#081 You Can’t Just Build for Everyone--so I Built It for Myself!

Show Notes

Experience is often a key ingredient for startup founders. Jimmy Kim, the CEO and co-founder of Sendlane, has plenty of experience with Sendlane being his third startup. With Sendlane, Jimmy is hoping to combine several MarTech tools into a single platform, dominating the space while creating a new category. Given his experience, Jimmy and Sendlane are well on their way to doing just that.

Jimmy joined startup coach Roland Siebelink on this week’s episode of the Midstage Startup Momentum Podcast to share how far Sendlane is in its journey. He also shared many key insights from the wealth of knowledge he’s gained as a founder. 

• Why it took Jimmy three attempts to build a successful sales team.

• Why Sendlane decided to use outbound sales sooner than most startups.

• Why a startup’s pricing shouldn’t be the driving force in winning the market.

• Why offering the cheapest pricing can be a bad thing.

• Why fundraising is no different from a sales cycle.

• How many term sheets startups should aim to get while fundraising.

Transcript

Roland Siebelink: Hello and welcome to the Midstage Momentum Podcast. My name is Roland Siebelink and I am a facilitator and coach and ally for many of the fastest-growing startups in the world. We have today with us yet another amazing co-founder, and it's Jimmy Kim. He is the CEO and co-founder of Sendlane, dialing in all the way from sunny San Diego in Southern California. Hello, Jimmy. Welcome to the Podcast. 

Jimmy Kim: Hey! Thanks, Roland. Thanks for having me here. 

Roland Siebelink: You told me in the pre-version that you do many podcasts, public speaking opportunities because you never know what might happen. Is that also how you started the company? 

Jimmy Kim: Not quite. We'll just jump right into it, but the company started out of need and necessity. It was not started because I went to a fancy school and I had this great idea, that I had a business and raised money and all that stuff. The story of Sendlane is one of those unique ones. Sendlane's actually my third business that I've built. Sendlane came out of my first two businesses. I built a tool that I needed for my business because I couldn't find the ones that I wanted. And for some reason in 2013, I thought it'd be really easy to build software, so I would just go and do this myself instead of paying these people astronomical dollars and cents that they were asking me for. 

Roland Siebelink: Let's delve into what the product is because we do want people to understand that, and then we'll get back to how successful that is, scratching your own itch as a startup model. What does Sendlane do? Who does it serve? And what change is it making in the world? 

Jimmy Kim: Sendlane is designed - today, it's an email and SMS marketing automation platform for e-commerce merchants. That means that we service middle market or large SMBs - they're doing anywhere from about $1 million to a $100 million. And they're looking for a tool that can unify their stack and allow them to communicate with their customers, recover their abandoned carts, and try to get those customers to go from being a lead to a customer to repeat customers. That's what we do today. We're a big revenue generator for the company. Often, when people are using our tool properly, they're seeing 30, 40% of their revenue generated through our channels of email and SMS. 

I had a retail store that became e-commerce that I had back in 2013, and I also was running another business; it was a content creator/micro-services software products. We drove a majority of our revenue through email, through our customer list, through acquisition of leads, and stuff like that. We needed a tool that would work for us so that we didn't have to be bound by the rules of other platforms. And we needed the flexibility, and that's how it started for us.

Roland Siebelink: Excellent. How far has the product come in the meanwhile? What level of maturity would you say it's at? What does it have? What does it not yet have that you would want to be building soon? 

Jimmy Kim: Over the years, we built it, rebuilt it, rebuilt it, and pivoted. Did all the things we did. This is 2013 to now, 10 years in the making, a short 10 years later. The product is very good - full feature parody to any of my competitors. The big thing about us is we're disruptive because we're not actually taking down one company; we're taking down two at once. We're displacing two companies, actually about three here shortly - in about 30 days from now, we'll be displacing three. And the big key is all three are billion-dollar companies. 

We're taking because we've done what they've done great and proven, and we've brought them together to do the same thing together. But then it brought extra tech into the place, so we actually do more in some places because we've unified it and we don't have a data disparity or an integration between the platforms. They're actually holistically one platform. For us, our story is all about disruption, consolidation, and the future. When I started building this, my pain point was email. But my pain point evolved. In that sense, when I started building this, it wasn't just about email; it was about all the apps that you use. 

A typical Shopify or big commerce merchant will use somewhere around nine to 10 tools for just their MarTech. And my goal and my vision in the next couple years as we're continuing to build is to eliminate all that into one. And that's really the big vision that I have that I'm aiming towards, I'm building for, and all that stuff. 

Roland Siebelink: What's the key value proposition why you're winning millions of dollars of revenue against these players? What are your customers saying you do better? 

Jimmy Kim: The platform's just newer/better. Ease of use is obviously there. We allow you to execute on more modern playbooks because of the unification story of the product. Then of course, we save time and money - the biggest thing that most people care about. And then last, there's data attribution clarity. By unifying the channels, it's giving more people clarity around their data and being able to truly understand and measure lift on what they're working on. Those are just a handful. There's customer support. There's a million things and reasons why we win today. 

Roland Siebelink: You already mentioned e-commerce vendors as core customers, how did you get to that specific go-to market, that specific ICP and what has it brought you to? How have you learned to reach them? How have you learned to build exactly what they need and so forth? 

Jimmy Kim: There's a lot of things there. I'll give you a little story. Back in 2018 - when I went all in on Sendlane and I exited my other two companies, I went to start building on this platform, and the first thing I did was I said, "Who do I need to build for because ultimately, I can't just build for everyone." And I learned that pretty early on, that you have to start verticalizing. I did the number one most logical thing - I built for myself. That's who I was. My ICP is who I was essentially. I was a $10 million e-commerce brand. I knew what I needed and what I did, and I was the marketer behind the brand. 

When you're the marketer and you've been in that space, you quickly recognize what you're really good at. We started to understand that. That came into the next part of it, and really it came into positioning. The biggest thing about anything that you do when it comes to the sales team is being able to share that value prop quickly, often, and really resonate and find that pain point of the customer. The sales team has been one of those weird things - and I'll tell you the story about it because I think it's super interesting. I failed at building that sales team three times in my career so far, and by the third time, we figured it out. Third time's the charm.

The first time I tried building it, we weren't ready. I tried to build a sales team when I wasn't ready. Meaning, founder-led sales was working. But the product was not in the market. The product and the positioning, nothing was there. Nothing was special about our platform. In 2019, I tried for a couple months, but it didn't work. I shut it down. Got back to founder-led, built revenue. We're focused on revenue. 

In 2020, we built it, pandemic hit, we started scaling, things went well. Late in 2020, I tried to hire another sales leader to hand off this thing, and it failed again. That time it failed because I actually think it was a different problem; we weren't able to get in front of the customers because we couldn't figure out our engine. We couldn't figure out our engine on how to get in front of those customers. Our marketing wasn't working. It was a very niche group of people that we had to find that niche. But they're harder to find because we were very specific.

We shut it down again. We backed it off again. And now on the third try, we started to figure it out. And the thing about what we had to figure out was: one, we had to figure out how to get the right data in. Find the right data, get the right validation of data, and understand. For us, it's very easy. We use technology, and technology and store sizing are pretty straightforward. There's a lot of tools that help us find that. We figured that out. 

Then the second thing that comes into motion is your positioning and your talk tracks. Those took a while to figure out, because how you go against a very legacy, already-captured market is to come with something very shocking or different. It took us a little bit to figure that out. And then third, it's the right people and processes behind all these. We created this outbound team engine, hired some BDRs, started to prove the motion, started to try to figure out our marketing, try to figure out our positioning. 

Over the last year now, we figured out our sales motion or go-to market, our AEs are successfully hitting their quotas the way they're supposed to be, and it's been a cool journey but with a lot of failures behind it. But that was probably the toughest thing that I've done in this business is to really get that motion working. 

Roland Siebelink: I see a lot of startups follow the inbound path often at a very low rate because they're figuring out product-led, they're figuring out marketing, lead-gen, and then their sales team is usually quite junior, basically order takers. You have gone in the more aggressive route of outbound earlier on than most other startups. Why did you make that choice and how often would you recommend that?

Jimmy Kim: Why did we make this choice? Well, we made the choice because we didn't believe there was any other path to create the revenue fast enough. We made the choice that this is the right way to do it because yes, we all have a dream that we all want to chase, and it's a beautiful dream on the other end. The reality is, especially in a very hyper-competitive space - I'm in the kind of space that when you go out to raise money, the VCs tell you, "Hey, that space is just saturated. It's too crowded, there's too much going on." 

Roland Siebelink: Our previous fund invested in that 10 years ago - something like that, right?

Jimmy Kim: Yeah. Being in that mindset is extremely hard. What I really recognized was, if you're gonna break through the noise on this, you have to get to raw human power. Raw human dialing. Raw human outreach. And they have got to be treated in a one-on-one element. Especially in the early days when you don't need as much revenue to move the needle, it makes it a lot easier to justify. 

Roland Siebelink: Two questions about that. How much was this outbound motion linked to you being the chief salesperson in the beginning? And two, what do you think is the right time for a startup to start moving from founder-led to an actual professional sales team?

Jimmy Kim: I started the motion, proved some of the early - I go all the way back to 2020 and I remember myself and my now VP of sales, but back then he was just an account executive. We stood back to back, and we dialed - 100 dials a day. And if I did 100 dials, I get one demo for every 30 dials roughly. We knew that KPI, so in the mornings, we dialed 100, in the afternoons, we demoed and we sold. And then we tried to scale it and I brought in a sales leader to do it, and we failed at it. I realized why. It was because we were unique in the things that we were doing. It wasn't exactly there, and the scripts weren't really nailed down. 

We had to go back and figure that out and create repeatability. To answer your second question, when is the right time? The right time is when you can take two additional people outside of your initial UN-whatever-person and scale them to success. And then you can go try to scale it out further and bring in a sales leader. But until you can prove success within around three to four people, in my opinion, you shouldn't scale. 

Roland Siebelink: Does going with outbound early then also help in figuring out your positioning, figuring out your key messages, the way that you market it later when you start setting up your marketing? 

Jimmy Kim: Yeah. What's funny is that the only way to figure out your messaging is to talk to a lot of people. It's such a simple statement. I didn't recognize how important that was until I realized the magic. I'll tell you my personal unlock, and I think it's really different than some. My personal unlock is standing at trade shows and just talking to people. Talking to 100 people a day and trying to tell them what you do at Sendlane or what the company is, and you explain to them what you're doing, how you're doing it, and you field those questions right there. And you know what's funny is over the day, your pitch gets better and better. 

Roland Siebelink: How important is it to be very clear on your ICP before you even start your outbound motion?

Jimmy Kim: That also was probably a big learning lesson that I didn't think about too well. I knew who I wanted to serve, but I tried to be really broad. Then I started to shrink that thing down and shrink that thing down. And I would say when things started working better was when we shrunk it down because of messaging. That was the biggest thing. 

When I go back - I'll tell you the story, Roland, it's actually interesting. A year ago - my ACVs from a year ago to an ACV today are 10X. Why have we 10X? Because we went up market because we realized we were too low in the market. We're trying to talk to the wrong people. We couldn't sell, they cost more, they're hard to service, and we kept moving up market. 

Roland Siebelink: As you move up market, many founders and salespeople find it challenging to also follow the price curve, to dare to offer a higher price. What's been your tip and success for that? 

Jimmy Kim: When we first priced ourselves, we priced ourselves with the top guys. Then they started raising their prices so fast, aggressively that we couldn't keep up. I don't think price matters as much because often the way that I look at it is price isn't that significant. It's a very small factor of what they want from the tool and what they would need. And I don't think it's the driver. No one makes a decision because of price. It's a part of the decision, but it's not the final decision. The final decision is, does it do what I need for my business and does it execute and give me the things that I need? 

Roland Siebelink: Have you found, on the other hand, that sometimes pricing too low makes you lose the deal? 

Jimmy Kim: People get suspicious. Put it that way. It's too cheap. And I get it. I always laugh; our cheapest plan when we first launched was $9 a month. Now our cheapest plan's $100 a month. You're 100% right. I think pricing is one of those fun games because in your mind, in most people's minds, they think if I price it cheaper, more people are going to be willing to try it out. And the truth is no, you're just gonna bring in a lower-value customer, ultimately. You should price yourself where you want to be and where you believe you should be. Price should never - and I tell my founder friends this - price should not be the driver of why you're winning or not. The value prop of the product, your ability to solve their problems, and your ability to do the things you need for their business are the most important things, in my opinion. Price is just the cherry on top. 

Roland Siebelink: Okay. Jimmy, we've covered product. We've covered go-to-market. Now some founders say the other thing you're building at the same time is also a business model; how it all fits together and how you make your profit over time. What are your thoughts on that? 

Jimmy Kim: We're a 100% SaaS business. We don't charge for services, nothing else, 100% SaaS. It's all recurring revenue income. I was very focused on that from the beginning, and I never wanted to sway from that. And though it was extremely hard trying to do that in the early days, I think it's well worth it as you get bigger and bigger as a company, because you know what you're going to get, you know your turn rate, you know all the things that happen, so predictability becomes easier. 

I think the most important thing that comes into a scaling business is predictability. Everything about repeatability and predictability. Everything else doesn't matter, to be honest. What those pricing decisions early on are gonna help you is gonna stand that business up. And not only that, even being investible as a business, you've gotta have the mantra of the right pricing model that's not too confusing that an outside person who might want to invest in the company is confused by it. Stay standard. Don't try to reinvent the wheel. There's a reason why if everyone knows subscription pricing and SaaS pricing, you try to create something completely different, it could work. But a lot of times it doesn't because it just confuses the buyer even further.

Roland Siebelink: Part of the SaaS business model in many cases is also to seek outside investment, to live off that cash. How have you looked at that and how have you defined your investor strategy over the years? 

Jimmy Kim: When people ask me how to do fundraising, I tell them one thing - you're not going to be shocked by what I'm gonna tell you - it's a sales cycle. My first one - I never raised money in my life - my seed round. Never raised money - no idea; I'm a bootstrap founder, my first two businesses. I never raised money, but I knew the concepts and understandings of it. What I did was very simple: congregate a list. I got CrunchBase Pro and PitchBook Pro and just scraped a huge list. Then I wrote down what I thought would be - what I think you're supposed to do, write down a bunch of templates, made this pitch deck that was horrible looking but I thought it was great, and I just asked for meetings. 

I asked a lot of people for meetings, about 3,000 people I must have emailed. And from there, I got about 150 meetings, believe it or not. I'd gone through 150 meetings. I'm going to give you the exact numbers because I have a fun little infographic that I always laugh about. Let me give you these exact numbers. 

Roland Siebelink: Let me guess, you wrote your own software to track it? 

Jimmy Kim: Yes, 2,728 venture capitalist firms that I reached out to. Of those, that led to 135 first meetings. And 61 of them were in person. I know we all live in a remote world now. But I walked down Sandhill Road, Menlo Park, the Bay. I did all of that. I had 61 in-person, 74 virtuals, and they all led to 95 second calls, 29 third calls, nine fourth calls, and three fifth calls. And that all led to three term sheets. 

Roland Siebelink: I can see that stream chart already. You should post it on social media. That should be really cool. 

Jimmy Kim: Yeah. It's cool that I did it. But here was the thing, I did that, I got term sheets - two big lessons I got from that first learning. One, if the investor's interested and they believe in you, they're gonna write your term sheet within 24 to 48 hours. That was the first learning. I didn't know that. Two, don't waste your time with people who ask for a bunch of stuff. I learned that too. I get it. But that means they're not sold. They weren't sold, and if they're not sold in that first pitch, they're probably not gonna be sold on you this time.

Roland Siebelink: One last question about the fundraising. Is one term sheet enough? 

Jimmy Kim: No. No. 

Roland Siebelink: What's the minimum you need to get before you say yes? 

Jimmy Kim: I think you should at least get three. I think three is a good goal to get. I know people get really excited when they get one and they want to sign it and they're so tired at that time that they just want to go forward. But when you get one, leverage it. I can't tell how many founders - I yell at them. I'm like, "You got one term sheet. Tell everyone you've been talking to that you got your first term sheet and you're gonna close the round soon." Watch the term sheets roll in. 

Roland Siebelink: It's all the leverage you need, right?

Jimmy Kim: All you need is one. It's a world of FOMO, and no one wants to miss out. By seeing one person do it, it will help. If it's a really big person, then it's even stronger. Then you have leverage. But until then, don't take the first thing that comes across. Make sure that you're really exploring the market and know that if one says yes, then that means other people will say yes. I've never met a founder who hasn't continued to pound the ground that's never gotten a yes. You'll get a yes if you hit enough people, no matter what. 

Roland Siebelink: That actually led me to my actual last question about fundraising. Cause the majority of people, unfortunately, will experience getting no term sheets. What do you do? 

Jimmy Kim: You gotta keep pounding. That means you haven't asked enough people. I promise you haven't asked enough people. There is someone who will say yes. 

Roland Siebelink: So you just keep going. You look at the kind of numbers that you mentioned before, right? 

Jimmy Kim: I talked to 160 people, 60 of them in person. That's 61 hours of my life, just talking to them and pitching the same thing. 

Roland Siebelink: I had the same experience when I did my own fundraise. In the hundreds of meetings. And that's normal and people don't realize it. 

Jimmy Kim: There's a reason why only 2% of startups are backed. They don't get backed because everybody who goes and asks gets a check. These companies are only investing five to seven companies a year. They meet thousands. My capital group is Five Elms Capital that backs me on my Series A and B. They put up a chart at our last thing. They met 12,000 founders last year and invested in six. 

Roland Siebelink: Yes, exactly. I always hear one in a thousand, but that's even lower. 

Jimmy Kim: Twelve thousand to six. What are they doing? A numbers game. You have to do the same thing. 

Roland Siebelink: Would you say ultimately what matters most is persistence? 

Jimmy Kim: Absolutely. That's it. As a founder, the number one thing is you just can never give up. If you believe, you believe, you gotta keep pushing. There's nothing you can do otherwise; you have to. If this is your baby and you wanna see it succeed and you need money, go find it somewhere. 

Roland Siebelink: Those are great closing words, for at least the investment part. But I do wanna give you an opportunity to still talk about what's the bigger vision behind Sendlane. How big is this going to be? Where do you want to be with it in 10 years? 

Jimmy Kim: My vision's very simple. In the future - in the next couple years - if you have a Shopify or big commerce store, I want to be the single MarTech app that you install. I wanna eliminate the nine apps that you use. Right now it is email and SMS. We have reviews, loyalty, attribution, pop ups, customer service. I wanna unify that stack. I want to be the single point that allows you to do your business and run your business with one tool. 

My future is all about the consolidation play, focused on the 80%. That's what I tell people. I'm not focused on every whistle and bell. I'm focused on the 80% of things that most people use, not edge cases, really focus on mainstream stuff. And I just want to dominate the world in that. I want to create a new category because what we're doing right now, we're creating new categories right now. I'm disrupting one by one by one by each category and hopefully I'm sitting there as my only category because I'm the only one in the market that does it. 

Roland Siebelink: Okay. How is your team looking at the moment? Roughly how many people are you in total? How many of those are product/engineering versus marketing and sales? 

Jimmy Kim: We're about 70 people. Of 70 people, 16 of them are in engineering, R&D, about 18 in sales - almost 20 in the sales team. Then we have a marketing and CS team that fills the rest of the gap with some operations. We're a remote company, mostly US based, but we do have some people overseas as well too.

Roland Siebelink: Okay. And what's the perfect Sendlane employee for you? How do you recognize them? 

Jimmy Kim: We look for autonomous, scrappy problem solvers. They're not gonna ask me how to solve their problem. They're gonna come to me with a solution that they've solved by going to Google and figuring it out. Other things: we have a very clear culture around how we treat each other. We have a no A-hole rule I call it, because we can't be mean to each other. There's no need. And I fire people all the time for just being jerks. We don't do jerks in this company. 

Roland Siebelink: How hard is that sometimes, Jimmy, when somebody's making good results and driving a lot of things for the company, and yet they're a jerk, what do you do?

Jimmy Kim: Gotta let them go. Why? They're so toxic. They're causing other problems. What people don't understand is that if you have a jerk, it may not seem like that on the outside because this person's performing that anything's wrong, but people around him that are being affected by this person are usually the things that you don't recognize. If that makes sense. It spills through: toxicity. It's a hard thing to do. But it's the thing you have to do. 

Roland Siebelink: What are Jimmy Kim's life pro tips on recognizing a jerk early enough? 

Jimmy Kim: Very easy. How do they treat their peers? It's very simple. Very simple. Secondly, do they have a friend? Often, when they're a jerk, they don't have friends within the company. Everybody finds a friend in a company. They don't find a friend and they seem just a little off and alone all the time; it's not because people are mean. They just don't wanna be around that person. They stick out like a sore thumb. And I always tell founders, if you know they're a jerk, they're a jerk. Don't question it. Because in the gut of a founder, you know when something's wrong often. Just trust it. 

Roland Siebelink: You may not be able to define it, but you know it regardless. 

Jimmy Kim: You know when they're not a great fit for the company. And the faster you can get rid of those non-great fits for the company, the better you are. I can tell you that, especially from growing the first 100 people in the company, whatever you do in these first 100 is gonna set your foundation for how your company's gonna move forward. Because you can't carry that culture forever within the top. You've got to carry it throughout the team. And in order to carry it throughout the team, you need to build and find the right people to help you carry that through because they will go out and hire the right people behind them. 

Roland Siebelink: Okay, excellent. This has been a fascinating, wonderful interview, Jimmy. I did wanna ask for all the listeners who've made it to the end - and I hope it's many because this was indeed very interesting - how can they help Sendlane? Where should they go? What should they download in order to figure out more about the company?

Jimmy Kim: If you have heard anything I've talked about and said, "Yeah, we do that or we work on that or do anything," there's a lot of things you do. But most of the time, I like to point people at social media because I think that's where you'll really get to learn about me. I'm very active on LinkedIn and I'm very active on Twitter. My LinkedIn, look me up, Jimmy Kim. My Twitter is @YoJimmyKim. Very active. Come find me. I chat. I'm open in the DMs. Talk to me. We'll figure it out. And figure out if there's anything I can help you with. I'm always happy to help people as well too. Regardless of being in my space, or if you're on a founder journey, ask me a question. 

That's how I give back because I believe that anything I can do - my biggest thing about giving back is very simple. Anytime I see an employee leave and they go and do something better, that's the proudest moment for me. It's what they do at their next job, not what they do at my company. It's important, but to me, I am the stepping stone for your next career. Everyone's gonna have careers; I'm gonna have careers. You might as well do the best for them so you can help them move up in their ladder. And that is what makes you proud. 

It's the same thing with founders. I appreciate working with other founders to give them advice and I hope they're way bigger than me one day so they can acquire me or they can give money or something. To me, it's been cool because I see different people that do eventually figure it out. They start taking off. And then what's cool, when they become big, I can still tap on their shoulder and they'll always respond to me. And I think it works both ways. I've seen it before and I'm always humbled when I see them take off.

Roland Siebelink: Founders, please do take advantage of this, whether it's Jimmy or me or many of the other people with some experience in life - whether relevant or not - that you can benefit from. Please do so because we do love helping startup founders and teams to actually make the best of this and the next step in their career. 

Excellent closing words, Jimmy. Really appreciate you being on our podcast today. Jimmy Kim, the CEO and co-founder of Sendlane. And for the audience, of course, next week we'll have a brand new episode for you guys.21