AgilityFeat had an opportunity to meet Tony Cappaert, co-founder of Contactually, at AgileDC a few weeks ago. After hearing Tony tell the Contactually story, we wanted to learn more and asked Tony to share his insights into how Contactually is applying Lean Startup practices. Tony agreed and the notes from our conversation are listed below.
To learn more about how to apply the Lean Startup to your business, check out our workshop, DaretoBeLean which will be held from January 9th-11th in Tamarindo, Costa Rica. Patrick Vlaskovits, co-author of the The Entrepreneurs Guide to Customer Development and the upcoming, The Lean Entrepreneur will be leading full day workshop.
Conversation with Tony Cappaert, 10/31/2012
AgilityFeat: Give me the Contactually pitch!
Tony: Contactually is a personal assistant for your important relationships. We found that people have contacts all over the place: LinkedIn, Facebook, e-mail etc. We make it super easy to bring all those contacts into one spot and then prompt you to follow up with your most important contacts via a daily e-mail that we send you. So, the idea is that we remind you to follow up with your most important customers to continually build stronger relationships with them and ultimately drive more direct and referral business. We are the only product out there today that automatically helps you proactively follow up with your best contacts.
AgilityFeat: How do you know which contacts are the most important contacts?
Tony: There are two ways we go about this. The first is that we get you to give us a little bit of information about a contact. We take that information and create buckets, or groups of related contacts. By putting a contact in a bucket, you basically tell us how important they are. For example, if you are a small business, your buckets might be current customers, past customers, investors, mentors, etc. Then you can setup frequencies with each bucket for how often you want to stay in touch with them.
The other way we know your most important contacts is that we actively sync with your email and social media accounts, so we can tell when you last communicated with a contact as well as your common frequency of communication with that contact. So the system can tell that you normally contact someone every few days and prompt you to contact that person if you haven’t done so recently.
AgilityFeat: What was the original idea, and how has Contactually evolved since that idea?
Tony: The notion of better organizing and structuring your contact database has been the same. My co-founder, Zvi, had been running a development shop and had contacts like vendors, existing clients and former clients in systems all over the place, and he wasn’t doing a great job staying in touch with them. He had tried using CRM’s in the past, which are great for managing sales pipeline, but they weren’t built for following up with other types of people. So he looked around and couldn’t find a tool that would automate more of your general contacts and sync that with the CRM. The original idea was to read your e-mail, sync that information to a CRM and send you an e-mail asking for more information about that contact. We still sync with the major CRMs today ,but the real meat of our product is prompting you to stay in touch with your most important contacts. That was the missing piece, and that’s where we focused our product development.
AgilityFeat: How did you determine that this would become the centerpiece of the application?
Tony: We are big believers in The Lean Startup and Customer Development. On day 1, we built a rough prototype that would send you an email every time you emailed someone new. When we started thinking about our primary customers, we thought about two groups: small business owners and other people using CRMs. We asked “when it comes to contact management, what is your biggest problem today?” We kept that question generic and open ended, and tried not to lead on the customers. We recorded the feedback and eventually we had a stack ranked list of problems. We then asked people to rank problems and following up with people was one of the most frequent problems identified, and so we started talking about that idea more with people. The key was that we listened to people tell us what their problems were rather than tell them what we thought they were. Eventually we realized that the original idea to send you an email daily asking about the people you are emailing was not the killer idea; getting automatic follow up reminders was.
AgilityFeat: What were the markets you went after?
Tony: Originally we thought we wanted small business owners and existing CRM users to use the product. However, the smart thing we did from the get-go (and this really helped with customer development) was that we asked people during sign-up to assign themselves to particular categories like small biz owners, real estate agents, financial consultants, and solo consultants. We saw a bunch of people signing up in particular categories. As a result, we were able to target those particular categories.
AgilityFeat: Are you still able to apply lean startup techniques now that you’re established?
Tony: We are big believers in the notion of constant customer development. You never know everything about your customers, but obviously at this point we do know who our customers are. However, it is dangerous to slip into the mindset that you don’t need to talk to your customers. So we still have calls with customers everyday to see how they like the product. We get email feedback everyday and we build our product based off that feedback. Our inbound sales process also gathers a lot of data about customers to see how often they sign in and their usage. Once a user has indicated their interest via usage, we’ll call them up and get more feedback as well as pitch our premium features.
AgilityFeat:What sort of metrics do you gather to measure the usefulness of your product?
Tony: The biggest metric we look at is “Are you following up with people we suggest?” If we can get someone to follow up with a contact we suggest in the first couple of days, then they generally start to engage with Contactually more and more and are much more likely to upgrade. We can also measure whether or not users are categorizing their contacts. The more you categorize contacts, the smarter the system becomes and the more value we can deliver to the customer. Other metrics include number of contacts that you have and what social media platforms you have linked. We also track how many other users you invited and did they accept.
AgilityFeat: What about logging calls?
Tony: One of the biggest things we learned in building Contactually is that people don’t want to do a ton of work to make the system work. So while you can manually log calls in Contactually, not many people use that function today. We learned that one of our big goals is to reduce the friction required to make the system work. To that end we are launching an iPhone app soon that will log the calls for you when you so use the application to call one of your contacts.
AgilityFeat: How often do you deploy new code?
Tony: We are deploying multiple times a day. The big updates will often go at night. We are definitely continuously deploying code, which is good and bad. At this point, we have 10,000’s of users, not 100,000’s of users yet, so we haven’t felt a big need to slow that process into a more structured release cycle. But there are growing pains — we’re not just 3 guys in garage now. We are now a team of 8 and we are trying to get more regimented in how we deploy code. We like the idea of having more sprint based releases for marketing purposes and setting expectations for users.
AgilityFeat: How did you handle the launch of Contactually? Was it a big beta release, small features over time, etc…
Tony: I can’t think of any software where you couldn’t have something available within a few days and Contactually was no different. We build version 1 over a weekend and shipped it to 100 or so users. That first deployment was very limited in functionality and definitely buggy, but it was better to get feedback early than wait too long. I cringe whenever I hear people talking about spending months of development without customer interaction.
AgilityFeat: What has been the biggest practical challenge with Lean Startup methodologies?
Tony: We were founded with The Lean Startup in mind, so we don’t really know anything else. I think there are just typical growing pains. Early on, we could spend hours talking to a user, but now as we grow, finding the time to talk to customers is getting harder and harder. So we still talk to customers a lot, but it is harder to manage that a year into the business while we still are trying to grow the business. And no one really talks about that. How do you keep talking to customers when you are focused on the other logistics of running your business?
Agility Feat: What’s the best piece of advice you wish you had been given?
Tony: Ideas are a dime a dozen, so it’s super important to initially and continually engage your users for feedback. That is definitely one thing I think we’ve done very well. And don’t forget, Contactually is a great way to keep in touch with those new customers!