Jared McInelly, TMMBA Student (Class of 2012)
I’ve heard the term “customer centric” from almost every company and at every executive speech. So when we had the CFO of Apptio, Kurt Shintaffer, come and speak to or TMMBA class and tell us that they are “customer centric” I thought nothing of it. But as he told us the story of the founding of Apptio, it quickly became apparent that these guys really mean it. I’ve never seen a company as focused on their customers as these guys.
Kurt founded the company with his friend Sunny Gupta. They had both just come off a nice exit from another start-up and they looked at each other and said “what now?”
“We knew a bunch of people in IT, so we started setting up meetings with them and asking them about what kinds of problems they faced as IT execs.”
From those discussions, a kind of theme started to form; everyone had issues with figuring out the ROI of their IT investments. When they would have to justify budgets and costs to other groups, they had nothing solid to justify the need for their budgets. As they met with more and more IT pros, they would ask questions and then tell them what they were planning to build. These experienced, high level people could really tell them if they were on the right track. Eventually they were ready to build a truly unique product that they knew at least 40 high level people needed.
Although Kurt and Sunny didn’t have IT backgrounds, their discussions led them directly to a problem that they decided they could solve. They came up with a business plan which they then took to the Venture Capitalists. Their pitch had enormous weight behind it because they could point to a big chart and say, “this Fortune 500 company has this problem. We know, we’ve talked to their CTO.”
Their previous successes at running a startup and providing a profitable exit for the VC’s made it easier for them to get funding. They started Apptio with a couple of people, an idea, and a whole bunch of VC money.
These customer centric beginnings have continued in their company culture. All of the executives meet regularly with customers. They go on sales visits and follow up on the phone a week or so after to make sure the customer got what they needed. Kurt also told us about a tough situation where they “over sold” the product to a big customer. As a management team, they decided that it was more important to win this customer to their platform than to make money on the deal. So they have embarked on an extensive project to design and build software for this customer. And they are losing money doing it.
They continue to look to their customers for product validation. As they build new tools or add functionality they can then go to other customers and say “we added such and such widget because Boeing really needed it, maybe you do too.”
According to Mark, “there is nothing better than peer selling.”
I found this customer centric style very interesting. There are benefits here that are hard to measure in dollar amounts. Apptio is providing products but really they are forming deep relationships with their customers. I worry that at some point the company will get too big and the executives too busy to keep meeting with customers. I think this is when product strategy seems to move away from what customers really want back to executive intuition and guessing. So far though, these guys seem to have really hit on something that solves a serious problem in the IT world. And they are doing it in an innovative-customer centric way.