I'm Ryan -- CEO and co-founder of Vendr.com (YCS19). Since YC, we've become one of the largest software buyers in the world ($2B+ spend processed; 15k+ transactions). But, here's what I don't understand -- why does a company like Vendr even need to exist?
Companies flock to us to buy software because they are fed up with "Contact Sales", opaque pricing, expiring discounts, and the games associated with sales. Buyers of software are rapidly opting out of sellers' sales processes, coming to Vendr, and asking us to do it for them. Sales is broken.
Today, sellers focus on creating sales processes that maximize the leverage and outcomes for the sellers. This creates friction resulting in avg 90 days sales cycles and 20-25% close rates for sellers. Not good. No wonder sales and marketing expense equals ~50% of revenue.
When Vendr's successful, we'll have fixed sales. No more games. Fair pricing, correct and fast buying decisions -- powered by data. This results in a win for the seller (lower cost acquisition; shorter sales cycles) and a win for the buyer (best products win; fair pricing).
LMK if you need help with any of the "contact us" pricing -- we can easily answer this for you. ryan@vendr.com
I think what you're doing is super interesting but I'd be curious to know who your biggest competitors are. How are you positioning yourself against Intello or Zylo?
We've observed the same. Even at bigger companies, the procurement team tends to focus on the most expensive/riskiest/sensitive vendors. That means that multi-millions dollar purchases are prioritized over $100k engineering SaaS purchases, for example.
We think that software buying needs to exist as an external function. There are too many products for internal teams to tackle this alone.
Great idea. We don't do reviews today but are considering integrations like Whistic, G2Crowd, and others. That would help stakeholders get evaluation information before they commit to buying.
I think you can do better than the public review systems that exist today: you can authenticate the buyers, which improves the usefulness of the reviews. Your reviews cannot be stuffed by hyper aggressive sales members posing as fake customers.
And, a step above: you can show how ratings from the same buyer change over time as their price point, scale, and features evolved. (Solve for: would you rather buy a piece of software that makes you happy as hell on day 1 but miserable on day 366, or one that makes you modestly happy on day 1 but blissfully happy on day 366?)
Music to my ears! SHI and other resellers (like CDW) work for the supplier, not the buyer. That means that when you use SHI or CDW to buy software, you are likely paying list price. Or, you're at least paying more than you should.
Vendr works for the buyer and does not receive reseller commission. That means that we are strictly aligned to your price outcomes, not the supplier.
Yes, we are accumulating buying power as we sign on additional logos. However, that is not our north star. Instead of working towards supplier leverage, we are trying to find the equilibrium price for all enterprise software. That way, companies can buy software with confidence and certainty that they are paying a reasonable price. As long as "Contact Us for Enterprise Pricing" exists, pricing will be variable.
The vendors are the ones that share pricing information with us and we are under NDA with our customers. The reason that the vendors share the information is because companies have indicated that this is the way that they want to buy.
1. The subscription price is tied to headcount. If you're below 100 employees, we charge $2k per month and it scales up based on # of employees. We tied pricing to headcount because it is a solid indicator of quantity of products and total $ spend. At these levels, we are to maintain a positive ROI. I'm open to suggestions and improvements with the pricing model!
2. Our sweet-spot is SaaS but we are testing non-SaaS purchases. As an example, we recently helped one of our customers save a bunch of money on their SOC 2 audit fees. Do you have specific non-SaaS purchases in mind?
Also, within our customer base, there is significant overlap in products. Meaning, most companies use G-Suite, Slack, Sfx, and others. So, we've learned how to buy those products efficiently and have a good understanding of what it should cost. This saves everyone's time (including the salespersons).
As far as the pricing model, what you say makes sense for larger companies. I'm thinking of small companies, say 10-20 people. Big enough that they do have some purchasing pain, but not $2k/month worth of it. Setting a low price point for them might get growing companies on board early, becoming larger clients as they grew.
For non-SaaS, I didn't have anything specific in mind. I know that my teams have purchased, at various times, IDE licenses, "Pro" versions of various libraries and tool, and even licenses to run various servers that aren't free/open source. The catch in my mind is that if "procurement-as-a-service" covers all my bases, it may make sense. But if I need an internal procurement person anyway, the value prop of your service diminishes a bit.
I like the idea overall. I'm a believer in hiring for the core product, and outsourcing the rest, and this idea fits in nicely with that philosophy.
Today, we aren't built for 10-20 person companies, but it is definitely top of mind. We are working on productizing some of our knowledge to solve for this use case, but we aren't there yet.
In terms of non-SaaS, yes, we could handle those examples. But, we don't do your cable bill and things like that. Technology procurement, yes.
Do 10-20 person companies generally have the same purchasing pain? I mean, small purchases (no matter if licenses or saas or whatever) are done with off-the-shelf prices, you pick out a plan and just buy it; you're not going to have the time-consuming enterprise sales dance with vendors refusing to name a price until they've had a sales team visit you in person to give a demo and negotiate a custom deal etc - that kind of high-touch sales inevitably requires the price to be large, and if you're not paying these large prices, then you aren't going through all this interaction with vendors and you simply don't have the problem that Vendr is solving.
Gain-share models are inherently biased, because you make more money as you save more money. This also leads to conflict with vendors, since the incentives are tied solely to financial outcomes.
We took a different approach. We charge a fixed subscription fee and we negotiate towards the outcomes of our customers, not our own.
Our stance is that our customers are great negotiators, they just don't have the time or interest to do it. So, if they were on the phone for the negotiation, they'd be saying the same thing that we are saying.
