Yahoo and Twitter have partnered to bring tweets directly into Yahoo homepage’s newsfeed on web and mobile, the company announced this morning. The move follows the February relaunch of the front page. At the time, the company debuted a redesigned site with an increased emphasis on personalization, as well as a more modern design.

The Twitter partnership expands upon this earlier mission involving personalization – a key focus for Yahoo’s CEO Marissa Mayer – noting that Yahoo will now ”seamlessly include relevant and personalized tweets alongside stories from Yahoo! and our other sources.”

These tweets will now appear directly in the Yahoo news feed, which offers an endlessly scrollable stream of content, divided into sections like “All Stories,” “News,” “Local,” “Entertainment,” “Sports” and more. The headlines that come from Twitter accounts will be indicated by referencing the source by its Twitter handle (e.g. “@ABCWorldNews” as opposed to “ABC News”) and there will be “Follow” buttons to the right of the stories, allowing users to click to add the news organization to their Twitter feeds.

“Updates direct from politicians, celebrities, media outlets, and other publishers have become an important source of real-time news and information,” Mayer explained in the official announcement today. “140 characters can connect athletes with their fans, capture live chatter from the red carpet, and inspire global debate.”

Though the post did not detail how the addition of tweets specifically ties into Yahoo’s overarching personalization goals, that refers directly to changes that took place following the homepage revamp earlier this year. The front page’s selection of news articles now starts out as a generic grouping of stories, but as users click on content that interests them, the site adapts. The more it learns about a user’s interests, the more relevant and personalized the surfaced stories become. (At least in theory). This technology will now also apply to the tweets.

Yahoo has been moving to reinvent itself under Mayer’s leadership, gobbling up startups, paring down its scattered lineup and launching well-received apps like a revamped Flickr and its new Weather app for iOS, the latter of which may be one of the highest rated iPhone applications we’ve seen, with 4,206 5-star reviews out of 4,832 ratings.

It’s worth noting, too, that the revamped Twitter-powered homepage has a mobile component as well. The update is rolling out to U.S. desktop and mobile users over the next few days, the company says.

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Pi.pe, the file transfer and synchronization service which emerged from San Francisco-based Pixelpipe, has previously served as one of the only serious utilities to move photos and other media files between all the various cloud services. Since its launch a little over a year ago, Pi.pe’s focus has been primarily on backup and sharing. But it was missing an option for ordering prints – something which most services focused on photo management today offer. Today, that changes.

The company is now launching Pi.pe Prints, which allows users to print photos hosted all over the cloud to locations like Walgreens, CVS, and soon Shutterfly, Tesco, and Fuji Film, too – the latter likely in about a month’s time. Pricing for Walgreens and CVS is the same as is listed on their own websites (e.g. 4

During our Disrupt event today, New York City company Foursquare’s co-founder Dennis Crowley spoke about how people are talking about the company these days. One of the interesting things about the company is its strategy to be the “location layer” of the Internet. For four years, the company has been trapping all of this location data, tips and social graph information.

On its location data, Crowley said that the company is generating all of this information that will be important moving forward, like finding all of the interesting places on say, a Monday morning in New York City. These are the bits of data that Foursquare has just started leveraging in its own app and it’s only going to get better.

Crowley says that its API is underutilized by partners and people aren’t “leaning” on them as much as they could be, as of yet. He says that in the next year you’ll see more apps that use Foursquare’s location data get smarter about the world around it. This means that the company has a lot more evangelism to do to educate companies on how their data is best used. I can’t think of many services that do a really good job of it right now. Sure, apps like Flickr let you add a Foursquare venue to your photo, but that’s all. It would be nice if Flickr could suggest places to visit and shoot photos based on other interesting places are close to your current location, and those are the types of applications that Crowley suggests when saying that its API isn’t used to its fullest potential.

When asked about how the company is viewed from the outside, Crowley said Foursquare is going through a period of time that other big startups have gone through:

We’re not the shiny new thing anymore, we’ve been around for four years. People are understanding what we’re trying to do, become the location layer. We’re in that interesting hazing period where people are skeptical on whether we can be success or not. Facebook went through it, now we’re going through it.

“The biggest haters and critics of Foursquare haven’t used the app in the past six months.” Crowley continued. He went on to call some of the predictive modeling that Foursquare is doing for users is somewhat like “rocket science.” However, getting people to stop thinking of Foursquare as the same company that it was in 2009, focusing on badges and leaderboards, is a hurdle, Crowley admits.

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Toronto-based photo-sharing service 500px is revamping its professional Portfolios product, the startup announced today. The new portfolios, which are currently in beta testing, will eventually function more like standalone e-commerce sites for selling photography, offering more customization options, including things like the ability to edit the CSS, store and blog integration, plus new themes and other additions.

Today, photographers on 500px can create a portfolio of their work by heading into the Settings page of the website. Here, they can pick from a variety of built-in themes, add a short biography, add photos to their portfolio set, and optionally set up a custom domain so the  site appears under their own URL and branding – for example, see 500px’s co-founder’s portfolio here: evgenytchebotarev.com.

The Portfolio product was something that the site rolled out back in 2010. But it was built very quickly, explains 500px’s VP of Biz Dev, Dustin Plett. “We always meant to get back to it, but we went through two and a half years of hyper growth,” he says. “We finally got to the point where we had the time and resources to build it the way we had always wanted.”

The feature has been redesigned and rebuilt from the ground-up, Plett says, with new themes created by 500px’s design agency partners. At launch, there will be ten of these improved themes available, but the plan is to offer hundreds by year-end. 500px will also open up the themes marketplace to the photographers and developers, allowing anyone to reshare their own custom themes with other users. Further down the road, this marketplace may also be expanded to support buying and selling of these premium themes, with the standard 70/30 revenue share in place.

While not available in time for May’s launch, 500px  plans to add expanded e-commerce features to Portfolios, too, in order to provide its users with more ways to sell their work. Notably, it wants to add a way to sell more sizes of standard prints (e.g. 4

VC firm Accel Partners is bringing on its first marketing partner with the addition of former Yelp Senior Director of Communications, Stephanie Ichinose. In her new role, Ichinose will be responsible for managing the Accel Partners brand and advising entrepreneurs in the Accel portfolio on their strategic positioning and communications strategies.

This is a big talent win for Accel. Ichinose was hired on as Yelp’s first communications strategist in 2006 and help scale the company’s messaging at all phases of its growth, until it became a public company. Prior to Yelp, she oversaw communications for Yahoo’s Search and Marketplace business unit where she also worked closely with entrepreneurs from acquisition announcements such as Flickr, Upcoming.org and del.icio.us. She was also a member of the Sony Computer Entertainment America PR team that launched the PlayStation2 in the US.

As more VC firms offer full-service agency-like services such as PR and marketing, we’re seeing more communications talent in the tech world jump to VC firms. And firms are also using PR talent to help manage their own brand.

“At the end of the day, our goal is to take founders and companies from Series A to IPO…We can help change our companies’ trajectories by adding this level of talent,” said Accel Partner Rich Wong.

Accel most recently announced a new $467 million fund to invest in Europe and Israel.

Article courtesy of TechCrunch

In California, drivers can now be pulled over for using their GPS while driving. Extending the state’s current ban on texting while driving, an appellate court in California v. Spriggs argued that the ”distraction would be present whether the wireless telephone was being used as a telephone, a GPS navigator a clock or a device for sending and receiving text messages and emails.”

So-called “distracted driving” laws have a mixed history of efficacy. In 2010, a study in the American Journal of Public Health found that “Any reduction in accidents following texting bans is short-lived, however, with accidents returning to near former levels within a few months.”

The most recent study, however, found that such laws are “moderately successful” , but only if they are strictly enforced. The study, to be published in next month’s American Economic Journal: Applied Economics, only looked at scenarios where the blame could be squarely placed on (digitally) distracted driving: single-vehicle, single-occupancy crashes. In some states, for instance, police cannot pull a driver over for texting while driving, but only add on a citation to another violation. In states with “strong” bans, driving fatalities were reduced 8%.

In Spriggs, the judge left it open as to whether the law should also apply to also checking things like email, or whether drivers could safely use a hands-free version of GPS. Either way, the National Safety Council warns, “there is no research or evidence that indicates voice-activated technologies eliminate or even reduce the distraction to the drivers’ mind.”

Looks like we won’t be safe on the road until we all get robotic cars. Appropriately enough, thanks to Google’s powerful lobbying, they’re now legal in California.

[Image Credit: Flickr user mrJasonWeaver]

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The average teenager now sends a staggering 1,800 texts a month. This scale is why Facebook announced a new chat-centric smartphone application, Home, hoping to snag the lucrative data of a new generation of hyper-connected, text-obsessed teens.

Once the social center for yuppie Ivy League 20-somethings, Facebook will launch Home on a super-cheap $99 Android smartphone, expanding the social network to the rest of the youth market of high-schoolers with little more than piggy-bank money to spend on technology.

Home’s signature feature, appropriately titled “Chat Heads,” is “a way you can talk to your friends no matter what you’re doing in your phone, no matter what app you’re in,” explained Joey Flynn, a Facebook product designer. When users share an Instagram photo, for instance, a chat thread is conveniently kept live, right underneath the shutter.

As our own Jordan Crook reported, “[Mark Zuckerberg] explained that Messaging shouldn’t be treated like any other app, though it often is treated that way in the current ecosystem…If you page through to another app, like a game or Instagram, the ‘chat head’ (as it were) stays right there in the corner, ready and waiting for interaction. The chat head even has an unread count to show how many photos you’ve missed.”

If you haven’t witnessed the socialization habits of 21st-century teens, it’s quite a sight. Teens roam in groups, seamlessly juggling dozens of conversations with geographically disparate friends, sharing photos and gossip in a flurry of thumb taps. To the next generation, there is practically no distinction between a friend five feet away or 500 miles.

If Home can be the technological solution that permits teens to share even more information, they’ll flock in droves to Facebook, giving the social network an extraordinary dataset of human conversation. Everyday chatting is rich with data on events, consumer preferences and hidden friendships.

Much like Google advertises to Gmail users based on the textual scans of their emails, chats could make Facebook’s ad targeting smarter. Even if Facebook doesn’t plan on scanning chats, it makes the social network the default home of an entire generation.

I suspect that many of my colleagues in the tech press will dismiss Chat Heads as a boring — if not irritating — feature. However, they’re not the target.

The first Facebook generation uses the Internet to occasionally browse, comment and announce social activity. The next generation lives on the Internet as a constant extension of their physical social life. This is the next evolution of the Internet, and Facebook wants to own it.

[Image Credit: Flickr User Tammy McGary]

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Cooliris is aiming to make its photo-browsing experience more addictive today with the launch of new features in its iPhone and iPad apps that it describes collectively as an attempt to offer “endless discovery.”

The company, which is backed by Kleiner Perkins Caufield & Byers and others, offers users a single app where users can browse photos across multiple online services, including Facebook, Instagram, Flickr, Twitter, Google Drive, and more. CEO Soujanya Bhumkar has argued that most popular photo apps thus far have really been “camera” apps, focused on features that help users take and upload photos, whereas Cooliris really is optimized for photo browsing and discovery.

Until now, however, the apps have been limited to photos that users uploaded themselves to their own accounts. Starting today, they can also browse photos posted by their connections on these other services, including their Facebook friends, people they follow/who follow them on Instagram, and their Flickr contacts.

Bhumkar told me that this should lead to a big increase in user engagement. By making friends’ photos available, Cooliris has dramatically increased the library of content that’s viewable in the Cooliris apps. It could also mean that Cooliris’ cross-service capabilities are relevant to more users — you may not post photos to Facebook, plus Instagram, plus Flickr, but there’s a good chance that you have friends sharing on all of those services.

The Cooliris team stopped by the TechCrunch office earlier this week to show off the new features, and also to tout their new slogan, “Pixels are the new decibels.” As before, browsing photos feels like a really nice fit for the “3D wall” technology that Cooliris has been working on for years. This time around, what was particularly impressive was the way the app replicates many of the social browsing features available in each of the services that it integrates with. For example, not only can you browse your friends’ Facebook photos, but when you’re looking at a photo, you can easily jump to the photos of people who are also tagged in that image.

Cooliris is also announcing integration with Dropbox. Both Dropbox and Google Drive offer their own photo-browsing experiences, but their interfaces are really file- and folder-centric, whereas Cooliris is optimized for giving users the ability to browse a lot of high-quality photos. The app has also added features allowing users to bulk save their photos to a specific Google Drive or Dropbox folder.

Bhumkar also talked about the apps’ business model. He said that in the second half of the year, he plans to add a subscription option starting at $4 a month. He emphasized that you’re not paying for more storage (since the photos are stored in other services anyway), but rather additional features like support for video. He also plans to start offering digital booklets as a new way to share and browse photos, which will sell for one-off fees.

“We think that some people are going to be willing to pay to level up,” he said.

A couple of months ago, Cooliris announced that its apps have been downloaded 3 million times on iOS. This week Bhumkar also pointed out that Cooliris users are viewing 1,200 photos every minute.

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Twitter is making a move to become the jumping off point for discovering, browsing and accessing the mobile app ecosystem, the company announced yesterday, in a somewhat understated event only developers were invited to attend. The event, due to its nature, was filled with geekier terminology like “footer tags,” “deep linking,” and “URL schemes,” making summaries of its announcements hard to parse by the everyday Twitter user who isn’t as familiar with what some of these things may mean.

So let’s clarify: Twitter wants to connect its users with content found in the broader mobile app universe, including products for sale from e-commerce companies, the mobile applications themselves, as well as other media, such as photos, videos, article snippets, and soon music, too.

This a major step forward for a service which begin life as a way to post brief, 140-character text-based thoughts, inspired by SMS.

just setting up my twttr

— Jack Dorsey (@jack) March 21, 2006

With Twitter Cards, which just went live in Twitter’s iOS, tweets are no longer boring status updates like the above, but are rich, perhaps even interactive elements, which will not only help to increase users’ time spent using Twitter and viewing content on its service, but that can also help send increased traffic to mobile applications.

Support for Twitter’s App Cards went live on iOS today.

There are two critical pieces to what Twitter announced: a way to increase e-commerce conversions via mobile apps, and a way to boost discovery and app installs for any mobile developer.

Twitter To Impact E-Commerce Conversions

Addressing the first item, the way this works is that Twitter will allow tweets to link to other applications. This is what Twitter refers to as “deep linking.” For e-commerce applications, being able to seamlessly move from a tweet to an app users already have installed on their devices – which already contains their account info (name, address, credit card, etc.) – will go a long way to increase e-commerce conversions versus sending those same clicks to the mobile web.

Fred Wilson, of Union Square Ventures, remarks on his blog that while Twitter’s phrasing of the announcement “might not seem like much,” it’s actually “a big deal” for e-commerce apps. “For many e-commerce and marketplace businesses, this will be a huge help in delivering transactions instead of page views,” he says.

E-commerce conversions are a big challenge, with typical conversion rates (the ratio of a site’s sales to a site’s visits) around 2 or 3 percent. On mobile, it’s even more difficult because of the tediousness of typing onto smartphones’ small screens. By instead pointing a Twitter user interested in a particular product to an app that already contains users’ payment info, there’s a better chance for serendipity and impulse purchases.

Twitter’s early partners on Twitter Cards include e-commerce players like (Wilson’s firm’s) portfolio company Etsy, as well as Gumroad, Storenvy, and Wine Library. Other partners, like Jawbone and Angry Birds’ maker Rovio, also sell physical goods, though not only via the web in the traditional e-commerce sense. Still, they too could take advantage of the simplified app-to-app flow to increase sales of their own items, if they choose.

Boosting App Discovery And Installs

But it’s not only e-commerce players who will benefit from the deep app linking. Also benefiting is any mobile app developer looking to increase their app’s discoverability – and then, hopefully, decrease the cost associated with acquiring users through other  channels like pay-per-install schemes, for instance.

Developers can now include “footer tags” on their app’s tweets which are just links that appear below the tweet which point users to the appropriate mobile app store (iPhone, iPad, or Google Play for Android devices), encouraging users to download the app whose content they’re viewing.

For example, social messaging platform Path, Flickr, Foursquare, and Twitter’s own video app Vine, will be among the first to adopt this new Cards feature.

As users tweet from the apps, their Twitter followers will have only to click on a link to download the app their friend is using if they want to check it out, too. It’s closing a loop of sorts – before, users would connect their mobile apps to Twitter, share content from the app, and people would click links and tweets to view that content. But that would be the end of it. If users then wanted to try the app, and hadn’t yet downloaded it, they would have to manually do a search in the app store to install it.

The alternative was moving Twitter users to web, and then from web to app. On iOS, Apple only recently (in iOS 6) added this connectivity in the form of “Smart Banners” which allow a web page to display a pop-up banner suggesting the link to download that app from the App Store, or opening the web content within the app. (There’s a similar plugin for Android).

But Twitter’s newly announced “deep app linking” goes a step further. Instead of taking a user from mobile web to app, it takes the user from app to app. That is, Twitter’s app to the developers’ app.

Genius, right? After all, a lot of the activity taking place on today’s “mobile web” is actually happening within apps. And unlike on the desktop Internet, these apps have not been hyperlinked to enable easy navigation between them. Instead, they’ve been standalone, isolated pockets of content, requiring users switch between them themselves. That’s been a problem for a number of reasons, but notably for app developers, because people only have so much mental bandwidth when it comes to accumulating and then remembering to launch and use the applications they download.

Twitter, which has long since transitioned from text-based thoughts to a content discovery network, is ideal for pushing people around this web of apps. And for developers, the benefit is that they can use Twitter as the jumping off point to move people from viewing content to actual (revenue-generating) in-app activity.

Backing Up: But On Mobile, Facebook Is Still King Of Social

It’s a big leap for Twitter, of course, to enable these connections, but lets pull back for a minute from being overly enthusiastic here. For any of this to really matter, Twitter needs to find a foothold of a significant and meaningful size on mobile.

So far, it’s still dwarfed by Facebook, which Flurry just reported today comprises 18 percent of users’ on-device activity. Twitter, along with all other non-Facebook social networks, only accounts for 6 percent of user activity in comparison.

And Facebook, too, has been working on its own mechanisms for moving users from social network to mobile apps. It taps into Facebook’s social graph to make recommendations. Facebook’s App Center, available on both web and mobile, is visited by hundreds of millions of users per month. Twitter, meanwhile, as a whole, has over 200 million monthly active users, out of over double that who are registered on the service.

Facebook’s app install ads, a new business for Facebook’s mobile future, are doing well, too.

And Facebook has 680 mobile monthly actives, while 120 million Twitter users are mobile monthly actives (Twitter said this February that 60 percent of its 200 million monthly actives log on via mobile at least once per month.) Twitter touted this group as skewing younger, noting that those 52 percent of those 18-34 are more likely to login on mobile than other groups.

But being young and mobile isn’t only Twitter’s thing.

Facebook, despite anecdotal reports to the contrary, isn’t struggling to find traction with its youngest users. According to Pew Internet & American Life’s latest figures, 86 percent of Internet users 18 to 29 use Facebook today. The site is not in decline, and according to new data from J.P. Morgan analyst Doug Anmuth (via All Things D), Facebook is growing more than other mobile competitors like Twitter, Snapchat, WhatsApp and even its own property, Instagram.

So even as this next, new generation of web – or rather mobile web – users step in to engage with content on social services, it’s not necessarily Twitter which will serve as their main gateway to the app universe. That’s not to say that Twitter won’t be an important, and growing, channel to connect users to apps, but it might be more fair to dub it a window and not a doorway at this time.

Article courtesy of TechCrunch

Editor’s Note: This is a guest post by Mark Suster (@msuster), a 2x entrepreneur, now VC at GRP Partners. Read more about Suster at his Startup Blog, BothSidesoftheTable.

The era of VCs investing in successful consumer Internet startups such as eBay  led to a belief system that seemed to permeate many enterprise software startups that hiring sales or implementation people was a bad thing.

“We want low-touch or zero-touch businesses” was the mantra.

I believe it’s flawed.

While I have some sympathy with not investing too heavily in sales people until the product has properly been tested and commercialized in the enterprise environment, in the end it’s a fact that it takes sales people to move product through large organizations. And of course the most successful technology companies: Google, Facebook, Salesforce.com [duh], Oracle, Microsoft all have loads of sales people.

But the “no sales people” mantra isn’t what I’m here to take on. It’s the second belief system that is even more engrained and even more wrong. Many young startups are being advised not to have a professional services business and in my opinion this is a big mistake.

The line of reasoning goes, “Services businesses are not scalable and the market won’t reward this revenue so make sure that third-parties do your implementation or clients do it themselves. We only want software revenue.”

This is a huge mistake. If you’re an early-stage enterprise startup services revenue is exactly what you need.

Let me explain why:

1. Successful Implementations
The most important way to sell a product for an early-stage business (or frankly any stage) is to have strong referenceable customers. These are the lifeblood of your sales organization. Referenceable means they are willing to be part of your sales collateral, willing to take calls from key leads, willing to speak at your conferences, etc.

How do you get referenceable customers? You build a great product and make sure it is used in such a way as to deliver real benefit to your customers versus just the promise of a benefit outlined in your marketing materials.

As much as many non-experienced investors might like to believe, even great products don’t just roll themselves out. You need to implement them. This often means getting the product to talk with other existing products, implementing the product to match the specific needs of a customer’s internal processes, training, monitoring usage and encouraging adoption.

It also means creating communication plans to make sure that there is a senior sponsor in the organization who knows what the benefits are and measuring and communication the gains.

This is vital because every rollout needs a champion (the person in charge of rollout) and a sponsor (the senior person who has the budget and who stops the blockers from killing the project). And that’s just it – every project has blockers. The people who either want to do nothing or who prefer a different solution.

Your project is forked without a rollout organization, communications, measurement, integration and without turning sales into referenceable customers.

Trust me – this will NOT happen without your having a dedication implementation team.

Professional services = higher rate of successful rollouts.

2. System Integrations
As outlined above one of the most important things to get an implementation right is integration. Your system as a silo will not deliver the same impact as your system talking with your customers other systems. And you can’t use the API argument to get out of helping with integration. As in, “Well, as a tech firm we put tons of effort into APIs so that you can do your own integrations. We prefer to sell software, not get involved with client systems.”

This line of thinking is expressed to me all the time by startup companies that think it is a pain to have to actually work with enterprise accounts. They prefer to just “innovate” and not have the grubby work of actually making their innovation work with real customers.

Good luck with that.

Your customers will not dedicate the teams to build the integrations because they are not yet committed enough to your product or company. This will happen organically in the future but not until you’re already large and successful.

And the other thing. The more your product is integrated with other systems the lower your churn rate will be. Imagine when your competitor comes in with their new whiz-bang features. Your customer sees it and thinks, “I wish your product did that” and you respond that you will have that feature launched in three month. But knowing that your competitor can’t get the integration done by then and your customer doesn’t want to go through the hassle of doing another integration – guess what – you will have a safe haven at that account.

Professional services + systems integration = lower churn.

3. Channel Partners Not Yet Formed
I’ve heard many investors / advisors tell startups to have third-parties do the implementations rather than your doing it. “You’re a software company not a services company! We like software. Software gooood. Services baaaad. Just have third-party VARs & SI’s do the implementations.”

Politely listen but ignore them.

Why would you have your most important success factor (successful implementations) outsourced to a third-party where you don’t control quality and who is strictly mercenary (i.e. doesn’t care as much about the successful outcomes as I do). I highly recommend this strategy for any company who doesn’t care about referenceable customers.

Here’s the thing: until your sales volume is sufficiently large no self-respecting SI or VAR is going to commit resources to making you successful. By definition you will either get a crappy SI promising you they will move mountains or a great SI that gives you their C-player team. Think about it – why should a great SI with tons of work commit to you while you’re still a small company?

I wrote about that extensively in “the fallacy of channel partners.” When you’re bigger channels play a very important role. But while you’re early? You need to control the sale & the implementation.

I call the argument many investors try to make on this point the “Salesforce.com argument” and it’s bogus.

People often cite Salesforce.com, “They don’t do their own implementations! They have a third-party ecosystem. And they’re the best enterprise company out there so they must know something.”

I worked at Salesforce.com. I can tell you this argument is wrong. Salesforce did have their own professional services / implementation team. Salesforce’s success as a company early on was due to the fact that their earliest customers DID have success and Salesforce put a lot of energy into making that happen.

Only after Salesforce.com went public did they consider cutting back on professional service because Wall Street didn’t reward the lower-margin business as much as the software business. But Salesforce knew how important this process is to their success so they actively encouraged the development of an ecosystem so much so that they even invested in these third-parties to make sure they were well-enough financed to survive.

Don’t fall for the Salesforce.com argument from your investors. It’s false logic.

Professional services = higher quality implementation.

4. Your Best Eyes & Ears
What did I learn from nearly a decade of doing system integration projects at Accenture early in my career? Your most successful sales people are the people who are on the ground doing the implementations.

But they’re technology people not sales people!

Precisely.

They know your customers systems. They are trusted by your customers exactly because they are tech people handling the rollout and making magic happen. They know your product intimately. And they form meaningful, trusted relationships with your customers.

So when your relationship-sales rep wants to figure out how to get a broader rollout of your product (more seats!) or how to sell new modules to those customers or how to get the CEO to be a referenceable customer for you, look no further than your implementation team to help this rep get the orders they need.

They are the gateway to your growth.

Professional services = upsell + cross sale + new business units

5. It’s Profitable Revenue Covering Your Fixed Costs
And finally, the most obvious argument is an economic one.

It’s true that professional services have a lower margin (say 45-55% gross margin) than software (typically 85-95% gross margin) and professional services business are inherently less scalable.

So I’m not endorsing your building your entire company around professional services (although I think that’s a fine strategy for many non VC-backed companies) but rather not to avoid it.

Let’s say you can do $1 million in software sales in your first year of selling delivering $850,000 of gross margin. Let’s say you can supplement that with $1 million in professional services revenue at $500,000 gross margin.

Need I point out that the $500,000 is still profitable revenue that can contribute to your central costs of running your business?

That it is non-dilutive financing?

That it is the driver of your future software revenue for next year?

Professional services = profitable revenue streams that fuel your business continuity.

The key is to not become overly reliant on professional services. There are some clear do’s and don’t for how to layer in professional services into a software business.

And I’ll address those in my next post.

Until then, happy implementations.

photo credit: KatanaZ photo on Flickr

Article courtesy of TechCrunch