Over the last two months our development team has been migrating QGenda’s automated physician on-call scheduling application from our own fully owned geographically separated cabinets of servers, switches, firewalls, and load-balancers to Amazon Web Services (AWS) Elastic Compute Cloud (EC2). We set out with a plan to replicate our current production environment using AWS, and along the way have experienced certain glitches worth mentioning for others planning to utilize AWS EC2.
Here are some main tips and gotchas learned in our AWS migration:
- The Elastic Load Balancer (ELB) has a default timeout of 60 seconds and drops any long running HTTP(s) requests exceeding this limit (such as generating a downloadable data intensive report on the fly). Solution: Submit an AWS support ticket asking them to extend the timeout to their maximum of 17 minutes.
- If your application requires SSL, it’s usually always best (performance wise) to decrypt the SSL on the server instead of offloading the decryption to the load balancer. This is especially important when using AWS because decrypting on the ELB would mean your data would travel in plain text within Amazon’s network from the ELB to your server(s) which other AWS customers could potentially intercept.
- AWS Elastic IPs (EIP) provide a static public facing IP address that can be assigned to any EC2 instance, however the EIP does not have a static internal private IP. If he EC2 associated with the EIP is rebooted, then the internal private IP changes, which can cause troubles when mirroring a database. Solution: Write a script to monitor the internal private IP or use Amazon’s VPC.
- The AWS Developer support for $49/month is worth every penny. It provides you with email support where they will respond within 12 hours. Another great support resource is the AWS community forums.
Switching from fully owned geographically separated hardware to AWS is definitely something each business should consider. It does not always make sense for every cloud application, but for QGenda’s needs it works perfectly. Just make sure to test, test, and test extensively when moving your production environment to the cloud.
Have you migrated your application to AWS, if so, what tips/gotchas did you run into?
We recently signed a 10,000 sq ft lease with a pre-negotiated expansion option of 6,000 additional feet and look forward to relocating the QGenda headquarters to the 11th floor of Tower Place 100 in the Buckhead Tech Corridor. At QGenda, due to our rapid growth, we have consistently outgrown office space over the years, and today we have 30+ employees spread across multiple floors for a total of around 4500 sq feet.
Here are some key factors to consider when looking for an office space:
- Parking space allotment is always a ratio in the form of X # of spaces per 1,000 sq feet. You want to make sure you always get a minimum of 4 per 1,000. During our search there was a penthouse office space we really liked, but the ratio was 2.6 per 1,000 so we had to eliminate it from consideration.
- Negotiate free rent inside the term of your lease. Most landlords will try to give you free rent outside the term of your lease by saying it’s a 5 year term with 10 months free rent making it a total of 70 months. It is much more preferred to be a 5 year deal with 10 months free inside the term of 60 months.
- Pre-negotiate adjacent expansion options before signing the lease to prevent the landlord from taking advantage of your growing needs by knowing the best space in the entire city for your business to expand into is the adjacent space right next door.
- Tenant Improvement (TI) allowance should be an average of $4 per sq ft per term year. You should have the option to use part of the TI towards moving/cabling.
- Avoid signing a personal guarantee.
- It doesn’t hurt to ask for free parking. However, if the building is well occupied it is highly unlikely you will receive a deal on parking fees, but they typically will make up for it in free rent or some other way.
- Expect an annual rent escalation of 3% each year, but have it begin in month 25.
Finding the perfect office space for any business is fun, time consuming, tedious, and definitely requires the help of a professional commercial office broker. If you have 10 or less employees, then on-demand office space at the Atlanta Tech Village would likely be the best solution.
What other key points have you negotiated in your own office space lease(s)?
I have found when talking to other entrepreneurs, they easily get caught up and bogged down by focusing too much energy worrying about competitors, such as their funding, pricing, marketing spin, and sheer existence. At QGenda we embrace competition and try to objectively learn as much about our “frenemies” product limitations or other weaknesses so we may casually exploit them during our product demo.
Here are some of the ways at QGenda that we have consistently beat our competition without lowering prices:
- Strive to be the best place to be a customer by retaining existing customers through offering the greatest support they have ever seen before.
- Constantly engage with prospects and customers about their pain points and continually invest in evolving the product to better suit their needs.
- Admit to prospects that your solution is not the cheapest, and prove to them that reducing pain points, top-notch support, and saving time is far more valuable than just saving money.
- Keep track of existing customers that switched to your product from a competitor and provide prospects a reference list of customers who switched from other products. If you provide amazing support and retain customers, then your competitors will not be able to use this one against you and it clearly gives you the upper hand when a prospect realizes that zero customers switch to your competitor.
- Go beyond the usual name dropping of existing customers, and without breaking any confidentiality clauses, provide the prospect as many real world scenarios about your product solving existing customer needs because the prospect can most likely relate to the same issues.
Despite our competition constantly trying to beat us solely based on having much lower prices, we rarely lose deals to competitors for many of the reasons above. Competition is good for every business because it validates the existence of a market, and remember it’s always a good idea to remain friendly with competitors because it’s nice to be first on the list of people they call when they are looking for an exit.
What are some of the ways you beat competitors in a sale?
When a fast growing company finds the best way to create a repeatable sales process for their product, it’s important for the customer success team to find the right balance between keeping existing customers 100% satisfied while also following through on new client implementations.
In our case at QGenda, we provide automated on-call physician scheduling software with unique complex business rules for each customer and below are some of the customer retention methods that work well for us:
- We are always ready to help an existing customer and everyone in the company (management, sales, engineers, and developers) make existing customers the highest priority.
- Hire personable engineers (we look for industrial engineers with a strong academic record) from top schools like Georgia Tech, Vanderbilt, Purdue, and many other excellent Universities.
- Each customer has a minimum of one dedicated engineer and one backup engineer who remain with that customer from implementation to go-live through their first year renewal as the main point of contact. Customers prefer this type of personal continuity and enjoy working with the same dedicated engineers each time they call with questions.
- Quarterly customer check-ins by sales and engineering (have them switch off and rotate quarters) because sometimes the customer feels more comfortable telling a sales person their issues.
- We are big believers in the saying “…teach a person to fish and they will eat for a lifetime”, but sometimes customers (despite having the ability themselves) would rather us do the fishing for them. So essentially that means we always go the extra distance to wow the customer by not only providing them great software (the “fishing rod”), but also offer to do their part and run the software for them at no additional cost (aka we fish for them).
These are just some of the many ways we strive to exceed customer expectations and be the best place to be a customer.
What are some additional thoughts and ideas on customer retention?
When a software company is in the early stages of existence, all they have to worry about is doing whatever it takes to get their application in front of as many potential customers as possible without worrying about a repeatable sales process. Once a company reaches a certain point, such as surpassing the million dollar milestone (or whatever metric applies), then it becomes increasingly necessary to create a scalable & repeatable sales strategy.
In order to continue our high growth, we have adopted a new sales strategy at QGenda to make our customer acquisition methodologies more repeatable no matter how many sales people we add to the team over time. The first major change was defining the structure of the sales team, which consists of a 4 year goal oriented promotion track of Business Development Rep (BDR) –> Account Executive –> Sr. Account Executive –> Sales Team Lead.
At QGenda we have an extremely high closing ratio (45%) for prospects that take the time to see a webinar, so for us it is important for the BDRs to constantly be setting demo appointments for the Account Executives. As a Business Development Representative you are expected to:
- Send 15 new prospect cold emails per day
- Send 15 follow up emails to previous cold emails from 3 days ago
- Make 15 calls to follow up emails sent from 5 days ago
- This equates to a minimum of 45 prospect touches per day
- Set 25 demo appointments per month (only count those that get performed)
Once a BDR reaches a specific goal (e.g. 250 demo appointments get performed) then the BDR should immediately be promoted to the Account Executive position. As an Account Executive they are responsible for performing demos, providing proposals, and closing hot leads. The Account Executive and Sr. Account Executive get promoted to the next level by booking $1MM in recurring revenue. Sales people are typically very competitive and goal oriented, so defining sales goal parameters that lead to promotions helps create a healthy motivated sales team.
What other ideas can help create a repeatable sales process?
Last week’s post about sharing company success by offering stock options covered a lot of the basic structural details around implementing an employee sock option plan, but one major point left unanswered is who gets what and how much? The most common way to discuss stock options is in terms of percent ownership, but many entrepreneurs (including myself) prefer to present stock options in dollar values with an expected outcome based on growth over a 4-5 year period.
Here are some common percentages of non-founder employee stock options:
- CEO/President ~ 5%
- C-Level (COO,CFO,CTO,etc) ~ 2% – 3%
- VP ~ 1% – 2%
- Director ~ .5%
- Manager / Senior Engineer ~ .2% – .25%
- Engineer / Consultant / Advisor ~ .05% – .15%
These are well known industry standard non-founder equity percentages, and it’s important to note that founder equity is an entirely different and more complex calculation based on a lot of parameters.
When discussing stock options with employees, I like to stay focused on the outcome of what these options could amount to using examples. For example (using easy numbers), if someone is granted 10,000 units with a strike price of $1/unit and the company grows at 60% year over year for 5 years, then those stock option are now easily worth $10/unit which is over $100k total. It’s much more exciting to think that 4-5 years of hard dedicated team work could pay off 10 fold for everyone, versus just telling each person individually that they have .1% ownership in the company.
What are some other key points when determining non-founder stock option equity grants?
An important part of building a successful company is sharing that success with the very people who make it possible. Stock options are a great way to share the success, and it also provides employees a true form of ownership behind all their hard work. Recently it became time to offer stock options at QGenda, so I began by talking to several entrepreneur mentors, and it was very apparent that there are many ways to setup stock options.
Here are some of the key points to consider when setting up stock options:
- Options should vest over 4 years.
- A typical vesting schedule of the 4 years is broken into a 1 year cliff then monthly vesting thereafter. For Example: if you are granted 48 units, then 12 units vest after the 1st year and then 1 unit per month for the remaining 36 months.
- When calculating the Strike Price you can avoid costly annual valuations by using a reasonable formula to value your business such as 3x trailing twelve month (TTM) revenue.
- Plan on 10% to 20% of the equity of the business to be part of the option pool.
- Create a buy/sell agreement with the same formula of 3x TTM revenue such that any employee that leaves the company has to sell their stock back to the company.
Offering stock options is a great way to provide loyal employees their fair share of ownership in what they are helping to build.
What other key points should someone consider when offering an employee stock option plan?
Welcome to the first blog post of the trials and tribulations of starting and growing a business. As an entrepreneur there are hundreds of questions, decisions, and of course a bit of luck related to successfully running your own company. This blog will serve as a place of open discussion for all the topics an entrepreneur faces, while staying especially focused on technology, corporate culture, business ideas, entrepreneurship, startups, business operations, and other situations that business owners face everyday.
I am a huge proponent of asking questions and leaving feedback, so please feel free to express your thoughts in the comments to provide more of an interactive blog for everyone.