Why We Invested In Ziflow
What is Driving the Need for Ziflow?
As marketing has evolved to embrace digital solutions, marketers are leveraging more channels to communicate and differentiate their offerings. This has resulted in an explosion of demand for content - designs, websites, ads, multimedia, etc. - from marketing teams. This content is taking various forms of delivery including film, video, animation, and the usual graphics and text.
This exponential growth of content volume, coupled with the increasing demands for marketing velocity, has shortened marketing cycles dramatically, pushing marketers to produce more content in less time. Marketing compliance is also growing exponentially, which requires marketing content to meet strict brand, corporate, regional, and regulatory compliance requirements.
Add all of that to a global pandemic which has forced enterprise marketing teams and their marketing agencies into remote working. This has made the review and approval process within the enterprise, within the marketing agency, and across both groups much more complicated. Hence the need for a cloud-based platform to automate it all.
Most teams that produce creative content spend far too much time on the tasks that encompass the creative process. Between sending emails to request (and re-request) feedback, checking on the status of projects, following up meetings and calls, and coordinating production tasks, it can be difficult for managers to keep a consistent eye on every project in the pipeline.
A proper review and approval process utilizing marketing automation tools can help marketers eliminate typical task inefficiencies and improve project delivery speeds, all while improving quality.
This is where a platform like Ziflow’s comes in. Ziflow provides both the enterprise and the agency a single platform for internal and external collaboration, with all interactions and version control captured within the platform, coupled with enterprise level security and compliance.
Why we Invested in Ziflow
It is not often enough that an investment decision can be classified in the “no-brainer” bucket. For Companyon Ventures, our investment in Ziflow was a no-brainer. Sure, we did our thorough diligence and consulted with market experts and interviewed customers. But we already knew the outcome from the start. This is a team we needed to back.
Team, team, team
I had the opportunity to work with the Ziflow team on their previous startup, ProofHQ. In early 2014, I joined ProofHQ as a board member and advisor to the founders when the company was just starting to build its US go-to-market team. In 2014 through 2015, we managed to drive ProofHQ into hyper growth by recruiting exceptional senior managers and employees, building an operation based on metrics-driven accountability, and a culture of hard work balanced with team-centric fun. We also managed to do this while maintaining capital efficiency augmented by a minimal amount of outside investment in the form of venture-debt.
In July 2015, ProoHQ was acquired by one of its product integration partners as the acquirer looked to expand its offering to the enterprise marketing and agency segments. At the time of the acquisition, the ProofHQ team had honed in the best practices of running and scaling a SaaS startup with metrics-driven capital efficiency and exceptional product delivery. And all this was achieved without raising large amounts of capital, and none from venture capital. The team and culture that it espoused (starting from the founders down to the rest of the organization), was the driving force behind ProofHQ’s success.
In starting Ziflow, the same founding team hit the ground running by building on all their experiences from ProofHQ and laying them as the foundation for taking Ziflow to the next level.
Ziflow is a 100% virtual organization. Ziflow looks for the best talent wherever that talent resides. A large percent of the staff is based in Poland, and not just technical staff but support and marketing as well. The go-to-market team is primarily based in the US. To be effective at running a virtual organization, accountability to objectives, tasks and metrics is key. And this team has perfected the model.
Execution, Execution, Execution
Borrowing the tagline “it’s the economy, stupid”-in this case, “it’s the execution, stupid!” I don’t think I will ever know which is more important for the success of a startup: execution or product. What I do know is that a team with brilliant execution and a mediocre product can deliver a successful outcome. A team with a brilliant product and poor execution will more likely fail.
Scaling and growing a B2B technology startup is HARD! Building the product and proving its initial value in the market is the easy part. Sure, this part requires vision and brilliant developers. And this is where any startup needs to start. Yet, so many companies have managed to grow successfully with a me-too product or a product with oh-okay features.
Scaling a company from a handful of employees with a handful of customers to hundreds and thousands is where success or failure hide - and that is all about execution.
One piece of evidence of their execution focus is their KPI report. This is a comprehensive spreadsheet used by all members of the senior team on a daily basis. It shows in real-time how web visitors convert to lead, leads to marketing qualified leads, MQLs to sales qualified leads, and so on to new customer sales to existing customer upgrades and churn. The KPI report to a SaaS startup is no different from the instrument a pilot uses to fly a plane. Ziflow’s KPI dashboard is one of the most sophisticated and insightful one that I have seen for a company at this early stage. The team continues to predict its future revenue and growth with astounding accuracy due to their metrics-driven approach.
The spirit of execution excellence permeates the entire organization with constant experimentation backed up by constant measurement and optimization. It’s all about the data, stupid.
Completing the trifecta, the Ziflow founders are laser-focused on maintaining a capital-efficient growth model. Much has been written about what it means to be capital-efficient in a SaaS startup. One simplistic rendition is maintaining a profitable distribution model. This means that a dollar spent in sales and marketing to acquire a new customer should generate at least a dollar in a new license booking which is paid upfront. And that dollar in booking is subsequently renewed at a dollar or more a year later (resulting in neutral or positive net churn).
Ziflow achieves capital-efficiency in three ways:
Operational efficiency: leveraging constant measurement to optimize business processes before scaling them. Add more hires only when the existing staff has reached optimal efficiency. This is especially important with sales and software development teams where there’s no limit to how many staff may be hired and where overhiring can result in quickly diminishing returns.
Virtual operations in pursuit of the optimal staff: Ziflow does not have offices and runs its entire operation virtually. This gives the team the option of hiring the best resources wherever they may reside with the optimal cost. The majority of the (very talented team) is located in Poland where the all-in cost of an employee is a third of that in the US. This gives Ziflow the flexibility to “pay-up” for the best talent and to hire more resources while maintaining capital-efficient growth.
Raise as little money as possible: The less money you raise, the more likely you are to focus on solving your operational scale problems than throwing money at them. One of the reasons Ziflow picked Companyon Ventures to raise its first external round of funding is because of the alignment in both firms’ strategies. We at Companyon have purposely designed our firm’s investment model for capital-efficient startups like Ziflow who don’t necessarily need large VC checks to scale.
We are looking forward to the next few years of hard work helping the Ziflow team scale their business with continued capital-efficiency and high-growth. Our Platform team is already jumping in to help with that execution.
Firas Raouf is a General Partner at Companyon Ventures, funding B2B software startups into their expansion-stage by injecting decades of startup and VC experience through operational hands-on investing. The Boston-based firm leads post-seed, pre-expansion rounds in capital-efficient startups across North America that are ready to scale. Companyon’s capital and expertise help scale portfolio companies into a supersized Series A or non-dilutive growth. The firm invests in startups with $1-3M in recurring revenue aiming to scale by 2-3x in the first year with help from its growth-ops Platform Team that offers experience, tools, and playbooks used in top-performing software startups.