Editor's note: This article is part of Inc.'s 2015 Best Industries report.

When Brian Trautschold, one of four co-founders of Ambition, an 18-employee software startup based in Chattanooga, graduated from the University of Tennessee in 2009, he worked in "boiler room" sales situations for Hewlett-Packard and the logistics company US Xpress.

"It was a day-to-day grind," he recalls of the jobs. "What it taught me as a naive college kid coming out of school was that no one there was excited about the job itself. Everyone just wanted to pay off a mortgage or a car loan or a student loan."

Though he didn't know it at the time, Trautschold was working in the sales settings that have birthed a booming industry--one you could broadly call "inside sales," a subset of which you could call "gamification software." 

Inside sales refers to sales pursued via phone or email or other technology, as opposed to in-person. A decade ago, the idea of using data to make the sales process more efficient was still novel. Since then, companies have embraced software to do just that, thanks to an increasing awareness that smartly managed inside sales--and motivated sales people--can drastically decrease your cost of customer acquisition.

Now there are countless vendors in the inside sales space, including the $50 million powerhouse InsideSales.com. But gamification software, which is Ambition's niche, is still very much an opportunity for the taking. To wit, global research-firm Gartner believes that by this year, "more than 50 percent of organizations that manage innovation processes will gamify those processes." Here's how Ambition successfully carved out its own niche in the highly competitive industry.

The demand.

Ambition focuses specifically on gamifying the performance of sales teams. Its software provides customers with a dashboard full of real-time metrics, such as calls made or leads generated or emails opened. 

Through Ambition dashboards, employees (and of course, their managers) can track performance in relation to individual and team goals on their computers and mobile devices. The software syncs with a company's CRM technology, as well as phone systems and spreadsheets and any other tools an organization might use. The cost is between $20 and $30 per employee per month.

Using whatever metrics a client wants to track, the software creates an Ambition Score, which is an aggregate of all the metrics. A score of 100 means an employee or team has reached every benchmark for a given time period.  

All over the world, sales and marketing teams are hungry for products like this, observes Mark Lindwall, a senior analyst with Forrester Research who recently interviewed 25 companies in the category, which (in lieu of gamification) he calls "strategic motivations programs or applications."

"Think about a sales manager. For his team, where does the employees' extrinsic motivation come from?" he asks rhetorically. "The assumption is that the motivation for selling will come from money. But it's just not the case all the time," he says. "It's always some combination of recognition and competition too."

Even though the demand for gamification software shows few signs of slowing, there are downsides to launching a company in this category. For one thing, there's always the possibility that heavyweights in the software-as-a-service space--like the SAPs, IBMs, and Microsofts of the world--will start scooping up startups and integrating gamification features into their offerings. 

Certainly Work.com, the startup formerly known as Rypple, is a candidate to emerge as the category's 800-pound gorilla. It was acquired by Salesforce.com back in 2011 and boasts big-name customers like HubSpot. Then there are category leaders like LevelEleven, which boasts big-name clients including Comcast, Delta Airlines, the Detroit Pistons, and OpenTable. In addition, InsideSales.com itself, with its nine-digit sums of venture capital backing, looms as an overarching presence in the category with its own offering, PowerStandings.

Getting started.

From his experience at US Xpress, Trautschold recognized that freight and transport companies would be an ideal vertical to target with Ambition. Many of them were low-tech about tracking sales efforts, "not using Salesforce, not using anything new or sexy," notes Jared Houghton, another Ambition co-founder and its CSO.

Moreover, Trautschold knew how to reach decision makers at these organizations. And thanks to the talents of fellow co-founder and CTO Wes Kendall, the company could craft solutions that synced with whatever the customer's existing (low-tech) systems were.

The first transportation company that agreed to work with Ambition was Chattanooga, Tennessee-based Access America Transport (AAT). When Coyote Logistics, a titan in the field, merged with AAT in March 2014, Ambition's sales team was already talking to Coyote reps. Soon Ambition closed on Coyote, landing its first Fortune 2000 customer. 

A few months later, Ambition raised $2 million from SV Angel, Google Ventures, and others, building on momentum from its sales wins and a Y Combinator stint at the end of 2013. Of course, this wasn't all the team was building on. Though Ambition was formally founded in 2013, three of the co-founders--Houghton, Trautschold, and CEO Travis Truett--knew each other from college and had a history of working together, going back to business-plan competitions at the University of Tennessee. 

Not that Ambition's path has been entirely easy. The team has made its share of mistakes, including succumbing to the temptation to sell to all potential leads--rather than only to qualified leads.

"Every single startup can be better at qualifying customers, as opposed to selling to anyone who shows any interest in what you built," admits Truett. Specifically, the challenge is to make sure a customer's culture is ready to use a product like Ambition to motivate employees. There remain, to this day, many old-school sales leaders who prefer whiteboards and gongs. 

As such, there's at least one word that should never be part of the gamification software pitch: gamification. "Talk to 20 VPs of sales, and only a good half of them would have even heard of gamification," notes Bob Marsh, founder and CEO of Detroit-based LevelEleven, a leading company in the category (and a former columnist for Inc). Ambition, for its, part, doesn't use the word even on its own site, for the same reason. 

Ambition's 2014 revenues were under $1 million, but the aim in 2015 is "mid to high seven figures," Houghton says. Their approach is two-fold: Selling into new divisions of existing clients, and leveraging connections from Y Combinator and their investors for intros to decision makers at prospective customers.

They say the intros are the hardest part of the battle. "The demo normally does it from there," says Houghton.

And that's how the conversion from whiteboards to dashboards begins. 

One boiler room at a time. 

Published on: Feb 4, 2015