My Lousy Presentation Allowed LogMeIn To Eclipse GoToMeeting

LogMeIn 2_17

A version of this article previously appeared in Forbes.

Last week, LogMeIn completed its merger with the GoTo services previously owned by Citrix (GoToMeeting, GoToWebinar, GoToTraining, etc.). Ironically, this merger might never have happened if I had been more persuasive back in 2003.

Unintended Uses By Unintended Users

In his book The Art Of The Start, Guy Kawasaki advises entrepreneurs to celebrate and exploit unexpected uses of their products by users outside of their target markets. Unfortunately, we did not heed Mr. Kawasaki’s advice.

Shortly after we launched GoToMyPC, a pre-cloud, desktop era tool that allowed users to work remotely, we noticed that some accounts had multiple PCs associated with them. This made no sense, as the solution was intended to allow a single user to access their work computer from an Internet connection. At the time, very few people had more than one work computer.

We spoke with a number of these anomalous users and learned that they were MIS Administrators who were using GoToMyPC to access remote servers located all over the world. They loved our product and enthusiastically described the handful of features they needed us to add, in order to make their jobs easier (primarily a dashboard from which they could monitor and access all their servers from one screen).

As Expertcity’s de facto CRO (years before we sold our company to Citrix), I was revenue hungry and elated with our new use case. I quickly pulled together a shoddy presentation and sat down with the three other folks who ran the business with me. In my naivety, I expected each of them to share my excitement.

After telling them that approximately 15% of our users were MIS Administrators who were “misusing” GoToMyPC and that we could significantly enhance these users’ experience with a few tweaks, I proposed that we launch GoToServer.

All three of my intelligent and highly reasonable compatriots protested. Their primary concern was that the financial benefits of a new product would more than offset by a detrimental loss of focus. We were a two product company at the time, so this objection seemed ill-founded. However, we made all decisions by consensus, so I dropped the GoToServer initiative.

Those Pesky Entrepreneurs Who Are Up At 3AM

In retrospect, I should have invested more energy into my pitch, as our hesitancy to properly service the needs of Administrators allowed a fledgling company, 3am Labs, to establish a beachhead in the remote access market.

Due to 3am Labs’ efforts, we quickly began losing our remote server users. Once the 3am team achieved a dominant share with Administrators, they released, a free alternative to GoToMeeting that significantly eroded our ability to charge a premium price for online meetings. Over the next decade, 3am Labs became the company’s primary remote access competitor.

It is always easy to second guess business decisions with the benefit of over a decade of hindsight. However, it is clear that 3am Labs, which eventually changed its name to LogMeIn, would have had a much more difficult row to hoe if we had not ignored an easily accessible and lucrative market segment, which we initially dominated without even trying.

Entrepreneurs, listen to Mr. Kawasaki and embrace unexpected users who devise unintended uses of your products. You might pick up some much-needed incremental revenue, while shutting out a potential competitor.

You can follow John on Twitter: @johngreathouse.

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John Greathouse

John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara’s Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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