believe basic non-commercial applications that do not charge big dollars and are basically widgets will not require certification however; all the rest now do.

4. Ismael Ghalimi  |  March 29th, 2007 at 1:22 pm

Jason,

Thanks for the clarification.

Best regards
 -Ismael

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