Acquisition project | ToolJet

💻 Product

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ToolJet's website landing page

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Core value proposition

ToolJet is a low-code, open-source application builder targeted toward building internal tools, and back-office applications that need to be connected with various data sources. Its core value proposition lies in the ability to customize tools for specific use cases and integrate them with existing workflows. The platform's low-code nature and user-friendly interface are key factors that encourage users to develop custom solutions using ToolJet.

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Vision

ToolJet's core value proposition lies in its ability to create dynamic web applications through its app builder and integrations. Additionally, it features a native low-code database, a marketplace for integrations (currently in beta), and a workflow builder (also in beta), positioning it as a comprehensive full-stack solution for internal tool development.

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ToolJet's low-code app builder interface

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ToolJet has two versions of the product-

• Cloud, hosted by ToolJet itself
• On-premise, hosted by the company itself

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Based on the similarity of product, G2 reviews, and keyword searches on Google & Youtube, their top five competitors are-

1. Retool
2. DronaHQ
3. Mendix
4. Appsmith
5. Superblocks

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However, since this is a B2B product and deals with organizations and not users directly, the largest competitor to our industry is replacing their current method of building internal tools- developing the tools from scratch using their tech stack which they are comfortable with. Hence, this ideological shift in moving from their current implementation to incorporating low-code tools is our biggest blocker.

👩🏻 Users

Data security and ownership are key considerations when picking a service to build internal tools. Large companies prefer to use the on-premise version of the product and host it in their own environment. Whereas, smaller companies usually have simpler use cases with a shorter lifespan. They often lack the resources or time to host and maintain the tool themselves and prefer the cloud product.

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Hence, cloud and self-hosted are considered to be two different product lines that cater to two different ICPs.

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Company Profiles

*100-500 range companies vary on which version of the product they pick based on their use case

**For cloud customers, the value of the product is realized with how quickly they can connect a data source and start iterating on their application. The use cases are usually POCs, forms, surveys, reports, dashboards for data tracking, etc. that can be used across all industries. While self-hosted has found PMF, our cloud offering is still building momentum.

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For self-hosted customers, the value of the product is realized the most in companies that are heavy in operations and have a relatively smaller tech team which requires them to be frugal.

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Since the self-hosted version supports larger customers (higher average ticket size), it makes up about 3/4th of the current revenue.

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Ideal Customer Profiles

This information was collated from insights from the sales team and my understanding based on customer interactions so far. There are three user profiles in the company which are reflected in the product as -

1. Admin- Manager that controls the product and users, Buyer
2. Builder- Developer that builds the application on the tool, influences buying decisions heavily
3. End-user- Users that use the applications built from the tool, no impact on the buying decision

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Cloud ICP

Self-hosted ICP

Influencers

The developers in the company are influential in expressing the need to make the building process quicker and in searching for a tool to aid them. They also influence the decision based on the tools they are familiar with.

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Blockers

Ironically, the developers within the company can also become blockers in some situations. Tools like these often have a sizeable learning curve, which can create inertia, especially if developers aren't familiar with it and are more accustomed to coding applications from scratch.

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The decision to adopt such a tool can also be hindered by upper management, based on the tool's price and the use cases it supports.

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This challenge is reflected in the ICP for companies with heavy operations and a relatively smaller team to carry the load. Such companies often have multiple custom use cases requiring applications to be built from scratch. They would be more inclined to adopt a tool that simplifies the development process, making it quicker and more cost-effective. ​

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📈 Market

Serviceable Obtainable Market (SOM) = $ 7.5M​

SOM Calculation -

• Companies in banking/finance, supply chain, and telecommunications in the USA = 1,000,000 [ref #1,2,3]
• Companies that are sized between 100-2500 = 200,000 [Assumed to be 20%] [ref #4]
• Assuming only 50% of those companies need and can pay for building custom internal tools = 100,000
• Market penetration assumption = 2% i.e. 2,000 companies
• Avg builders = 3, avg end-users = 30
• Avg contract value/year = $3744**
• SOM = $ 7,488,000

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**These assumptions are based on trends observed in ToolJet

Serviceable Attainable Market (SAM) = $ 54M​

SAM Calculation-

• Companies in USA = 18,000,000 [ref #5]
• Companies that are sized between 100-2500 = 3,600,000 [Assumed to be 20%] [ref #4]
• Assuming only 20% of those companies need and can pay for building custom internal tools (taken lesser percentage size it involves a lot of industries and not the targeted ones like in SOM) = 720,000
• Market penetration assumption = 2% i.e. 14,400 companies
• Avg builders = 3, avg end-users = 30
• Avg contract value/year = $3744**
• SAM = $ 53,913,600

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**These assumptions are based on trends in ToolJet

Target Attainable Market (TAM) = $ 7B

The SOM and SAM have been calculated keeping our core audience in the US in mind. However the need for internal tools is global, and the low-code development market was estimated to be $6.78B in 2022 [ref #6]

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References -
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[1]  988,019 businesses in the Finance and Insurance industry

https://www.ibisworld.com/industry-statistics/number-of-businesses/finance-insurance-united-states/#:~:text=There%20are%20988%2C019%20Finance%20and,of%20%2D0.1%25%20from%202022

[2] Number of organizations in supply chain industry 9,492
https://www.crunchbase.com/hub/united-states-supply-chain-management-companies

[3] There are 1,001 Wireless Telecommunications Carriers businesses in the US as of 2023

https://www.ibisworld.com/industry-statistics/number-of-businesses/wireless-telecommunications-carriers-united-states/#:~:text=There%20are%201%2C001%20Wireless%20Telecommunications,increase%20of%203%25%20from%202022.

[4] A common approach is to use the Pareto Principle (also known as the 80/20 rule) as a rough guide, suggesting that a smaller percentage of the total companies would account for the majority of employment. So 20% was assumed.

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[5] 18,232,567 is the total of the companies in the USA.

https://www.naics.com/business-lists/counts-by-company-size/

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[6] Low-code development market was estimated to be $6.78B in 2022

https://www.grandviewresearch.com/industry-analysis/low-code-development-platform-market-report

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Is the market saturated?

No, the market is large enough to co-exist with multiple competitors. There's a diverse spread of industries and companies across independent contractors, SMBs, and enterprises.

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Core marketing pitch

ToolJet's user-friendly, low-code platform is designed for teams of any size, offering a secure and scalable solution for developing custom internal tools. Minimise developer resources, accelerate development up to five times faster, and cut costs in half compared to traditional software development, all within a secure and scalable environment.

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🗒️ Acquisition Overview

Approach

The cloud product is still in its pre-PMF stage, as adoption has not been significant enough yet to establish a discernible pattern. In contrast, the self-hosted version is the flagship product, having achieved PMF accounting for the majority of the revenue.

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Current acquisition channels

• Sales - main acquisition channel
• • Outbound - email and LinkedIn
  • Inbound - from our open source community with 26k+ stars and 500+ contributors

• Content & Social media marketing - blogs & youtube videos on tutorials, product updates, and relevant content for the community
• Hackathon - A hackathon conducted every year in October that is promoted on social media and nudges the open-source community to contribute to issues in our public repository on GitHub.
• Partner program - commission-based affiliate program with service-based companies targeted towards larger companies (initial exploration phase and not formalized yet)

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Selecting Acquisition Channels

ToolJet Cloud = Pre-PMF

ToolJet Self-hosted = Early scaling stage

Hence, one channel is picked for Cloud that needs to be lost in cost and effort

and two channels are picked for Self-hosted that need to be scalable and have low lead time.

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For Self-hosted,

• Paid ads are low in lead time, and high in scale, and as an added benefit it is also flexible which gives us room for experimentation.
• Product integrations and partner design were shortlisted because they are high in their ability to scale. However, partner design was picked because it had comparatively lower lead time and effort. Moreover, it's low in cost which would allow for more budget and experimentation for paid ads.

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For Cloud,

• Organic search and content loops were shortlisted because they were low in cost.
• ToolJet's domain authority score is low and it has a low surface area covered in terms of the number of keywords as well. Given how competitive the market is, the top relevant keywords have a high Keyword Difficulty and CPC score. The keywords lower on the relevancy scale have much lower search volume compared to the top ones.
• Moreover, one of the current channels that ToolJet is already employing is working on content like blogs, videos, etc to steadily increase the SEO score.
• Hence, instead of working on improving SEO which seems to be a longer lead time than expected, content loops was selected.
• Since content loops will be a more targeted campaign, it was chosen. ToolJet was the #2 ranked repository on GitHub during Hacktober 2023 and has 500+ contributors and 27k + stars. Hence, the developer community can be leveraged to enable distribution via our current social media channels like GitHub, LinkedIn, and Twitter.

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ToolJet's domain authority. Retrieved from: www.semrush.com

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Keyword overlap with ToolJet's top competitors. Retrieved from: www.semrush.com

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Top keywords difficulty level and CPC. Retrieved from: www.semrush.com

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Overview of proposal

The goal of all the below-proposed experiments is to increase the number of paying customers. The proposal is split into three parts-

1. Partner program to target potential customers in our ICPs for Cloud
2. Paid advertising on LinkedIn to target buyer persona directly
3. Content loops across the admins and builders via ToolJet (enabler/platform)
   

🤝 Experiment 1- Partner program

🧑‍🤝‍🧑 Existing partner program

Currently, ToolJet offers an affiliate partner program targeting service-based companies, which receive commissions for every paid customer they refer to the company. These companies, working under contracts with multiple other companies, possess a network that can be leveraged. Given that this initiative is recent, it is too early to evaluate the approach or outcomes of this acquisition method. Therefore, I have proposed a strategy that operates parallelly with the existing one, rather than building upon it.

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This strategy aims to target larger companies to expand our Self-hosted use cases while proposing a growth channel for our Cloud product that caters to the company's broader product line. Considering that the average contract size and purchasing power in this segment will be lower, we'll focus on attracting a large number of small companies across various industries.

👩‍🔬 Proposed Experiment

A significant obstacle in our current buying process is the reluctance to switch from an existing system, such as building from scratch in their tech stack, to a new tool, especially due to a considerable learning curve.

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Brag worthy aspect

Turn your ideas into apps in a matter of hours, not days. Easy low-code interface to build and manage custom applications and data.

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Platform currency

Offer ToolJet credits for one year to 3 builders and 30 end-users, enabling them to use our system to build their tools and realize it's value.

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Partner

The target audience we aim to reach consists of small teams that would benefit from ToolJet hosting their tools, particularly those that are lean in terms of resources and seeking a quick solution for their application development needs—namely, startups. Moreover, solo founders have been reported to be spending over a third of their time on internal tools — most likely on resources that fill in early company and product gaps. [Retool, 2022]

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Offering free credits to early-stage teams not only supports their use case but also means they are likely to continue using our platform throughout the free year and beyond, due to common vendor lock-in practices in this industry. Based on this, we should focus on partnering with numerous organizers of events such as startup pitch events, hackathons, and networking events. This will help us tap into the startup network, both buyers and builders, particularly targeting startups at the seed stage for early vendor lock-in.

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For example,

Techstars Startup Weekend- Participants have 54 hours to create a startup. ToolJet can sponsor the event, allowing participants to use their product for rapid prototyping. This exposure will highlight the value ToolJet can offer, with top winners receiving free credits.

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Additionally, managing the event's logistics presents a great use case for ToolJet. So we will also offer the product subscription and some custom support to build the necessary applications for the event's planning and implementation phases.

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Landing page for participants in the event with targeted value prop of the platform

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🧪 Experiment 2- Paid advertising

👩🏻‍💼 Channel of advertising

This channel is targeting the buyer audience from our Self-hosted ICP which includes upper management roles such as CEOs and CTOs.

Moreover, LinkedIn allows us to filter audience by company size, industry, etc which will help us directly target and fine-tune our audience search.

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🆎 Type of advertisement

Lead generation forms on LinkedIn would help scale the existing sales-led approach. ToolJet can host an online webinar that the lead might potentially sign up for and collect their details via the sign-up.

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💸 Budget

• Lifetime value of an account = avg yearly contract value x avg lifetime of user

= $3744 x 1 year = $3744​

• Based on Intelus's report in August 2023, the average cost per lead generation was between $40-100
• However, the cost per lead generation is assumed to be $200 keeping extra margins for the bidding room since finance is a competitive market.
• Assuming, the sales team converts 20% of the leads generated, CAC = $1000 ​
• Hence, LTV/CAC= 3.7

📢 Campaign details

• Length of campaign = 2 months
• Daily ad budget = $2000 since finance is a competitive industry
• Total ad budget = $120,000

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It takes approximately 7 days for the ad set to start optimising. For LinkedIn to optimise based on purchases made by the sales team, rather than just on leads generated, the campaign must continue long enough for some deals to close. Assuming the average time to close a deal is 15 days, this allows the ads an additional week to optimise for deal closures, followed by a month to gather leads optimised for purchasing. Based on the results of this experiment, ToolJet can adapt and adopt more campaigns and ICPs.

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🎯 Target Segment

The following are the Audience Attributes set on LinkedIn's Campaign Manager-

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Location = USA

Company size = 501-1000

Company industry = Financial services

Job seniority = Manager, VP, Director, Senior, Partner

Forecasted audience size from LinkedIn Campaign Manager = 230,000+

💥 Potential Impact

• Based on the daily ad budget being $2000, LinkedIn should be able to generate 10 leads a day given that the average cost is $200, which is a total of 600 employees
• Assuming we manage to target 2 executives from the same company, the rest 50% would be unique companies = 300 companies
• Multiple touchpoints in the same company would also benefit the sales team in pursuing the leads

• Assuming our sales team can convert 20% of the leads, potential customers = 60 companies
• Potential revenue generated = 60 x $3744 (average contract value) = $ 224,640**
• ROAS = 1.87**

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**This number can vary based on ad campaign details and content. I've taken average industry numbers for the calculation. This is also a reason for the campaign being only 2 months to be able to experiment, given the high rates of LinkedIn's ads.

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📉 Marketing pitch for this ICP ​

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Interests of forecasted audience sized based on LikedIn's Campaign Manager

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Given that 91% of the target group showed an interest in Business Administration, ToolJet can leverage this to showcase the platform's capability to streamline business processes. The webinar will offer tips and tool recommendations for leaders in the finance industry, prominently featuring the advantage of building internal tools using low-code platforms - to optimize the efficiency of their dev resources and reduce their costs - while emphasizing on data safety.

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Therefore, the marketing pitch is refined to be

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🎨 Creative Strategy​

Given the campaign's two months, ToolJet will host an online webinar featuring a series of talks every week for a month during the campaign to maintain ad relevance. The advertising will commence a month before the event to allow users ample time to sign up. The campaign is scheduled to run from August to September, targeting the buyer persona.

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The set is split into two types of advertisements-

1. Targeting pain point/use case of the product
2. Targeting the product

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This experiment will help in determining whether users are aware of this type of solution or if specific use cases need targeted attention. Both advertisements incorporate social proof—highlighting the speakers of the sessions and emphasizing that the webinar is free, to incentivize users to sign up.

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📘 Advertisement 1- Use case​

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This explicitly mentions the pain point "productivity" and the audience "who is this for" in it.

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👩🏻‍💻 Advertisement 2- Product​

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This ad mentions the solution "low-code" to the pain point and what all the users outside can learn from the webinar

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🔄 Experiment 3- Content Loops

ToolJet's core value proposition is that making complex tools with their low-code platform is much faster and easier than using conventional methods. Hence, the hook is designed to showcase this value to the target audience.

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Content Loop Flow​

🪝 The Hook
Online Hackathon for developers inside and outside of our existing community to create as many applications as possible within two weeks. The theme of the Hackathon will be "Starting up" which will be basic internal tools that will be open-sourced to the community as templates.

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The leaderboard and all necessary information for the competition, including the application list will be displayed on a web app. This app, built with ToolJet by integrating with GitHub to track issues and actual contributions, not only facilitates the competition but also demonstrates ToolJet's capabilities to the target audience—developers. Building the leaderboard with ToolJet itself enhances brand recognition as well. Furthermore, all participants will receive notifications when their template is used, maintaining engagement and excitement throughout the competition.

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Hackathon Leaderboard built on ToolJet - the 'Built with ToolJet' tag takes users to the website. The partner AWS is mentioned to increase the organic impressions.

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🖼️ The Content Creator

Existing users will be encouraged to request templates they would like to see on the platform, and they will be floated as prompts in the hackathon. The purpose of these templates is to enable users to start building quickly, given the steep learning curve associated with mastering such a tool. Therefore, user requests for templates will directly aid in retaining both existing and new users, as these templates' use cases are identified by the community itself. However, ToolJet will evaluate the applications to approve them which then get added to user and they are ranked on the leaderboard.

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🛻 The Distributor

Google SEO and social media marketing, with an emphasis on social media outreach as the primary channel, are key components of our strategy. Google SEO aims to attract new users, while social media outreach will enable us to re-engage our existing community, which includes over 26,000 developers from our Github community who have shown interest or found value in the product. This approach will not only increase our contributions but also generate more inbound leads for the sales team to pursue.

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Written & Researched by Nechal Maggon, Tooljet.

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