Build a great team, you can’t do it alone. We have an incredibly diverse team that has enabled SourceDay to solve challenges with more speed and success daily. I intentionally spent nearly all of 2019 building our executive team to enable the scalability and continued growth of our platform.
As part of my series about the “5 Things, You Need To Know To Create a Successful App or SAAS”, I had the pleasure of interviewing Tom Kieley, CEO, SourceDay.
Tom is CEO at SourceDay, a supply chain collaboration engine that brings people, information, and processes together to modernize how companies manage orders with their suppliers, drive collaboration and ship orders on time. Tom is a veteran SaaS business owner with more than a decade of experience in product management and operations, hardware and software sales, and supply chain management.
Thank you so much for joining us! Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
After graduating from Texas A&M University with a degree in supply chain engineering, my first job was to manage a manufacturing line at Dell Inc. I learned a lot in that role as I managed 60 people through supply chain ups and downs, not realizing how big an impact that experience would have on the road. From there, I transitioned into sales and held several positions at enterprise software companies like Boomi, Asure, and Pervasive. My success in sales and desire to start my own company led me to found RightGift, a platform that helps charity organizations increase awareness and donations. (I no longer lead RightGift, but still, serve on the board.)
Along the way, I met Clint McRee, a fellow software sales guy who also happened to have ten years of manufacturing and supply chain experience. We had a shared vision to help manufacturers avoid supply chain disruptions by improving how they purchase parts and raw materials. We founded SourceDay in 2013 and bootstrapped the business through a couple of pivots before bringing our first SaaS product to market in 2016. Our personal experiences made us believe there’s a huge market opportunity to digitally transform how manufacturers, distributors, and retailers collaborate with their suppliers. We knew we could develop a product that would solve those challenges for the first time and build a successful company along the way.
What was the “Aha Moment” that led you to think of the idea for your current company? Can you share that story with us?
As Clint and I went to market with our solution, we discovered how difficult it would be to build a true marketplace where buyers and suppliers both actively participated and shared information. We underestimated what a “chicken or egg” situation it would take to drive true adoption for both sides. That led us to realize we needed to find another way to establish product market fit and build the business.
Conversations with our prospects, business mentors and customers, combined with our shared supply chain experience helped us realize that the best way to pursue our vision was to focus first on solving the fundamental challenge all manufacturers have with supplier collaboration and supplier performance. So we did what many successful startups do; we pivoted. Rather than lead with our marketplace value prop, we went to market with an enterprise SaaS solution that modernized how buyers and suppliers collaborate — giving them a smarter way to manage purchase orders, requests for quotes, quality, and accounts payable. Three years later, thousands of companies have processed over $66B indirect spend through SourceDay, and many of our original marketplace ideas have started to be realized.
Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?
Our “is this really happening” moment came when we realized that solving the problem we set out to solve would not be possible without first addressing larger industry challenges. Building any Enterprise B2B SaaS platform is hard, but doing that in the pursuit of establishing a marketplace is even harder. That’s because our success depended on delivering real value to buyers AND suppliers while inspiring them to change how they work together. We realized that meant two different types of sales cycles and that we would have to pivot to keep the business growing.
This was a challenging time, but our passion to ‘figure it out’ never wavered. Our continued conversations with prospects kept us convinced that we were on to something, which drove us to keep pushing. Clint and I kept each other going with humor, optimism, and more than a few nerf guns and whiteboards. After two years of bootstrapped development, we figured out how to solve the “chicken and the egg” challenge of building a two-sided marketplace and successfully launched our minimum viable product, or MVP.
So, how are things going today? How did your grit and resilience lead to your eventual success?
One of the big reasons we’re thriving today is because we realized early that we needed to evolve our strategy. We’ve raised more than $10M in funding since we were founded in 2013 and brought our product to market in 2016. We serve over 5,000 companies worldwide today. We doubled our team in the last year and increased revenue by 75%. As we move into a new office this month to accommodate our growth, I’ve reflected on how our early pivot ultimately led to us solving the original problem we set out to address, just a little differently than we originally planned. I’m thankful that we were able to listen to prospects and stay focused on the bigger vision, rather than staying stuck on our original idea. Rather than get discouraged, we turned our challenges into innovation. As a result, we now have a robust community of buyers and suppliers that use SourceDay to streamline their collaboration and keep the rest of their businesses running smoothly.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
We still laugh about one of the tactics we used to get ourselves noticed at a trade show in our early bootstrapping days. We had a very little budget for marketing but knew we had to find a way to build awareness with our target customers. We scraped together some money and decided to exhibit at a trade show, but had very little leftover for SWAG. We needed a creative way to call attention to ourselves in a crowded exhibit hall. So Clint and I decided to buy a case of mini bottles of whiskey and hand them out to everyone who visited our booth. We learned that our audience LOVES whiskey because it didn’t take long for us to get flooded with traffic. However, we didn’t know that this gimmick broke the conference host’s rules, so we had to do some tap dancing to keep from being asked to leave. The big lesson here is that our audience is ready for a partner who can ‘stir up’ status quo and that events are a great place to build awareness and relationships with the people who can help us grow the business. But for that to work, we have to understand and respect certain boundaries.
What do you think makes your company stand out? Can you share a story?
The biggest thing that makes SourceDay stand out in the spend management space is our absolute commitment to customer success and delivering measurable results. We do that by being exclusively focused on a problem that no one else solves: helping companies manage direct material spend challenges versus the indirect spend issues that most other vendors focus on. Our SaaS solution solves the primary challenges that the old way of doing business perpetuates. As a result, we have customers who have seen a return on their investment in less than three months. We deliver that fast a return because our average customer improves on-time delivery by 35%, they stop overpaying suppliers, they hold less safety stock, and improve employee productivity by at least 25%.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
The first, most important thing is to try and maintain focus. That can be really hard for a startup that is trying to find product market fit because it’s hard to resist chasing business that might not be right for you. But you go a lot slower and waste lots of time and money if you let yourself get distracted from your core mission. A very close second is to remember that even in the toughest moments, you might be seconds away from a creative breakthrough or a new customer. The rollercoaster is fierce, but it’s a lot of fun if you can stay optimistic and just patient enough to let the business evolve in the right way. Nothing is an “overnight success” and as long as you truly believe and enjoy what you’re creating, you will succeed.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
I’ve learned most everything I know about working hard and growing a business from my father. His success and experience as a CFO at multiple early-stage companies has given me a wealth of information on best practices for fundraising, financial operations, and building for scale.
One of my biggest challenges as a first time CEO and co-founder has been knowing when to delegate and let go of operational tasks. It was my father who gave me confidence and encouraged me to trust the team we built to take on more so I could spend more time on our strategic objectives. A lot of this encouragement came from his direct council during my journey as an entrepreneur, but I also learned from examples he set when I was young. I often think about the time when my dad officially put me in charge of the all-important yard duties. Granted, it was a relatively small yard, but we lived on a steep hill. Bypassing the torch, my dad was able to spend more of his limited free time in his woodworking shop doing a hobby he loved. Now, with the incredible team we’ve built at SourceDay able to take on more of the “yard work,” I’m able to better focus on the “woodworking;” being the strategic leader I need to be to continue to see the company thrive.
I would also be remiss not to mention my wife, who has the hardest job of all raising our three children and supporting me.
Ok thank you for all that. Now let’s shift to the main focus of this interview. Approximately how many users or subscribers does your app or software currently have? Can you share with our readers three of the main steps you’ve taken to build such a large community?
The SourceDay platform currently hosts more than 5,000 manufacturers, distributors, retailers, and suppliers. Three main steps we’ve taken along the way were: define our target market and stay focused on our core mission, recruit the best talent around, and deliver real value to our customers as we innovate and grow.
What is your monetization model? How do you monetize your community of users? Have you considered other monetization options? Why did you not use those?
Our software is priced like most SaaS B2B organizations: an annual subscription that includes a platform fee and number and type of user licenses. Our accounts payable solution also includes transaction fees based on the number of invoices we process for a particular customer. Some companies that deliver similar solutions charge based on a customer’s total spend, but we think that is too much like a tax so we don’t price that way. We’ve also avoided charging suppliers because we don’t want to erode the value they get from using our platform on behalf of their customers.
Based on your experience and success, what are the five most important things one should know in order to create a very successful app or a SAAS? Please share a story or an example for each.
- Build a great team, you can’t do it alone. We have an incredibly diverse team that has enabled SourceDay to solve challenges with more speed and success daily. I intentionally spent nearly all of 2019 building our executive team to enable the scalability and continued growth of our platform.
- Don’t build too early. We started building our reverse auction marketplace well before we knew enough about the costs of going to the market. Our pivot cost us time and money that we could have potentially saved had we done more research earlier.
- Don’t wait too long either–get your product to market. As I was bootstrapping RightGift I thought that it needed to have ALL the best features before anyone would use it. I ultimately overbuilt the solution and wasted a lot of time and money. It’s better to launch with an MVP because the first version of your product will never be perfect.
- Find great mentors. All the greatest innovators and leaders have had mentors that guide and help them through challenging times. I’ve always leaned on multiple people within my network, including an executive coach. Our executive coach worked closely with me and the leadership team to drive a playbook approach to our weekly leadership meetings. Our playbook process has given us the focus and alignment we need to maintain success through rapid growth.
- Know your strengths but more importantly your weaknesses. As we continue to grow, I’ve had to let go of many critical roles as I hired experts who brought more skill and experience than I have in a particular area. This can be challenging, but so rewarding when you hire the right people. Because you end up with a diverse team that balances and enhances one another’s strengths.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
I believe it’s important to give back to the community that has helped us succeed, and social impact programs have been a part of our culture from day one. Our employees engage in service projects together regularly, and our social impact efforts have grown into one of my favorite internal initiatives called SourceDay Cares. This program is led by a committee of our employees that plan our company’s service projects, and we encourage them to choose organizations they have a personal connection to. Inviting our team to guide our company’s community service projects is one of the reasons we maintain 80% employee participation in the program. This engagement not only helps some great causes, but it also improves cross-functional relationships for our team and overall employee satisfaction. If I could start a movement, I would encourage every company to establish a similar commitment to social impact. If every business made this a priority, our communities would be stronger, our employees happier, and our businesses would reap the benefits of both of those things.
How can our readers follow you on social media?
This was very inspiring. Thank you so much for joining us!
About the author:
Mitch Russo started a software company in his garage, sold it for 8 figures and then went on to work directly with Tony Robbins and Chet Holmes to build a $25M business together. Mitch wrote a book called “The Invisible Organization — How Ingenious CEOs are Creating Thriving, Virtual Companies” and now his 2nd book called Power Tribes — “How Certification Can Explode Your Business.” Mitch helps SaaS company founders scale their own companies using their proprietary system. You can reach Mitch Directly via [email protected]
5 Things You Need To Know To Create a Successful App or SaaS, With Tom Kieley, CEO of SourceDay was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.