Editor’s note: “Sales teams today are crying out for technology that enables them to more effectively sell to more educated customers,” says Daniel Chalef, CEO of KnowledgeTree, which provides customers with sales and marketing enablement tools. He explains how his company’s cloud-based product erases the divide between sales and marketing. He also gives tips to startups transitioning to the United States.
SandHill.com: What business challenges were you trying to address when you initially launched KnowledgeTree?
Daniel Chalef: Our aim was to help our customers solve challenges around driving value through their content generation. To do that, we built a content management application, which we delivered as an on-premises, open source document management product.
Then we started to focus on solving a specific problem for sales and marketing organizations. Today we enable sales teams to discover content that wins deals. We also help sales and marketing leadership understand what content is resonating in the field and help them ensure that their sales organization remains on message.
The content covers customer-facing content such as datasheets, case studies, white papers and other allied materials as well as sales enablement material such as call scripts, ROI calculators and pricing calculators.
There is a huge sea change in how sales organizations are structured today. Sales organizations operate differently, particularly enterprise B2B sales organizations.
SandHill: What is driving this sea change?
Daniel Chalef: Companies started using the Internet in the last few years to do a lot of their research and preparatory work around understanding what products are in the market and how they fit the purpose for their business. By the time they engage with a vendor, they have moved through a number of different early stages of the buying cycle already.
So sales organizations need to be far more sophisticated and armed with the right material that allows them to engage intelligently with far more educated prospects.
SandHill: Are other factors driving this sea change?
Daniel Chalef: Yes. There has been a movement from field sales to inside sales, where people work in a single office and use emails, the Web and phone conferencing to sell. That really puts access to the right content at a premium. There is far more reliance on technology to enable inside sales organizations.
SandHill.com: When did this sea change begin?
Daniel Chalef: I would say that it started about five to six years ago, but it really picked up momentum with the advent of inbound marketing, driven by technology. It’s a very exciting place to be, when one looks across the market space, with Marketo announcing their IPO a few weeks ago, Oracle purchasing Eloqua, and there are a number of other high-growth vendors in the space such as HubSpot.
It turned marketing, and in particular Web marketing, into a science. There is a lot of analytics behind that science. But what has been left behind is the content. Companies have been very focused on Web content and less focused on enabling their sales organizations to access documents and other types of content that enable them to sell effectively. We believe this is the next wave, once we move beyond Web experience management or Web content management.
SandHill.com: What sets KnowledgeTree apart from other vendors that provide tools that allow people to find content?
Daniel Chalef: Where KnowledgeTree excels is helping marketing and sales teams define rules around what content they may discover. We build discovery tools, not search tools. We provide tool sets to content creators and curators to build rules around that content and define how that content is surfaced to the rest of their organization, which is the opposite of “search.”
We provide tools, both in Salesforce and in mobile apps, which allow the marketing or sales team to define what content is visible to the sales team for each product, for each market that the company sells into and for each stage of the sales process.
SandHill.com: What is the benefit of your product being a SaaS application?
Daniel Chalef: Salesforce.com is the leading CRM application today, and it is a cloud-based application. For us to work effectively with Salesforce, we have to be cloud based.
We’re able to support both inside sales organizations and field sales teams because we are in the cloud. Our iPad and iPhone apps enable field sale teams to discover the winning content that they can take into their sales demos when they are onsite with a customer. They cannot do that if their application is not a cloud application.
SandHill.com: What is KnowledgeTree’s target market?
Daniel Chalef: This solution resonates very well with companies that have complex and dynamic sales processes. They sell a large number of products into a large number of different vertical markets.
Also, their sales campaigns are not transactional; they have to engage with a customer and prospect over a period of time in discreet stages before they can close a deal.
Sales and marketing leaders are able to structure their sales campaigns and to drive content into the sales organization for discovery based on the particular sales campaign. We help them structure the content that has surfaced for that particular industry vertical, solution and for that particular sales stage. Our solution also ensures that the sales team always uses the latest content. We provide some very cool push messaging that pushes alerts down to mobile devices when marketing releases relevant new content.
SandHill.com: Please share an example of the ROI one of your customers achieved.
Daniel Chalef: A large technology customer of ours uses KnowledgeTree to capture presales content and request for proposal (RFP) responses within one of their sales organizations. They have a large team that’s solely focused on responding to unsolicited RFPs.
One of the challenges the team faced was not being able to readily reuse winning content in their RFP responses because they couldn’t find the right content and they didn’t know rather it was winning content or not.
We helped them structure their content and ensure that it was discoverable based on the types of customers that they were selling to, or the RFP response that they were responding to and whether or not the content was historically successful.
As a consequence, they won twice as many contracts as previously and drove an incremental $7 million in revenue.
SandHill.com: You launched KnowledgeTree in Cape Town, South Africa. What led to your decision to expand to the United States?
Daniel Chalef: We started getting significant interest from U.S. customers as well as European customers and from the U.S. venture capital community. We realized by about 2007 that we needed to transition to the United States and incorporated here in 2008.
SandHill.com: How did you fund the U.S. expansion?
Daniel Chalef: We raised our first institutional venture capital round in 2009 to help us move the business to the United States. Interestingly, it wasn’t U.S. venture capital; it was South African. The investor was Hasso Plattner Ventures Africa.
SandHill.com: Why did you think that it was important to move to the United States?
Daniel Chalef: If you’re a fast moving, aggressive startup, it’s important to be close to your customers and close to the broader market. You want to be able to service your customers well, and being collocated in the series of time zones that your customers are in is important.
Also, the venture capital community in South Africa is young and isn’t as large as the U.S. VC community. We realized that for us to build a valuable company we would need capital partners that had deep enough pockets as well as experience with assisting U.S.-based, VC-funded startups with scaling.
SandHill.com: You settled in Raleigh, North Carolina. What prompted you to choose the East Coast instead of the West Coast?
Daniel Chalef: My initial exposure was the Bay Area. That’s where all the VCs were and that’s where I started building a network. We have a team in South Africa, and I found it really prohibitive being on the West Coast when South Africa is 10 hours away. It was very difficult to lead that team from the Bay Area. On the East Coast South Africa is only six hours ahead in summer. That’s a lot easier to handle from a collaboration perspective.
SandHill.com: Were there any other considerations in making your decision to set up U.S. headquarters in Raleigh?
Daniel Chalef: Cape Town is a Mediterranean climate. I landed in Boston too many times in winter and we had to have the plane deiced on the runway. The first time was novel, but then it got tiresome. I knew folks at Red Hat, and they told me that Raleigh-Durham was an up-and-coming area and that we should consider it.
SandHill.com: What have been some pros and cons of choosing that area?
Daniel Chalef: There was some culture shock for me, far more so than being in the Bay Area, but certainly Raleigh is an interesting city to be in. There is a lot going on in the Research Triangle.
Also, being a smaller city with bigger aspirations, there is a lot of energy and intent. It’s exciting to be part of that. The downsides are that there is a smaller talent pool and it can be difficult to raise capital. But in some respects it’s easier to attract talent because there is somewhat less competition. People are more loyal and they stick around. We’ve built a very talented team in Raleigh.
SandHill.com: What was the biggest risk you anticipated when contemplating the move to the United States and what did you do to mitigate that risk?
Daniel Chalef: In hindsight, it was the inability to run offices in two countries at the same time and still create a shared vision. I quickly realized the value of having everybody collocated in the same office and not worrying about how the time of day affects whether or not I could have a meeting with somebody that day.
We somewhat organically tried to mitigate that risk with an enormous amount of video calling and trying to put systems and processes in place that tie the two teams together.
We would have liked to bring our team to Raleigh but, unfortunately, the U.S. immigration regulations at this stage don’t allow that. We have a couple of engineers in South Africa, but we hired a new executive team in Raleigh.
SandHill.com: Did you encounter any unanticipated challenges, either during the move or immediately after you arrived in the United States?
Daniel Chalef: There were many of them. Running a company in the USA entails having to deal with three tiers of government: federal, state and local. The red tape was certainly a big barrier.
I also had not anticipated a multitude of issues, mostly stemming from my immigration situation, such as having to get my work visa and get a Social Security number before I could get a driver’s license and having to wait for it to go to the Department of Homeland Security before they would issue it because they wanted to make sure I wasn’t a terrorist.
I’ve yet to get a Green Card, despite employing almost 30 Americans and having raised significant venture capital. I certainly didn’t anticipate red tape and delays around every step of the process.
SandHill.com: What tips do you have for other startups that are considering moving to another country?
Daniel Chalef: Think carefully. It’s both a personal and a corporate odyssey. It’s a very challenging thing to do and requires significant commitment; you can’t do it halfheartedly.
Entrepreneurs need to understand the U.S. regulations and the tax impacts. Spend some time in the city or areas you intend to move to before you make the move. Get familiar with it and try to understand the culture. Network; find some folks who will mentor or coach you and potentially make introductions to other people, especially “go-to” people — accountants, auditors, tax consultants, lawyers, journalists, etc. What is the tax impact of moving to the USA?
There is certainly a groundswell of support for immigrant entrepreneurs and a lot of effort being undertaken by everybody from venture capitalists to startup companies to legislators to change the immigration situation.
In Raleigh-Durham, folks helped me network and then build out from that network. That made it a lot easier to operate from a position of very little knowledge about the local environment.
SandHill.com: Your company conducted a survey this year on the divide between sales and marketing. What was the primary finding?
Daniel Chalef: One of the biggest problems is the lack of collaboration between sales and marketing, For instance, marketing creates great content, but sales doesn’t know about it. Or sales uses content that is off message. Our study revealed that the primary friction points are around content that sales people use to build their business cases.
KnowledgeTree removes those friction points by delivering the right marketing content to sales. It makes both teams more effective.
Daniel Chalef co-founded KnowledgeTree in South Africa and led the company through its U.S. relocation and major series A and B funding rounds. He was an early employee at South Africa’s highly successful and first Internet Service Provider. Daniel is recognized internationally for his opinions on technology and business, and quoted in leading publications. He is also an active supporter of the local technology community, where he frequently guest speaks and advocates for startups.
Di Freeze is editor of SandHill.com.