The board of a successful startup decided that it needed a booster shot of growth vitamins. So it promoted its president to CEO after his new marketing strategy accelerated the startup's growth.
Now it is easier for the startup's board to imagine that it can go public.
This is the story of John Stephans, CEO of Boston-based "workplace collaboration technology provider," IdeaPaint. Stephans began with IdeaPaint in mid-2012 as a senior vice president and had been its president since early 2013 before the board promoted him to CEO in February 2015.
IdeaPaint creates "high-performance dry erase paint. Its products and accessories create dynamic, collaborative environments in corporations, educational institutions, and homes."
IdeaPaint instituted its new strategy in 2014 and the payoff was much faster growth. Stephans said, "the company's revenues were up 80% to 90%, we're growing much faster than the industry (whiteboards are a $1 billion industry growing at single digits) and we're profitable."
When Stephans became president, he started to do something about IdeaPaint's growth problem. "We were selling to channel partners who would reach our end customers--such as architects. The partners were good but we supplied one of many products that they sold. We lost touch with the end customer and they were not getting the right level of customer service," explained Stephans.
So IdeaPaint decided to go direct. According to Stephans, "In December 2013, we ended our business ties to our U.S.-based distribution partners so that we could control our own destiny, know our end-users, help them install our product, and provide them with services such as teaching them how to run effective brainstorming sessions or how to co-create new products."
IdeaPaint reorganized its sales force--tripling it in the last 18 months. Its sales force is organized around different customer groups such as companies doing new construction, architectural firms, paint distributors and small and medium-sized businesses.
And within many of these segments IdeaPaint has different kinds of sales people. For example, it assigns business development representatives to go after new customers and account executives to find more opportunities to sell to existing customers.
IdeaPaint's next challenge is to expand globally. "We are in 40 countries and we want to be in more countries. Outside the U.S. we may partner with local distributors who have local market knowledge and can deliver local market support. And we may supplement such distributors with our own sales team," said Stephans.
IdeaPaint's growth story offers three important lessons for startups:
- If you work with partners, make sure they have a strong incentive to present your product to customers in a compelling way.
- If partners do not deliver the level of support and service that you need, consider whether you can change their incentives to accomplish that.
- If the partners cannot improve, consider creating an in-house sales staff. If you do that, make sure you are confident that the higher revenues they generate by bringing in new customers and supporting existing customers with better new products and more effective service more than offset their costs.