Playing the long game: why one company chose product over growth

By Carmel DeAmicis , written on September 16, 2013

From The News Desk

After 19 months of waiting, Faizan Buzdar finally got approved for his green card. Along the way, he attracted the attention of the White House, who featured Faizan in a video pushing for immigration reform. “Faizan,” Barack Obama tweeted, “is a perfect example of why we need #ImmigrationReform.”

Screen Shot 2013-09-16 at 12.16.30 AM

Pakistani-born Buzdar is the founder of Yammer-competitor Convo. He celebrated his new green card by raising a $5 million Series A from Morgenthaler Ventures, announced today. Not a bad way to consecrate the moment.

It makes sense that Convo is the type of startup the US government wants to put down roots in Silicon Valley. It’s a well designed platform for a company's employees to communicate and work together. It’s like the office Yammer, except you can search the newsfeed for key words, invite a handful of people into private chat, quickly share articles with an Evernote-esque web clipper, annotate documents with fellow colleagues, and work together on the same presentation. So basically it’s like if Yammer had super powers.

Convo serves 6,000 companies at this point, and has converted the likes of TechCrunch and The Next Web into using its platform. It appears to be headed down the road of success, albeit with a lot of competitors hustling along beside and ahead of it.

With so many companies to beat in the enterprise collaboration space, Convo has taken a different path then most. Founder Buzdar did not care about customer acquisition or growth. In fact, he downright ignored it for the first two years, to the point where his marketing and sales team numbered zero. “If you focus on growing users first, you end up with products focused on keeping VCs happy,” Buzdar says.

Instead, Convo targeted product development long before growth. It judged success rates by customer engagement: how many posts a company had, how many comments each user made, how often people logged into their accounts.

Here’s why. Predecessors like Yammer and Clarizen had already paved the way for Convo. They spent tons of marketing dollars educating consumers about what an enterprise collaboration platform does and why it’s helpful. As the defining companies in the space, they also took the lead on customer acquisition.

In order for Convo to disrupt these big guys, it can’t win by marketing alone. It needs to kick serious ass, and offer a better product than anyone else out there. Up-and-comers take note -- no matter your industry, if others already exist that do what you do, this rule applies to you.

”The first few players spent a lot of time and money creating awareness of the category, so that's to our advantage,” Buzdar says. “We don't spend any money on marketing, but happy customers tweet and blog.” Convo tried to make its early customers happy by focusing attentively on features they requested, and honing the product till it ran smoothly. For the first year, it did not actively work to gain new customers -- instead, it relied on the fact that happy customers would spread the word.

Resources are finite and precious in the early days of a pre-VC company. You have to decide what matters more: growing your customer base to a substantial and impressive number, or perfecting your product and hoping the customer base grows itself. There is no perfect answer, but for Convo the best hope it had to unseat competitors was to be better. Not too difficult a goal for it to reach, given that Yammer is the consummate underachiever, HipChat doesn’t offer enough features, and collaboration sites like Clarizen lack the social newsfeed element [Correction: as of August 26th, 2013 Clarizen has introduced a newsfeed].

Despite doing it all, Convo will have to make a pretty big splash in order to make its mark on the enterprise collaboration market. It's an increasingly fragmented field, and the list of companies offering such services goes on: Asana, Huddle, Jive, Kato, Chatter, Yammer, HipChat. Every week I get companies pitching me as “the next Yammer.” Even GitHub is getting into the space, having announced last week at TechCrunch Disrupt that it’s moving beyond developer communities. GitHub wants to become a space for people in all professions to collaborate with one another on projects.

Buzdar knows that Convo has a long road ahead of it, and he plans to spend a good chunk of the Series A funding by finally doing some marketing.