AppMesh gets $3M from CRM veterans to play David to Salesforce's Goliath

By Michael Carney , written on September 4, 2013

From The News Desk

It’s easy to look at the CRM market and conclude that Salesforce has won, so why bother competing. But two former employees of the SaaS giant, Leo Tenenblat and Tom Tobin, say nothing could be further from the truth. The pair founded AppMesh in early 2012 and launched a mobile-first CRM system that aims to put the needs of end users before those of enterprise managers and CIOs.

Today, the company received a major vote of confidence coming in the form of a $3 million Series A round led by InterWest Partners with participation from TDF Ventures and Opus Capital. Also participating in the round were members of CRM-pioneer Siebel Systems Founders’ Circle, David Schmaier, Steve Mankoff, and Peter Lim – as was InterWest’s Bruce Cleveland. The company has raised a total of $4 million to date.

“We view the crux of the issue as being that mobile offerings either focus on the very limited use cases or over-prioritize the needs of managers,” Tenenblat says. “There remains a big hole in the market.”

As I wrote in at the time of AppMesh’s April launch:
Traditional CRM systems – which are little more than empty spreadsheets with a custom interface – are the kind of thing that managers love, but sales reps hate. Managers gravitate toward the ability to turn to one centralized database and monitor rep activity, as well as forecast future performance. Reps, on the other hand, loath the need to manually input data following each customer interaction.
AppMesh aims to shed this broken model and instead offer sales reps a CRM and intelligent digital assistant hybrid that is designed from the ground up for on-the-go use.

One of the biggest differentiators from the mobile offerings of legacy providers is that AppMesh is fully-functional without Wi-Fi or cellular data. By storing a user’s full address book locally on his mobile device – using advanced compression techniques to minimize impact on storage space – the app offers sales reps full access to their data and even supports editing while offline. Any changes made while offline simply sync when the device regains network connection.

AppMesh’s integrates with the iOS calendar, mail, and phone apps to offer intelligent assistant functionality similar to that of Google Now, Tempo, Sunrise, AnyDo, EasilyDo, and other consumer-focused apps, but with more of a business-tilt. For example, the app can remind sales reps to stop in to visit a VIP customer when in the vicinity of their office or complete other, similar helpful functions.

With many users adopting AppMesh as their primary or only CRM system, the company is receiving plenty of product feedback, Tebenblat says.

“One big request has been supporting additional customization, such as the ability to add in your own sales pages,” the CEO says. “We’ve also seen lots of group-based feature requests like analytics across teams. There have been a few requests for a desktop client, but not as many as you’d expect.”

AppMesh has only five employees today, including its two co-founders, two additional engineers, and one designer. With the infusion of new capital, the plan is to grow the team significantly, with a focus on both product R&D and marketing.

The company hasn’t monetized its platform yet, opting instead to focus on user acquisition and gathering data on usage. The plans to introduce a freemium model in the future, according to Tenenblat.

While the CEO declined to reveal exact usage statistics, he pointed to the app’s rise into the Top 10 when searching for “CRM” or “contact management” in the iOS App Store (across both the iPhone and iPad) as an indication of traction.

“We’re ahead of many industry giants, which is crucial because a lot of discovery is happening organically in the App Store,” Tenenblat says. “We’re in line with or ahead of our expectations from launch.”

But, it’s one thing to make a product that thousands or millions of people love. It’s entirely another to make one that people are willing to pay for. The fact that the platform targets end users, rather than cash-flush enterprises, could potentially make it more difficult to find users willing to pay for the service. But this hasn’t been the case when talking to current users, according to AppMesh’s CEO.

“Customer sentiment is already, ‘I can’t believe this is free and I’d gladly pay for it,’” Tenenblat says.

In terms of frighteningly ambitious startup ideas, taking on Salesforce in the CRM category is right up there with challenging Google in search or reinventing email. It’s nearly a full on kamikaze mission. But it’s in these ubiquitous and mission-critical categories where the magnitude of rewards for success can justify the enormous risk.

AppMesh is barely out of the starting blocks in what promises to be a punishing race. The founders know this, as do their investors. But the company and its backers have the right pedigree to think that they can take on the entrenched powers in this category and stand a chance of making it out alive.

[Image via Tea Leaf Nation]