<\/em>Sometimes what sounds like bad news when talking to customers might be your finest hour. As we started E.piphany, we\u00a0got out of the building\u00a0to test our hypotheses by talking to potential customers in and around Silicon Valley. On one of our most memorable visits, we met with\u00a0Joe DiNucci<\/a>, the VP of Marketing at Silicon Graphics who was generous enough to brainstorm the types of problems corporate marketers had. At the time Silicon Graphics \u2013 with 2+ billion dollars in sales of 3d workstations \u2013 was one of the hottest hardware companies in Silicon Valley.<\/p>\n The conversation seemed to click as he checked off every one of the issues we thought might define our product:\u00a0 no closed-loop between expensive marketing activities and results, lack of department and corporate wide visibility to real-time sales and marketing data, browser versus client-server application, etc. We came up with a rough estimate of how much Silicon Graphics could save if they had a way to solve these problems, and together did a back of the napkin ROI (Return on Investment<\/a>) analysis.<\/p>\n Next we started enumerating what form a solution might take and what kind of features a product should have. Amazingly we came up with a feature list that was pretty close to the one we were building.\u00a0 I was feeling like a genius so I went to the next step and I asked Joe: \u201cIt sounds like Silicon Graphics might be interested in working with us to be an early customer?\u201d<\/p>\n The answer was not what I expected.: \u201cNo not at all.\u201d<\/p>\n Say, what?\u00a0 Why?\u00a0 \u201cWe also decided that this was an important problem to solve, and since we couldn\u2019t find any vendor selling it, my director of marketing wrote the software to do it. We\u2019ve built and deployed the product throughout Silicon Graphics. It\u2019s called Mine Your Own Business.\u201d<\/p>\n Talk about feeling your bubble deflate fast. I went from feeling the high of believing that I might have an early customer in an innovative company to the low in realizing that they\u2019d never buy anything from us. And worse, what we had envisioned as a product so unique that no one had thought of it, someone had already built. We wouldn\u2019t be the first. We were doomed.<\/p>\n I left Silicon Graphics feelings discouraged. But on the drive back to E.piphany a few things hit me.<\/p>\n The more I thought about it, the better I felt. This was a validation of our ideas not a negation.<\/p>\n The next day I called the VP of Marketing back and asked him if I could get a demo of their software. Soon I was in the office of\u00a0John McCaskey, the director of Silicon Graphics Science Industry Marketing who wrote Mine Your Own Business. As he went through the demo, I realized I was looking at working code for a big part of what we had spec\u2019d as our first release.<\/p>\n I told John he ought to join our startup. \u201cHow many of you are there?\u201d he asked. \u201cThree, I said. \u201cIncluding me. Four if we count you.\u201d John rolled his eyes and tried to change the subject. I said, \u201cWe\u2019re three now, but if we do this right we could be selling $100 million dollars a year of your software. Wouldn\u2019t you rather be doing that than working at a big company?\u201d That got his attention. \u201cWell who\u2019s funding you?\u201d My turn to pause, \u201cWell no one yet, but every VC thinks it\u2019s a great idea.\u201d<\/p>\n Watching someone rolling their eyes twice is not a good sign you\u2019re going to close the deal, so I grabbed the phone and called\u00a0Bill Davidow<\/a>, a legendary VC whose office I had just left. \u201cBill, do me a favor,\u201d I asked, \u201cCan you tell this guy how big the enterprise software market can get?\u201d\u00a0 I don\u2019t know who was more surprised, Bill Davidow in getting a call from me (since he had just told me he\u00a0wasn\u2019t<\/em> going to invest in our new company \u2013 his firm having funding\u00a0Rocket Science<\/a>, the previous company I had just cratered) or John having watched me get the VC on the phone on the first ring (pure and unadulterated luck.)<\/p>\n Bill was kind enough to spend a couple of minutes educating John about the opportunities for a startup like ours, and enough of a gentleman not to mention he had passed on our deal.<\/p>\n Thirty days later John became the fourth co-founder of E.piphany.<\/p>\n Sixty days later we convinced Silicon Graphics to license us all of John\u2019s code for a dollar. (During the craziness of the Internet bubble E.piphany\u2019s market cap would be greater than Silicon Graphics.)<\/p>\n John\u2019s boss, Joe DiNucci, the VP of Marketing of Silicon Graphics became E.piphany\u2019s VP of Sales.<\/p>\n Finding that a potential customer wrote their own software (or hardware) to solve a problem is good news, not bad. There’s no stronger sign that you’ve identified a high-value problem.<\/p>\n Photo by <\/em>R\u00fcdis Fotos<\/em><\/a> via Flickr<\/em><\/p>\n![\"getworse\"](\"http:\/\/www.stoth.com\/wp-content\/plugins\/wp-o-matic\/cache\/a00fe_getworse-199x300.jpg\")
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