This 130-Person Startup Raised $40 Million to Spur 100-Percent Growth
Relieve pain for many people with a better product at a lower price and keep innovating.
A former student who is running a startup that’s growing very rapidly asked my advice on March 30 on how to find and converse with potential investors. I warned her that sometimes investors have already provided capital to a rival and they might be seeking competitive intelligence.
I concluded by pointing out that it is almost always better not to bring in outside investors if you can finance growth through internally generated funds. The reason is that outside capital means giving up some control of your company’s destiny.
Lusha, a Tel Aviv-based startup bootstrapped its growth for nearly four years before raising a $40-million Series A round in February. The company provides up-to-date, accurate data that makes it more efficient for sales people to prospect for new customers.
Lusha is doubling its revenues and employee count and expects to keep doubling. That’s according to a March 4 interview with co-founder and CEO, Yoni Tserruya. The 130-employee company says its community of users tops 520,000 sales professionals and 167,000 sales organizations–including Google, Dropbox, Aircall, and Zendesk.
My conversation with Tserruya brings to mind three principles that I think can help your company achieve its goals.
Solve a problem that’s painful for many people.
Many startups fail because they solve a problem that’s not painful enough or afflicts too few people. Lusha does not make that mistake. It is trying to solve a big problem representing a $2.2-billion industry, estimated Tserruya.
Why are people willing to spend on this? According to VentureBeat, “HubSpot found that over 40 percent of salespeople say prospecting–making outbound calls or emails in hopes of creating opportunities–is the most challenging part of the sales process. The industry is dominated by lengthy cycles, organizational buy-in, and yearly contracts costing tens of thousands of dollars. Salesforce found that today’s professionals spend just 34 percent of their time selling and that 57 percent expect to miss their annual quotas as a result.”
2. Give customers a value proposition that beats incumbents’.
Lusha offers better-quality data at a much lower price–which is what I mean by a better customer value proposition. According to Tserruya, “The incumbent, [publicly-traded] Zoominfo [which has $440 million in annual recurring revenues and says it controls only 20 percent of the market] charges $20,000 per year for its content.”
Lusha offers more for less money. Its assistant–“in the form of Chrome, Firefox, and Edge extensions that live on users’ LinkedIn, Gmail, social media, and Salesforce accounts–spotlights contact details like emails, phone numbers, and company information, filling out the fields for prospects when they reach lead forms and allowing users to save contacts directly to a dashboard,” according to VentureBeat.
Lusha is like Waze–the Google-owned crowd-sourced traffic service–for sales people. It offers a free version that enables users to get five free contacts per month and charges a relatively modest monthly amount for organizations that need more contact information. Lusha’s aim is to build a large community of sales people who can provide accurate, timely contact information, explained Tserruya.
3. Invent new products so existing customers keep buying.
Most successful products will attract rivals who want to copy them. Therefore, if a company wants to keep growing, it must invent new products.
Lusha does this by listening to customers and building products that show up frequently in those requests and have high profit potential. As Tserruya said, “How do we decide what products to add? Most commonly, we get user requests. We look for quick wins with small infrastructure and prioritize based on return on investment.”
Lusha is on track for an IPO. “It will happen. There is a lot to do to get there in the next three years,” said Tserruya.
Follow these three principles and you can boost the odds that your startup will find its way to a public listing.