Metigy gets $20 million AUD to making online marketing easier for SMEs


This post is by Catherine Shu from Fundings & Exits – TechCrunch

David Fairfull, CEO and co-founder of Metigy

David Fairfull, CEO and co-founder of Metigy

Metigy, a marketing platform created to help small businesses automate more of the decision making in their online ad campaigns, has raised a Series B of $20 million AUD (about $14.6 million USD). The new funding, led by returning investor Cygnet Capital, will be used to grow the Sydney, Australia-based startup’s international customer base, especially in the United States and Southeast Asia. Other participants in the round included Regal Funds Management, OC Funds, Five V Venture Capital and Thorney, plus returning

Founded in 2015, Metigy is currently used by about 26,000 businesses and has channel partnerships with Google and Optus. About 44% of its customers are in Australia and New Zealand, while 26% are in Southeast Asia, and 22% are in the United States. The startup has raised AUD $27.1 million (about USD $19.9 million) in total.

Co-founder and chief executive officer David Fairfull told TechCrunch Metigy was created because “half of SMEs fail in the first two years and marketing is one of the top two reasons for this. It’s a global issue and a paradigm that can be changed by harnessing technology.”

Fairfull and other members of Metigy’s founding team previously worked at We Are Social, a global creative agency. While there, they “spotted an opportunity to give small businesses access to the same data and strategic insights” as larger marketing teams.

Marketing platform Metigy's Command Center

Marketing platform Metigy’s Command Center

Metigy’s platform gives more support to small or inexperienced marketing teams by using real-time data from their online advertising channels to create a livestream of recommendations. For example, it will tell marketing teams if they should start posting more content right away, use more hashtags or schedule more posts. The platforms also predicts what posts will result in the most conversions, helping companies decide how to spend their advertising budget.

For example, one of Metigy’s customers, parking app Share with Oscar, used Metigy to analyze what was trending on social media when members of the Royal Family visited Sydney. As a result, Fairfull said they were able to generate 2,700 customer engagements by spending about AUD $10 (about USD $7).

Other social marketing platforms like Hootsuite and Sprout Social are “essentially process solutions that help make the marketer more efficient,” said Fairfull. “However, if you don’t understand marketing, then all this process efficiency won’t help you gain results.”

Metigy is focusing on the United States and Southeast Asia because of the large number of SMEs there. By 2022, there is expected to be 30 million SMEs in the U.S. “On top of this, success in marketing technology is often benchmarked by success in the U.S., so expanding in this region adds credibility,” Fairfull added.

But in terms of volume, Southeast Asia offers a more promising market. “The real growth opportunity for us though is in Southeast Asia, where there is expected to be 150 million SMEs across the 11 markets by 2022,” Fairfull said. But the majority of them don’t have large marketing teams or access to the kind of ad technology that larger companies do. Companies in the region also tend to be more price sensitive, Fairfull added, so artificial intelligence and machine learning-based technology helps lower the cost of software like Metigy to an attractive price.

SaaStr Podcast #398 with Salsify Co-Founder & CMO Rob Gonzalez


This post is by Amelia Ibarra from SaaStr

Ep. 398: Rob Gonzalez is the Co-Founder & CMO @ Salsify, empowering brand manufacturers to deliver the product experiences consumers demand at every point in their buying journey. To date, Salsify has raised over $250M in funding from the likes of Venrock, Underscore, Warburg Pincus, Matrix Partners & Greenspring to name a few. As for Rob, before founding Salsify, he was the first-ever product manager at Cambridge Semantics and before that was a Senior Product Manager @ Endeca helping grow the company to it’s $Bn exit.

In Today’s Episode We Discuss:

* How Rob made his way into the world of SaaS as a product manager and how that led to his founding Salsify over 8 years ago.
* How does Rob think about the bundled vs unbundled thesis within SaaS? When is it right for SaaS companies to turn down potential customers? How can they do that the right way? What is the right way to think about customer segmentation? How should startups decide which customer segment to focus on?
* How should startups think about implementing partnerships? When is the right time? What is the right way to onboard them? How can they be trained in implementation efficiently? What does great change management look like to Rob? What does Rob believe are the biggest misconceptions around change management?
* How does Rob think through pricing today in a way that encourages land and expand? What can you do to make the land as frictionless as possible? What does it take to expand effectively? How does Rob think about usage vs seat-based pricing in SaaS? How should sales and marketing work together on pricing?


 

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
SaaStr
Harry Stebbings
Rob Gonzalez

Below, we’ve shared the transcript of Harry’s interview with Rob.

Harry Stebbings:

We are back. This is the official SaaStr podcast with me, Harry Stebbings. And joining me in the hot seat today, we have Rob Gonzalez, co-founder and CMO at Salsify, empowering brand manufacturers to deliver the product experiences consumers demand at every point in their buying journey. To date, Salsify has raised over $250 million in funding from the likes of Venrock, Underscore, Warburg Pincus, Matrix Partners, and Greenspring, to name a few.

Harry Stebbings:

As for Rob, prior to founding Salsify, he was the first-ever product manager at Cambridge Semantics, and before that was a senior product manager at Endeca, helping grow the company to its billion-dollar exit. I do also want to say, huge thank you, though, to Michael Skok at Underscore. Some amazing background and question suggestions for Rob today. Michael, I really did so appreciate that. But that’s enough from me. So now it’s time to dive into the show, and I’m thrilled to welcome Rob Gonzalez, co-founder, and CMO at Salsify.

Harry Stebbings:

Rob, it is so great to have you on the show today. I’ve heard so many good things and many stories from Michael Skok. So thank you so much for joining me today, Rob.

Rob Gonzalez:

Thanks so much for having me.

Harry Stebbings:

Not at all. I do want to start it a little bit on you. So tell me, it’s a wonderful world, SaaS, but it’s also an interesting one to get into. So how did you make your way into the world of SaaS, and how did you come to found Salsify? I say most recently, but quite a few years ago, now.

Rob Gonzalez:

Yeah. Eight years ago, we founded the company, September 2012. But I had wanted to start a company for a long time before that. In 1999, I was at Williams College with my co-founder Jeremy Redburn. Williamstown at that time was sort of self-titled Silicon Village. There was a small startup scene. Tripod was a search engine there, which exited to AltaVista.

Rob Gonzalez:

And so, a lot of people that were doing computer science in Williamstown were thinking about startups back even in the late nineties. I was working on a startup that was an early mobile payment platform. It was basically using Bluetooth and an app on PalmPilots to do wireless payments in restaurants. And actually, one of the restaurants burned down and took our whole prototype with us, and that was pretty much the end of that company.

Rob Gonzalez:

So back then, we were already talking about it and it just took me and Jeremy another 14 years, almost, to get to a point where we really wanted to do a company. We felt ready from an experience perspective, we had an idea of what we wanted to do. Both of us and our third co-founder, Jason Purcell, were at a company called Endeca, which was a search engine for e-commerce, exited to Oracle for over a billion dollars in 2011. So we had a deep experience in the e-commerce space and it just, in 2012, it felt right. We had a great idea, we had a lot of experience, and we were ready to do it. But it took a lot of thinking up until that point before we ended up pulling the trigger.

Harry Stebbings:

Can I ask, you said it felt right. Do you think one’s ever ready to found a company? Do you know what I mean? I have a lot of graduates who always ask me, “Hey, should I join a startup? Should I join an incumbent? Or should I start my own company?” Do you think you’re ever ready, really, to start your own company? And actually, the only way you learn is by doing. How do you feel about that?

Rob Gonzalez:

I don’t necessarily agree that you’re never ready and all forms of never being ready are equivalent. So the statistics say that the older you are, the more likely you are for your company to succeed. All things being equal, a 20 year old versus a 30-year-old versus a 40-year-old starting a company, the 40-year-old is going to have a higher likelihood of success. So from that perspective, I think there is a lot to be said from gaining experience.

Rob Gonzalez:

Operationally, I look at, in particular, my experience at Endeca, but also another startup that sold to pharmaceutical companies and other life sciences businesses and financial services companies called Cambridge Semantics. I look at my experience through those companies, and I learned a lot about enterprise software sales, about buying patterns, about functions like product management and product marketing, and how they fit into a well functioning and operating company. It just made it a lot easier for us to scale up Salsify as we found success.

Rob Gonzalez:

I think if I had tried to do this when I was 22, I don’t know that I would have been able to do it. And not only that, I mean, I was in my early thirties when we founded Salsify. Jason’s a few years older than us and he was the GM of Endeca’s entire e-commerce business, and so had serious senior management experience. And that’s meant that, as we’ve scaled, it’s made it a lot easier to bring on seasoned executives that fit right into what we’re trying to do. So from my perspective, I think sometimes waiting can be helpful. The experience can matter.

Harry Stebbings:

I do want to ask, though, we spoke about eight years ago, founding Salsify. The SaaS industry, I mean, it’s completely changed on its head. I mean, eight years ago, a billion-dollar SaaS company was very, very rare. Now we have decacorn SaaS companies. How do you think about the most pronounced changes in SaaS over the last eight years for you?

Rob Gonzalez:

Yeah, I think there’s two. First, you hit the nail right on the head. In 2012, Wall Street didn’t really know how to value SaaS companies. You look at the forward-looking ARR multiples on the stock price, and they were a lot lower back then. They’ve been raising pretty much the entire decade. So whilst we didn’t know how to value them…

Rob Gonzalez:

And I think nobody really understood how many really big SaaS companies there could be. I mean, there was Salesforce, of course, but then you’ve got ServiceNow, you’ve got Veeva, you’ve got Workday. NetSuite exited close to a decacorn. It was just so many really great companies and so many more that are being built. And I think very few people understood that you could have really the possibility of dozens of decacorn companies existing on this model. And so that understanding has evolved a lot.

Rob Gonzalez:

The second major thing, I think, is that back in 2012, we were in what I think of as X in the cloud, as the moment of SaaS where you just take an existing software category and you put it in the cloud. So if you’re ERP, boom, Workday. If you’re CRM, boom, Salesforce. If you’re e-commerce, boom, Demandware. And there’s a lot of benefit to running a software as a service, in general. But I think that that generation of technology as being the first generation of cloud technology really misses out on benefits that you can accrue to being truly multitenant.

Rob Gonzalez:

So if you were building a commerce platform today, for example, you wouldn’t do it as single tenant, effectively, deployments. My account runs my website. You would probably do it as a way to connect data and analytics and behaviors and workflows across different companies and across different websites to make them all more effective. So I think we’re in a generation now, which is more, what is only uniquely possible in the cloud. And that’s distinct from the X in the cloud pattern that was the first generation.

Harry Stebbings:

Sorry, this is so unfair of me to go off schedule like this, but when you think back on only possible in the cloud, I think through every investment of mine is unbundling or bundling and try and very carefully be aware of which camp we’re in and why. Do you think that’s actually completely external to unbundling versus bundling? Or do you think it’s actually related? And if so, which one?

Rob Gonzalez:

Oh yeah. The old Jim Barksdale framing.

Harry Stebbings:

We’re both fans, clearly.

Rob Gonzalez:

Huge fan. Yeah. I think it’s orthogonal most of the time. Let me just give you an example. There were chat protocols that were around for a long time and there were even intercompany enterprise chat like Yammer and HipChat that existed. And Slack came out, and Slack enabled you to connect across companies. And they really built a network model on top of the chat, so instead of operating within a company, they started operating across companies.

Rob Gonzalez:

And that’s an example where it’s not really bundling or unbundling anything. It’s taking advantage of the fact that you’re a multi-tenant cloud architecture, and connecting people within one company is no different than connecting people across companies. So that type of mindset, I think, is the difference, not so much a bundle or unbundle.

Rob Gonzalez:

In Salsify’s space, in particular, we work with brand manufacturers, so customers, think Bosch, Coca-Cola, Levis, Lego, companies like that, and we help them win online. And a big part of those companies executing online is communicating their product data, their brand experiences, inventory data, things like that, to Amazon, to Walmart, to Granger, to Home Depot, to wherever their products happen to be sold.

Rob Gonzalez:

And there’s a connection across the supply chain of the brand and the retailer that didn’t really quite exist before from an experience management perspective, but is enabled by a SaaS company in a way that just wouldn’t have been possible in a non-SaaS world. And that’s another example of something where it’s not exactly a bundle or unbundle, it’s more unlocking a new type of capability that is uniquely enabled by the model.

Harry Stebbings:

Can I ask, you mentioned some of your incredible clients there. I spoke to Michael Skok, one of your investors, before the show, and he mentioned there was a time when, bluntly, there was a case where you were turning down customers. Now, talk to me about this. Why would one turn down customers? What was the reasoning, from your perspective?

Rob Gonzalez:

I mean, focus is the really short answer there. Ultimately, what we’re building is a multi-channel commerce platform. So if you are in the modern world, 2021, you are going to market, as a brand manufacturer, as a retailer, as a distributor, any of these models, in a hundred different ways. So if you think about just a manufacturer and you’re making a toy, you might sell it direct to consumer on your own website. You might sell it on Instagram, so Facebook has buy buttons on Instagram now. You might sell it through Facebook marketplace. You might sell it on Amazon as a first party seller. You might also sell it on Amazon as a third party seller, and so on and so forth.

Rob Gonzalez:

So your routes to market are extremely varied and also changing all the time. goPuff, for example, is a relatively new route to market competing with convenience, just raised a massive round at a close to $4 billion valuation. Now, they didn’t exist 10 years ago, and now it’s an important route to market for convenience products. So you’ve got this incredibly wide range of routes to market, and the challenge of a modern commerce platform is how do you actually coordinate selling motions and marketing motions through all of them centrally? That’s the problem that we’re looking to solve.

Rob Gonzalez:

Now, in terms of things going pear shaped, early on, we would sell to retailers, and we would sell to distributors, and we would sell to manufacturers. And what we found over time is that the needs of those three different business models in the market were really quite divergent. And it became pretty difficult for us from a product management and product strategy perspective to create a product that knocked it out of the park for retailers at the same time that we were creating a product that knocked it out of the park for brand manufacturers, and ultimately, had to make a choice that, for us, focusing on brand manufacturers really was going to be better off for our customers and easier for us to manage, given limited resources.

Rob Gonzalez:

So that’s what we ended up doing. And it’s meant that we’ve had to sunset some customers that were reasonably happy customers and it’s meant that when folks come into us from those business models and they want to work with us, we have to say no. But in saying no, it gives us the ability to create a truly best in class product on a lot of different axes for the core market that we serve.

Harry Stebbings:

So many different things from that there for me. Sorry for this, but you said about the multitude of the routes to market. I’m really interested. When you think about partnerships, something that’s been a core part of a lot of SaaS providers in the early days in scaling GTMs efficiently, how do you think the partnership model will play out over the next three to five years, I guess? And how did you think about it?

Rob Gonzalez:

Let me start with my philosophy here, which is that some companies, and certainly a start-up that I was working with before this, have fallen into the trap where you think that the partners are going to solve the go-to-market problem for you. They’ve got reach, they’ve got experience selling solutions that are similar to your solution, and so on and so forth.

Rob Gonzalez:

I think that’s wrong. Ultimately, partners can only sell something that you yourself have figured out how to sell and scale. So first and foremost, you want to have control of your go-to-market, and you’ve got to have the ability to sell to your customer yourself. And in gaining that ability, you will be able to bring on partners who can then accelerate your go-to-market and become part of your lead generation mix.

Rob Gonzalez:

In our case, we didn’t really spin up partners until early 2019, late 2018, early 2019 as a function, and only really a few weeks ago did we get a functional executive, a guy named Dan Herman, over the group to run it and start scaling it. So for us, it was relatively late in the game. I mean, we’re a series D company right now. We’ve been around for eight years and we only now have a partner organization that supports partners going to market.

Rob Gonzalez:

Now, because we’ve already reached scale within some of our accounts, our largest customers are multi-million ACV accounts, we can go to an Accenture, we can go to a WPP, we can go to others that are in the space that are expecting large deals with commensurately large services attached to them, and we can get their interest. Accenture literally has hundreds of people all over the world system at any given moment, and they can be good partners for us in that way. Four years ago, five years ago that wouldn’t have been the case.

Rob Gonzalez:

So the answer will vary based on company’s maturity level, and the type of product they sell, and how complicated it is, and the size of contract, and all that type of stuff. But broadly speaking, I think you’ve got to have a pretty decent scale on your own go-to-market efforts before it’s worth bringing partners in as part of the mix.

Harry Stebbings:

I love the way we’re just completely ignoring the schedule here, but I’m far too enjoying this. So you mentioned some of the incredible customers that you have around the world, and then also Accenture and the many other people engaging with it on a daily basis. My question to you is, change management is always so tough when working with some of these huge brands. What’s been your biggest lessons in what it takes to make change management efficient, effective, and streamlined?

Rob Gonzalez:

Yeah. Let me start with a mistake that we made early on. In 2012, no one took Amazon seriously, really. I mean, if you were a Johnson & Johnson, or you were any of these large manufacturers, you had one person or a tiny little team on Amazon, and that was it. They were just an additional sales channel. The gross was relatively low, even if the growth rate was relatively large. Other retailers weren’t, at that time, looking at Amazon as an existential threat, so the world of e-commerce was really quite different in 2012 compared to where it is today.

Rob Gonzalez:

And we were building a solution that enabled brands to win online, effectively. Control their brand presence, their product experience on Amazon, Walmart, Target, other places like that. And we thought that it was an enterprise problem. We thought that it would be analogous to really controlling your experience on Google. So if you’re managing a web property, you take Google SEO and SEM very seriously. There’s what, an $80-90 billion industry that focuses on just that?

Rob Gonzalez:

We felt that there would be the same type of thing for retail search. If you’re a brand manufacturer winning search on Amazon, winning search on Walmart, winning search on Home Depot should be even more valuable to you than winning search on Google. It’s closer to the purchase. And so, our view is we come to market with a solution that solves a big part of this problem, and people would be willing to pay a lot of money for it pretty quickly.

Rob Gonzalez:

And in 2012 and 2013, the early versions of the product, and frankly, even through halfway in 2014, they were hard to sell for exactly the reason that you’re talking about. It’s the change management aspect of it. These companies, even the ones that look forward in the future and say, “E-commerce is going to be a huge thing. Amazon is going to be absolutely dominant,” and so on and so forth, and there weren’t many of those people, but even those people, internally in their organizations, couldn’t get the tens of thousands of dollars to invest in robust enterprise solution for the problem.

Rob Gonzalez:

And so for us, getting in these companies, doing the education, finding the champions, and finding people that really believed in the vision was insufficient to closing out a lot of deals. And really, what helped us out along the way was in the back half of 2014, Macy’s, Walmart, Target, Home Depot, all within six to nine months of each other, started releasing content quality guidelines for their suppliers that included penalties for suppliers didn’t provide enough content that was deeper and compliant with their individual site search strategies and had images that were compliant with their site style guides and all this sort of stuff.

Rob Gonzalez:

And it really wasn’t until that time that the retailers started putting a thumb on the scale and putting pressure on the brands to become more digitally literate that we had the external compelling event needed to start pushing on the change management within these companies. So for us, having a strong vision of the future and understanding what changes the brands would have to go through over a long period of time to succeed, it wasn’t sufficient. The industry itself had to move in our direction in order to really give us the clout to push on it. Nowadays, of course, it’s a totally different situation. With COVID, in particular, everybody knows digital is everything, and it’s a much easier conversation to have.

Harry Stebbings:

Totally is. And yeah, I completely agree in terms of the shifted times. The other element that you said was about the services element. You mentioned Accenture, and services is a segment that’s bluntly shit on by VCs. Services revenue is thought of as low grade revenue. Ugh, services revenue. I’m actually a big believer in it, to an extent, if it’s a healthy ratio, given its ability for customer success and retention. How do you think about services revenue, and your willingness to have it as part of your business today, really?

Rob Gonzalez:

Yeah. We have a services arm. We want to run it about slightly gross margin positive on the business, so just, essentially, so it pays for itself. I think that services in the early days of, especially, an enterprise software company like Salsify, are extremely important. Because if you’re providing an enterprise solution and you’ve only been working on it for three, four years, it’s going to have gaps.

Rob Gonzalez:

There’s no way you can build a truly robust enterprise grade piece of software in three, four years that solve hard problems and have it be complete. Really robust services can paper over a lot of the product shortcomings and enable your customers to see success. So I think it’s an absolutely essential piece of companies getting off the ground.

Rob Gonzalez:

As you scale, we’ve made a decision at Salsify that we don’t want our services arm to be a large profitable business. I think in our space, you could certainly build a large profitable services business. There’s plenty of add-ons on top of our software, such as content creation, optimization, content optimization for things like SEO, image design, the list goes on and on, but then also the classic enterprise services work like workflow modeling, measurements and analytics on performance, and so on and so forth.

Rob Gonzalez:

So you can do tons of services on top of the solution that we offer. We’ve made the decision that most of that should go to the ecosystem. So we have just enough services, is the way that I would think about it. And for very large global deployments, the multi-million dollar SOWs, that sometimes a company, a large Salsify deployment, we want that to be done by somebody like an Accenture, somebody like a Wunderman Thompson, that has the in-house capability and experience doing it. And I think that’s best for all parties.

Rob Gonzalez:

So I think it’s a really important part of the mix. I don’t poo-poo it at all. I think it’s an essential part of the mix, and whether or not you decide to make it a big part of your revenue stream, I think just depends on, for your particular ecosystem, how important and embedded are existing services companies, and can you take advantage of that? I mean, if the answer is yes, then it enables you to be more of a software company. And if the answer is no, there’s no reason not to do the services yourself.

Harry Stebbings:

Can I ask, when you look at the services required to scale to the multi-millions of pounds of contract value that you have and other enterprise software companies have, the question that I have is, you can’t start at the multi-million pound level on a contract size basis. What have been some lessons for you in terms of entry point and how to successfully expand in as compressed a timeframe as possible, really, in terms of upsell?

Rob Gonzalez:

One of the great enduring benefits of the SaaS model is it’s just so suited to land, expand. It’s perfect for land, expand. And we’ve really followed that strategy from the beginning even to now. So, the way that we set our pricing and packaging is very intentionally to make the initial sale of Salsify for a new logo as frictionless as possible.

Rob Gonzalez:

And for us, we sell to manufacturers that are as small as 10 million a year in revenue, and then we sell to the very biggest in the world. And our contracts can go in the 10,000 a year range at the very lowest end to multi-million a year, depending on the functionality, and the geographies it’s being used, and some features, and so on. So those initial lands, our entry points that we create, are structured based on the market segment so that we can keep the average sales cycle time to about 90 days. So from that first buyer meeting until deal closed, around 90 days.

Rob Gonzalez:

So our largest customers that are in the multimillion dollar ACV range all started at about $65-70,000 initial contracts a few years ago and have just been adding to it over time. So from my perspective, SaaS enables land, expand way better than any other model that I know of. And if you focus on those initial lands as a frictionless deal that you can get wins on the board, the sky’s the limit in terms of how far you can grow with your customers together. So, that’s how we thought about it.

Harry Stebbings:

Listen, I totally agree in terms of it being the perfect model and suited. And fascinating to hear about that conversion cycle. In terms of the sales reps doing it, payback is one of my biggest passions, which is probably a sign that I need to get out more. How do you, especially as a CMO with the marketing hat on, how do you think about sales and marketing’s relationship, and what you, as the CMO, most like to engage with from the sales perspective side?

Rob Gonzalez:

Yeah. I mean, this is an evolving game for sure. I subscribe to what David Kellogg said, which is that marketing exists to make sales faster. And I think that depends on, first and foremost, that you’ve got a healthy sales team, with healthy sales leadership, and a healthy sales process. If you have that in place, there’s lots of different ways that marketing can be a great partner to sales in driving pipeline generation and helping them really hit and beat their numbers on a reliable basis.

Rob Gonzalez:

From our perspective, we’ve gone through several different, I think of as, generations of sales and marketing at Salsify. In the early days, we were selling much smaller contracts. The solution was a lot simpler than it is today and the whole selling motion was relatively transactional. So we had a more inbound-heavy marketing mix, and we had a certain type of rep that was more oriented at just banging out transactional deals. Over the years, while we still have some of our business looks like that, more and more of the business is bigger enterprise sales.

Rob Gonzalez:

The first thing that we did was we had to upgrade sales management, we had to upgrade sales reps, the folks that are really true enterprise grade experienced sellers, we brought into the company. That was a big cultural and process shift for us. I mean, talk about change management, that was a lot of work and we didn’t get it all right. It took a while to really settle into that new motion.

Rob Gonzalez:

And then after we had the sales reps, we had to do the same thing with marketing. So I brought on a new VP of revenue marketing in September of 2019, and she’s really done a tremendous amount to rebuild the entire growth engine to be much more enterprise focused from the beginning. So to get back to the original point, marketing makes effective sales more effective. In our experience, there’s been a sales change, then bleeds back through market. Sales change bleeds back through marketing. And that’s happened in several cycles so far over the course of the company.

Harry Stebbings:

Can I interrupt you? You said about a revenue marketing officer. I had Ryan Bonnici, he’s a friend, on the show recently and he said that marketing has to be tied to a number directly related to revenue. Marketing attribution is the biggest challenge for me in my flaws. How do you think about the revenue marketing role and how you think about successful marketing attribution?

Rob Gonzalez:

Yeah, I mean, it’s not a problem. That’s an easy one to solve for us. Because we’re an enterprise sale, a lot of the sales cycles are team oriented sales cycles. They take long periods of time. I mean, I say we try to keep up the average to 90 days, but there’s a long tail to that. So we often have larger sales cycles that might take nine months or 10 months and involve dozens of people on the buying side and maybe a dozen people at Salsify working on the deal.

Rob Gonzalez:

In those types of situations, there’s not a single lead source and there’s not a single marketing contribution. So you might have 15-20 touches with the company in the two months before the initial buying meeting. A couple of them are webinars, a couple of them are cold calls, a couple of them are referrals from a customer, and so on and so forth. And which of those do you give credit to for the lead? Which one of them do you give credit to for the deal?

Rob Gonzalez:

So from our perspective, what we’ve done to help simplify this is the cold calling team, the telemarketing team, the PDR team, we brought in as part of the revenue marketing function. And ultimately, that team is responsible for both handling the inbounds that come in and converting them to first buyer meetings, and then also cold calling and just doing the classic tele-prospecting to create new buyer meetings as well. We look at where the sources of all the meetings are initially, and then we look at the mix of touches that go into supporting the cycle all the way through close, including webinars that we use for the middle of the sales cycle to help educate buyers that are trying to learn more about the space.

Rob Gonzalez:

So I think there’s no silver bullet there. One of the things that we’ve done in the last couple of years is we took Jeremy Redburn, who’s one of the three co-founders, and we put him in charge of data at the company, in part to start building out more intelligence around attribution, because it’s been getting more complicated the bigger that we’ve getting. So yeah, I don’t have a hard answer to you other than it’s hard. We do the best that we can. I feel for everyone that’s trying to figure out exactly how to do this.

Harry Stebbings:

I think it’s pretty impossible. I do have to say that I do want to move into my favorite of any show, though, Rob, which is a quick fire round. This has been so much fun. I love just the natural conversation. So thank you for rolling with the punches, so to speak. But I say a short statement, and then you hit me with your immediate thoughts. Are you ready to roll?

Rob Gonzalez:

I’m ready to roll.

Harry Stebbings:

Okay. So tell me, start up life is fraught with challenges. What’s your biggest challenge with your role with Salsify today?

Rob Gonzalez:

I would say for a long time, it was all the HR related things. I mean, you get hundreds and hundreds of people in the company and there’s personnel stuff that pops up. And that’s, for me, personally, just based on my personality makeup, the most stressful part of the job.

Harry Stebbings:

What does the word company culture mean to you? It’s bandied around like nothing today. What does it mean to you?

Rob Gonzalez:

It’s the set of decisions and behaviors that happen when nobody’s looking. It’s like, what’s the default thing that you do? What’s expected of you? And what do you know that your peers are going to judge you on? That’s ultimately the heart of it.

Harry Stebbings:

Can I ask a tough one? What have you done deliberately to set the company culture with Salsify?

Rob Gonzalez:

I think one of the things that we did well is we sat down with Michael Skok in the early days and had a discussion about this. The thing that came out from that meeting was that I think most of a company’s culture is organic, is driven by especially leaders that you hire early on that shape the teams and shape the organizations of the company. And a lot of that is like, you can have control of the leader, but not exactly how the culture develops.

Rob Gonzalez:

The thing that we did well, and really, thanks to Michael for putting us in this direction, is we picked a couple of just core values that we hold ourselves accountable to. We survey our employees and just see if there’s any gaps in how we’re behaving towards those core values and we put particular effort to making sure that they’re true across the company. So while most of it can organically develop, a couple of key characteristics, we try to be very intentional about that. The most important to me being empowerment, the fact that individuals can operate as autonomously as possible, and that decision-making capability is pushed as far outward in the organization as we can make happen.

Harry Stebbings:

Tell me, what’s the hardest role to hire for today and why?

Rob Gonzalez:

Right now, I’m looking for a head of product marketing, so if you know anyone, let me know. And I think that’s a particularly hard role in a modern SaaS company because it’s not a bad version of product marketing of old. We’re creating sales decks and things like that. A modern head of product marketing is like a GM without the P and L almost, and they’ve got to be tremendously good at a huge variety of things. And in a product oriented company like Salsify, they’ve got to be technical. And so, I think that’s a little bit of a unicorn role and I really could use somebody there.

Harry Stebbings:

No, listen, I totally agree. And product marketing is every single person who I’ve ever asked hardest role to hire for. I think at least you are not alone. Tell me, which external SaaS leader do you most respect and admire today, and why?

Rob Gonzalez:

Benioff. I think Salesforce is just this operationally excellent machine. We just hired Mike Milburn, who was Salesforce’s Chief Customer Officer, and before that, he was the GM of Service Cloud, which is a multi-billion dollar ARR division of Salesforce. And especially what I’ve been learning from Mike and what I had known from people that worked at Salesforce before is that place is just a machine. And it’s hard to build something like that. And then I’ll give you a second answer. I really admire Reid Hoffman. He has said very publicly that he’s run multi-thousand person companies and teams and he just doesn’t like being in charge of teams. And he’s super self-aware of that. And I admire that. So the two of those guys really come out for me.

Harry Stebbings:

What would you most like to change about the world of SaaS? As we said, Salsify, eight year old company. What would you most like to change about the world of SaaS?

Rob Gonzalez:

Man, I would like there to be a lot more rigor around SaaS metrics so that we can more easily benchmark against other companies. Just for example, everyone calculates churn a little bit differently. David Kellogg has an outstanding series of blog posts about all the different ways that people talk about churn. David Skok, also on our board, who’s written just a really outstanding 30 page ebook on how to calculate churn effectively and LTV and CAC. And it’s just, people are pretty inconsistent about this. So when people are reporting these numbers that are non-GAAP SaaS numbers, it’s really hard to know how you would compare with those. So for me, I would just like more rigor around that so that we can more easily benchmark and talk to peers about it.

Harry Stebbings:

I totally agree. I’d also love it if we had some open source platform where we can do anonymized dataset benchmarking. That would be even better. I do want to move into my favorite, which is next five years for you and for Salsify. Paint that picture for me, Rob.

Rob Gonzalez:

Yeah. So we intend to IPO, I mean, certainly within that five years, unless we’re doing something wrong. We’ve also started creating a category called commerce experience management. And what I’d really like to see is for that category to take shape and for others to see the future that we see, in terms of how a brand executes and goes to market in this new multi-channel world of the digital shelf that we’re in now. So for us, that’s really it. Just keep the operational growth going, hit an IPO with our feet on the ground, running hard, continuing to accelerate, and make the category that we’re building a real thing that everybody’s talking about.

Harry Stebbings:

Rob, as I’ve said, I’ve heard so many great things from Michael before this episode. I’m so pleased that we got to do it, and I so appreciate your patience and really letting me go off schedule quite so much.

Rob Gonzalez:

No, absolutely. It’s been a fun conversation. Hopefully it’s valuable to the audience and thanks so much for having me on board.

Harry Stebbings:

Absolutely love that. And such exciting times ahead for Rob and Salsify. If you’d like to see more from us behind the scenes, you can on Instagram at HStebbings1996 with two Bs. I always love to see that. We have a very special show for you in the coming weeks. We have Tamar, Head of Product at Slack, and then we also have Felix, founder and CEO at Collibra on the show. Stay tuned, some very special ones to come.

 

The post SaaStr Podcast #398 with Salsify Co-Founder & CMO Rob Gonzalez appeared first on SaaStr.

SaaStr Podcast #398 with Salsify Co-Founder & CMO Rob Gonzalez


This post is by Amelia Ibarra from SaaStr

Ep. 398: Rob Gonzalez is the Co-Founder & CMO @ Salsify, empowering brand manufacturers to deliver the product experiences consumers demand at every point in their buying journey. To date, Salsify has raised over $250M in funding from the likes of Venrock, Underscore, Warburg Pincus, Matrix Partners & Greenspring to name a few. As for Rob, before founding Salsify, he was the first-ever product manager at Cambridge Semantics and before that was a Senior Product Manager @ Endeca helping grow the company to it’s $Bn exit.

In Today’s Episode We Discuss:

* How Rob made his way into the world of SaaS as a product manager and how that led to his founding Salsify over 8 years ago.
* How does Rob think about the bundled vs unbundled thesis within SaaS? When is it right for SaaS companies to turn down potential customers? How can they do that the right way? What is the right way to think about customer segmentation? How should startups decide which customer segment to focus on?
* How should startups think about implementing partnerships? When is the right time? What is the right way to onboard them? How can they be trained in implementation efficiently? What does great change management look like to Rob? What does Rob believe are the biggest misconceptions around change management?
* How does Rob think through pricing today in a way that encourages land and expand? What can you do to make the land as frictionless as possible? What does it take to expand effectively? How does Rob think about usage vs seat-based pricing in SaaS? How should sales and marketing work together on pricing?


 

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
SaaStr
Harry Stebbings
Rob Gonzalez

Below, we’ve shared the transcript of Harry’s interview with Rob.

Harry Stebbings:

We are back. This is the official SaaStr podcast with me, Harry Stebbings. And joining me in the hot seat today, we have Rob Gonzalez, co-founder and CMO at Salsify, empowering brand manufacturers to deliver the product experiences consumers demand at every point in their buying journey. To date, Salsify has raised over $250 million in funding from the likes of Venrock, Underscore, Warburg Pincus, Matrix Partners, and Greenspring, to name a few.

Harry Stebbings:

As for Rob, prior to founding Salsify, he was the first-ever product manager at Cambridge Semantics, and before that was a senior product manager at Endeca, helping grow the company to its billion-dollar exit. I do also want to say, huge thank you, though, to Michael Skok at Underscore. Some amazing background and question suggestions for Rob today. Michael, I really did so appreciate that. But that’s enough from me. So now it’s time to dive into the show, and I’m thrilled to welcome Rob Gonzalez, co-founder, and CMO at Salsify.

Harry Stebbings:

Rob, it is so great to have you on the show today. I’ve heard so many good things and many stories from Michael Skok. So thank you so much for joining me today, Rob.

Rob Gonzalez:

Thanks so much for having me.

Harry Stebbings:

Not at all. I do want to start it a little bit on you. So tell me, it’s a wonderful world, SaaS, but it’s also an interesting one to get into. So how did you make your way into the world of SaaS, and how did you come to found Salsify? I say most recently, but quite a few years ago, now.

Rob Gonzalez:

Yeah. Eight years ago, we founded the company, September 2012. But I had wanted to start a company for a long time before that. In 1999, I was at Williams College with my co-founder Jeremy Redburn. Williamstown at that time was sort of self-titled Silicon Village. There was a small startup scene. Tripod was a search engine there, which exited to AltaVista.

Rob Gonzalez:

And so, a lot of people that were doing computer science in Williamstown were thinking about startups back even in the late nineties. I was working on a startup that was an early mobile payment platform. It was basically using Bluetooth and an app on PalmPilots to do wireless payments in restaurants. And actually, one of the restaurants burned down and took our whole prototype with us, and that was pretty much the end of that company.

Rob Gonzalez:

So back then, we were already talking about it and it just took me and Jeremy another 14 years, almost, to get to a point where we really wanted to do a company. We felt ready from an experience perspective, we had an idea of what we wanted to do. Both of us and our third co-founder, Jason Purcell, were at a company called Endeca, which was a search engine for e-commerce, exited to Oracle for over a billion dollars in 2011. So we had a deep experience in the e-commerce space and it just, in 2012, it felt right. We had a great idea, we had a lot of experience, and we were ready to do it. But it took a lot of thinking up until that point before we ended up pulling the trigger.

Harry Stebbings:

Can I ask, you said it felt right. Do you think one’s ever ready to found a company? Do you know what I mean? I have a lot of graduates who always ask me, “Hey, should I join a startup? Should I join an incumbent? Or should I start my own company?” Do you think you’re ever ready, really, to start your own company? And actually, the only way you learn is by doing. How do you feel about that?

Rob Gonzalez:

I don’t necessarily agree that you’re never ready and all forms of never being ready are equivalent. So the statistics say that the older you are, the more likely you are for your company to succeed. All things being equal, a 20 year old versus a 30-year-old versus a 40-year-old starting a company, the 40-year-old is going to have a higher likelihood of success. So from that perspective, I think there is a lot to be said from gaining experience.

Rob Gonzalez:

Operationally, I look at, in particular, my experience at Endeca, but also another startup that sold to pharmaceutical companies and other life sciences businesses and financial services companies called Cambridge Semantics. I look at my experience through those companies, and I learned a lot about enterprise software sales, about buying patterns, about functions like product management and product marketing, and how they fit into a well functioning and operating company. It just made it a lot easier for us to scale up Salsify as we found success.

Rob Gonzalez:

I think if I had tried to do this when I was 22, I don’t know that I would have been able to do it. And not only that, I mean, I was in my early thirties when we founded Salsify. Jason’s a few years older than us and he was the GM of Endeca’s entire e-commerce business, and so had serious senior management experience. And that’s meant that, as we’ve scaled, it’s made it a lot easier to bring on seasoned executives that fit right into what we’re trying to do. So from my perspective, I think sometimes waiting can be helpful. The experience can matter.

Harry Stebbings:

I do want to ask, though, we spoke about eight years ago, founding Salsify. The SaaS industry, I mean, it’s completely changed on its head. I mean, eight years ago, a billion-dollar SaaS company was very, very rare. Now we have decacorn SaaS companies. How do you think about the most pronounced changes in SaaS over the last eight years for you?

Rob Gonzalez:

Yeah, I think there’s two. First, you hit the nail right on the head. In 2012, Wall Street didn’t really know how to value SaaS companies. You look at the forward-looking ARR multiples on the stock price, and they were a lot lower back then. They’ve been raising pretty much the entire decade. So whilst we didn’t know how to value them…

Rob Gonzalez:

And I think nobody really understood how many really big SaaS companies there could be. I mean, there was Salesforce, of course, but then you’ve got ServiceNow, you’ve got Veeva, you’ve got Workday. NetSuite exited close to a decacorn. It was just so many really great companies and so many more that are being built. And I think very few people understood that you could have really the possibility of dozens of decacorn companies existing on this model. And so that understanding has evolved a lot.

Rob Gonzalez:

The second major thing, I think, is that back in 2012, we were in what I think of as X in the cloud, as the moment of SaaS where you just take an existing software category and you put it in the cloud. So if you’re ERP, boom, Workday. If you’re CRM, boom, Salesforce. If you’re e-commerce, boom, Demandware. And there’s a lot of benefit to running a software as a service, in general. But I think that that generation of technology as being the first generation of cloud technology really misses out on benefits that you can accrue to being truly multitenant.

Rob Gonzalez:

So if you were building a commerce platform today, for example, you wouldn’t do it as single tenant, effectively, deployments. My account runs my website. You would probably do it as a way to connect data and analytics and behaviors and workflows across different companies and across different websites to make them all more effective. So I think we’re in a generation now, which is more, what is only uniquely possible in the cloud. And that’s distinct from the X in the cloud pattern that was the first generation.

Harry Stebbings:

Sorry, this is so unfair of me to go off schedule like this, but when you think back on only possible in the cloud, I think through every investment of mine is unbundling or bundling and try and very carefully be aware of which camp we’re in and why. Do you think that’s actually completely external to unbundling versus bundling? Or do you think it’s actually related? And if so, which one?

Rob Gonzalez:

Oh yeah. The old Jim Barksdale framing.

Harry Stebbings:

We’re both fans, clearly.

Rob Gonzalez:

Huge fan. Yeah. I think it’s orthogonal most of the time. Let me just give you an example. There were chat protocols that were around for a long time and there were even intercompany enterprise chat like Yammer and HipChat that existed. And Slack came out, and Slack enabled you to connect across companies. And they really built a network model on top of the chat, so instead of operating within a company, they started operating across companies.

Rob Gonzalez:

And that’s an example where it’s not really bundling or unbundling anything. It’s taking advantage of the fact that you’re a multi-tenant cloud architecture, and connecting people within one company is no different than connecting people across companies. So that type of mindset, I think, is the difference, not so much a bundle or unbundle.

Rob Gonzalez:

In Salsify’s space, in particular, we work with brand manufacturers, so customers, think Bosch, Coca-Cola, Levis, Lego, companies like that, and we help them win online. And a big part of those companies executing online is communicating their product data, their brand experiences, inventory data, things like that, to Amazon, to Walmart, to Granger, to Home Depot, to wherever their products happen to be sold.

Rob Gonzalez:

And there’s a connection across the supply chain of the brand and the retailer that didn’t really quite exist before from an experience management perspective, but is enabled by a SaaS company in a way that just wouldn’t have been possible in a non-SaaS world. And that’s another example of something where it’s not exactly a bundle or unbundle, it’s more unlocking a new type of capability that is uniquely enabled by the model.

Harry Stebbings:

Can I ask, you mentioned some of your incredible clients there. I spoke to Michael Skok, one of your investors, before the show, and he mentioned there was a time when, bluntly, there was a case where you were turning down customers. Now, talk to me about this. Why would one turn down customers? What was the reasoning, from your perspective?

Rob Gonzalez:

I mean, focus is the really short answer there. Ultimately, what we’re building is a multi-channel commerce platform. So if you are in the modern world, 2021, you are going to market, as a brand manufacturer, as a retailer, as a distributor, any of these models, in a hundred different ways. So if you think about just a manufacturer and you’re making a toy, you might sell it direct to consumer on your own website. You might sell it on Instagram, so Facebook has buy buttons on Instagram now. You might sell it through Facebook marketplace. You might sell it on Amazon as a first party seller. You might also sell it on Amazon as a third party seller, and so on and so forth.

Rob Gonzalez:

So your routes to market are extremely varied and also changing all the time. goPuff, for example, is a relatively new route to market competing with convenience, just raised a massive round at a close to $4 billion valuation. Now, they didn’t exist 10 years ago, and now it’s an important route to market for convenience products. So you’ve got this incredibly wide range of routes to market, and the challenge of a modern commerce platform is how do you actually coordinate selling motions and marketing motions through all of them centrally? That’s the problem that we’re looking to solve.

Rob Gonzalez:

Now, in terms of things going pear shaped, early on, we would sell to retailers, and we would sell to distributors, and we would sell to manufacturers. And what we found over time is that the needs of those three different business models in the market were really quite divergent. And it became pretty difficult for us from a product management and product strategy perspective to create a product that knocked it out of the park for retailers at the same time that we were creating a product that knocked it out of the park for brand manufacturers, and ultimately, had to make a choice that, for us, focusing on brand manufacturers really was going to be better off for our customers and easier for us to manage, given limited resources.

Rob Gonzalez:

So that’s what we ended up doing. And it’s meant that we’ve had to sunset some customers that were reasonably happy customers and it’s meant that when folks come into us from those business models and they want to work with us, we have to say no. But in saying no, it gives us the ability to create a truly best in class product on a lot of different axes for the core market that we serve.

Harry Stebbings:

So many different things from that there for me. Sorry for this, but you said about the multitude of the routes to market. I’m really interested. When you think about partnerships, something that’s been a core part of a lot of SaaS providers in the early days in scaling GTMs efficiently, how do you think the partnership model will play out over the next three to five years, I guess? And how did you think about it?

Rob Gonzalez:

Let me start with my philosophy here, which is that some companies, and certainly a start-up that I was working with before this, have fallen into the trap where you think that the partners are going to solve the go-to-market problem for you. They’ve got reach, they’ve got experience selling solutions that are similar to your solution, and so on and so forth.

Rob Gonzalez:

I think that’s wrong. Ultimately, partners can only sell something that you yourself have figured out how to sell and scale. So first and foremost, you want to have control of your go-to-market, and you’ve got to have the ability to sell to your customer yourself. And in gaining that ability, you will be able to bring on partners who can then accelerate your go-to-market and become part of your lead generation mix.

Rob Gonzalez:

In our case, we didn’t really spin up partners until early 2019, late 2018, early 2019 as a function, and only really a few weeks ago did we get a functional executive, a guy named Dan Herman, over the group to run it and start scaling it. So for us, it was relatively late in the game. I mean, we’re a series D company right now. We’ve been around for eight years and we only now have a partner organization that supports partners going to market.

Rob Gonzalez:

Now, because we’ve already reached scale within some of our accounts, our largest customers are multi-million ACV accounts, we can go to an Accenture, we can go to a WPP, we can go to others that are in the space that are expecting large deals with commensurately large services attached to them, and we can get their interest. Accenture literally has hundreds of people all over the world system at any given moment, and they can be good partners for us in that way. Four years ago, five years ago that wouldn’t have been the case.

Rob Gonzalez:

So the answer will vary based on company’s maturity level, and the type of product they sell, and how complicated it is, and the size of contract, and all that type of stuff. But broadly speaking, I think you’ve got to have a pretty decent scale on your own go-to-market efforts before it’s worth bringing partners in as part of the mix.

Harry Stebbings:

I love the way we’re just completely ignoring the schedule here, but I’m far too enjoying this. So you mentioned some of the incredible customers that you have around the world, and then also Accenture and the many other people engaging with it on a daily basis. My question to you is, change management is always so tough when working with some of these huge brands. What’s been your biggest lessons in what it takes to make change management efficient, effective, and streamlined?

Rob Gonzalez:

Yeah. Let me start with a mistake that we made early on. In 2012, no one took Amazon seriously, really. I mean, if you were a Johnson & Johnson, or you were any of these large manufacturers, you had one person or a tiny little team on Amazon, and that was it. They were just an additional sales channel. The gross was relatively low, even if the growth rate was relatively large. Other retailers weren’t, at that time, looking at Amazon as an existential threat, so the world of e-commerce was really quite different in 2012 compared to where it is today.

Rob Gonzalez:

And we were building a solution that enabled brands to win online, effectively. Control their brand presence, their product experience on Amazon, Walmart, Target, other places like that. And we thought that it was an enterprise problem. We thought that it would be analogous to really controlling your experience on Google. So if you’re managing a web property, you take Google SEO and SEM very seriously. There’s what, an $80-90 billion industry that focuses on just that?

Rob Gonzalez:

We felt that there would be the same type of thing for retail search. If you’re a brand manufacturer winning search on Amazon, winning search on Walmart, winning search on Home Depot should be even more valuable to you than winning search on Google. It’s closer to the purchase. And so, our view is we come to market with a solution that solves a big part of this problem, and people would be willing to pay a lot of money for it pretty quickly.

Rob Gonzalez:

And in 2012 and 2013, the early versions of the product, and frankly, even through halfway in 2014, they were hard to sell for exactly the reason that you’re talking about. It’s the change management aspect of it. These companies, even the ones that look forward in the future and say, “E-commerce is going to be a huge thing. Amazon is going to be absolutely dominant,” and so on and so forth, and there weren’t many of those people, but even those people, internally in their organizations, couldn’t get the tens of thousands of dollars to invest in robust enterprise solution for the problem.

Rob Gonzalez:

And so for us, getting in these companies, doing the education, finding the champions, and finding people that really believed in the vision was insufficient to closing out a lot of deals. And really, what helped us out along the way was in the back half of 2014, Macy’s, Walmart, Target, Home Depot, all within six to nine months of each other, started releasing content quality guidelines for their suppliers that included penalties for suppliers didn’t provide enough content that was deeper and compliant with their individual site search strategies and had images that were compliant with their site style guides and all this sort of stuff.

Rob Gonzalez:

And it really wasn’t until that time that the retailers started putting a thumb on the scale and putting pressure on the brands to become more digitally literate that we had the external compelling event needed to start pushing on the change management within these companies. So for us, having a strong vision of the future and understanding what changes the brands would have to go through over a long period of time to succeed, it wasn’t sufficient. The industry itself had to move in our direction in order to really give us the clout to push on it. Nowadays, of course, it’s a totally different situation. With COVID, in particular, everybody knows digital is everything, and it’s a much easier conversation to have.

Harry Stebbings:

Totally is. And yeah, I completely agree in terms of the shifted times. The other element that you said was about the services element. You mentioned Accenture, and services is a segment that’s bluntly shit on by VCs. Services revenue is thought of as low grade revenue. Ugh, services revenue. I’m actually a big believer in it, to an extent, if it’s a healthy ratio, given its ability for customer success and retention. How do you think about services revenue, and your willingness to have it as part of your business today, really?

Rob Gonzalez:

Yeah. We have a services arm. We want to run it about slightly gross margin positive on the business, so just, essentially, so it pays for itself. I think that services in the early days of, especially, an enterprise software company like Salsify, are extremely important. Because if you’re providing an enterprise solution and you’ve only been working on it for three, four years, it’s going to have gaps.

Rob Gonzalez:

There’s no way you can build a truly robust enterprise grade piece of software in three, four years that solve hard problems and have it be complete. Really robust services can paper over a lot of the product shortcomings and enable your customers to see success. So I think it’s an absolutely essential piece of companies getting off the ground.

Rob Gonzalez:

As you scale, we’ve made a decision at Salsify that we don’t want our services arm to be a large profitable business. I think in our space, you could certainly build a large profitable services business. There’s plenty of add-ons on top of our software, such as content creation, optimization, content optimization for things like SEO, image design, the list goes on and on, but then also the classic enterprise services work like workflow modeling, measurements and analytics on performance, and so on and so forth.

Rob Gonzalez:

So you can do tons of services on top of the solution that we offer. We’ve made the decision that most of that should go to the ecosystem. So we have just enough services, is the way that I would think about it. And for very large global deployments, the multi-million dollar SOWs, that sometimes a company, a large Salsify deployment, we want that to be done by somebody like an Accenture, somebody like a Wunderman Thompson, that has the in-house capability and experience doing it. And I think that’s best for all parties.

Rob Gonzalez:

So I think it’s a really important part of the mix. I don’t poo-poo it at all. I think it’s an essential part of the mix, and whether or not you decide to make it a big part of your revenue stream, I think just depends on, for your particular ecosystem, how important and embedded are existing services companies, and can you take advantage of that? I mean, if the answer is yes, then it enables you to be more of a software company. And if the answer is no, there’s no reason not to do the services yourself.

Harry Stebbings:

Can I ask, when you look at the services required to scale to the multi-millions of pounds of contract value that you have and other enterprise software companies have, the question that I have is, you can’t start at the multi-million pound level on a contract size basis. What have been some lessons for you in terms of entry point and how to successfully expand in as compressed a timeframe as possible, really, in terms of upsell?

Rob Gonzalez:

One of the great enduring benefits of the SaaS model is it’s just so suited to land, expand. It’s perfect for land, expand. And we’ve really followed that strategy from the beginning even to now. So, the way that we set our pricing and packaging is very intentionally to make the initial sale of Salsify for a new logo as frictionless as possible.

Rob Gonzalez:

And for us, we sell to manufacturers that are as small as 10 million a year in revenue, and then we sell to the very biggest in the world. And our contracts can go in the 10,000 a year range at the very lowest end to multi-million a year, depending on the functionality, and the geographies it’s being used, and some features, and so on. So those initial lands, our entry points that we create, are structured based on the market segment so that we can keep the average sales cycle time to about 90 days. So from that first buyer meeting until deal closed, around 90 days.

Rob Gonzalez:

So our largest customers that are in the multimillion dollar ACV range all started at about $65-70,000 initial contracts a few years ago and have just been adding to it over time. So from my perspective, SaaS enables land, expand way better than any other model that I know of. And if you focus on those initial lands as a frictionless deal that you can get wins on the board, the sky’s the limit in terms of how far you can grow with your customers together. So, that’s how we thought about it.

Harry Stebbings:

Listen, I totally agree in terms of it being the perfect model and suited. And fascinating to hear about that conversion cycle. In terms of the sales reps doing it, payback is one of my biggest passions, which is probably a sign that I need to get out more. How do you, especially as a CMO with the marketing hat on, how do you think about sales and marketing’s relationship, and what you, as the CMO, most like to engage with from the sales perspective side?

Rob Gonzalez:

Yeah. I mean, this is an evolving game for sure. I subscribe to what David Kellogg said, which is that marketing exists to make sales faster. And I think that depends on, first and foremost, that you’ve got a healthy sales team, with healthy sales leadership, and a healthy sales process. If you have that in place, there’s lots of different ways that marketing can be a great partner to sales in driving pipeline generation and helping them really hit and beat their numbers on a reliable basis.

Rob Gonzalez:

From our perspective, we’ve gone through several different, I think of as, generations of sales and marketing at Salsify. In the early days, we were selling much smaller contracts. The solution was a lot simpler than it is today and the whole selling motion was relatively transactional. So we had a more inbound-heavy marketing mix, and we had a certain type of rep that was more oriented at just banging out transactional deals. Over the years, while we still have some of our business looks like that, more and more of the business is bigger enterprise sales.

Rob Gonzalez:

The first thing that we did was we had to upgrade sales management, we had to upgrade sales reps, the folks that are really true enterprise grade experienced sellers, we brought into the company. That was a big cultural and process shift for us. I mean, talk about change management, that was a lot of work and we didn’t get it all right. It took a while to really settle into that new motion.

Rob Gonzalez:

And then after we had the sales reps, we had to do the same thing with marketing. So I brought on a new VP of revenue marketing in September of 2019, and she’s really done a tremendous amount to rebuild the entire growth engine to be much more enterprise focused from the beginning. So to get back to the original point, marketing makes effective sales more effective. In our experience, there’s been a sales change, then bleeds back through market. Sales change bleeds back through marketing. And that’s happened in several cycles so far over the course of the company.

Harry Stebbings:

Can I interrupt you? You said about a revenue marketing officer. I had Ryan Bonnici, he’s a friend, on the show recently and he said that marketing has to be tied to a number directly related to revenue. Marketing attribution is the biggest challenge for me in my flaws. How do you think about the revenue marketing role and how you think about successful marketing attribution?

Rob Gonzalez:

Yeah, I mean, it’s not a problem. That’s an easy one to solve for us. Because we’re an enterprise sale, a lot of the sales cycles are team oriented sales cycles. They take long periods of time. I mean, I say we try to keep up the average to 90 days, but there’s a long tail to that. So we often have larger sales cycles that might take nine months or 10 months and involve dozens of people on the buying side and maybe a dozen people at Salsify working on the deal.

Rob Gonzalez:

In those types of situations, there’s not a single lead source and there’s not a single marketing contribution. So you might have 15-20 touches with the company in the two months before the initial buying meeting. A couple of them are webinars, a couple of them are cold calls, a couple of them are referrals from a customer, and so on and so forth. And which of those do you give credit to for the lead? Which one of them do you give credit to for the deal?

Rob Gonzalez:

So from our perspective, what we’ve done to help simplify this is the cold calling team, the telemarketing team, the PDR team, we brought in as part of the revenue marketing function. And ultimately, that team is responsible for both handling the inbounds that come in and converting them to first buyer meetings, and then also cold calling and just doing the classic tele-prospecting to create new buyer meetings as well. We look at where the sources of all the meetings are initially, and then we look at the mix of touches that go into supporting the cycle all the way through close, including webinars that we use for the middle of the sales cycle to help educate buyers that are trying to learn more about the space.

Rob Gonzalez:

So I think there’s no silver bullet there. One of the things that we’ve done in the last couple of years is we took Jeremy Redburn, who’s one of the three co-founders, and we put him in charge of data at the company, in part to start building out more intelligence around attribution, because it’s been getting more complicated the bigger that we’ve getting. So yeah, I don’t have a hard answer to you other than it’s hard. We do the best that we can. I feel for everyone that’s trying to figure out exactly how to do this.

Harry Stebbings:

I think it’s pretty impossible. I do have to say that I do want to move into my favorite of any show, though, Rob, which is a quick fire round. This has been so much fun. I love just the natural conversation. So thank you for rolling with the punches, so to speak. But I say a short statement, and then you hit me with your immediate thoughts. Are you ready to roll?

Rob Gonzalez:

I’m ready to roll.

Harry Stebbings:

Okay. So tell me, start up life is fraught with challenges. What’s your biggest challenge with your role with Salsify today?

Rob Gonzalez:

I would say for a long time, it was all the HR related things. I mean, you get hundreds and hundreds of people in the company and there’s personnel stuff that pops up. And that’s, for me, personally, just based on my personality makeup, the most stressful part of the job.

Harry Stebbings:

What does the word company culture mean to you? It’s bandied around like nothing today. What does it mean to you?

Rob Gonzalez:

It’s the set of decisions and behaviors that happen when nobody’s looking. It’s like, what’s the default thing that you do? What’s expected of you? And what do you know that your peers are going to judge you on? That’s ultimately the heart of it.

Harry Stebbings:

Can I ask a tough one? What have you done deliberately to set the company culture with Salsify?

Rob Gonzalez:

I think one of the things that we did well is we sat down with Michael Skok in the early days and had a discussion about this. The thing that came out from that meeting was that I think most of a company’s culture is organic, is driven by especially leaders that you hire early on that shape the teams and shape the organizations of the company. And a lot of that is like, you can have control of the leader, but not exactly how the culture develops.

Rob Gonzalez:

The thing that we did well, and really, thanks to Michael for putting us in this direction, is we picked a couple of just core values that we hold ourselves accountable to. We survey our employees and just see if there’s any gaps in how we’re behaving towards those core values and we put particular effort to making sure that they’re true across the company. So while most of it can organically develop, a couple of key characteristics, we try to be very intentional about that. The most important to me being empowerment, the fact that individuals can operate as autonomously as possible, and that decision-making capability is pushed as far outward in the organization as we can make happen.

Harry Stebbings:

Tell me, what’s the hardest role to hire for today and why?

Rob Gonzalez:

Right now, I’m looking for a head of product marketing, so if you know anyone, let me know. And I think that’s a particularly hard role in a modern SaaS company because it’s not a bad version of product marketing of old. We’re creating sales decks and things like that. A modern head of product marketing is like a GM without the P and L almost, and they’ve got to be tremendously good at a huge variety of things. And in a product oriented company like Salsify, they’ve got to be technical. And so, I think that’s a little bit of a unicorn role and I really could use somebody there.

Harry Stebbings:

No, listen, I totally agree. And product marketing is every single person who I’ve ever asked hardest role to hire for. I think at least you are not alone. Tell me, which external SaaS leader do you most respect and admire today, and why?

Rob Gonzalez:

Benioff. I think Salesforce is just this operationally excellent machine. We just hired Mike Milburn, who was Salesforce’s Chief Customer Officer, and before that, he was the GM of Service Cloud, which is a multi-billion dollar ARR division of Salesforce. And especially what I’ve been learning from Mike and what I had known from people that worked at Salesforce before is that place is just a machine. And it’s hard to build something like that. And then I’ll give you a second answer. I really admire Reid Hoffman. He has said very publicly that he’s run multi-thousand person companies and teams and he just doesn’t like being in charge of teams. And he’s super self-aware of that. And I admire that. So the two of those guys really come out for me.

Harry Stebbings:

What would you most like to change about the world of SaaS? As we said, Salsify, eight year old company. What would you most like to change about the world of SaaS?

Rob Gonzalez:

Man, I would like there to be a lot more rigor around SaaS metrics so that we can more easily benchmark against other companies. Just for example, everyone calculates churn a little bit differently. David Kellogg has an outstanding series of blog posts about all the different ways that people talk about churn. David Skok, also on our board, who’s written just a really outstanding 30 page ebook on how to calculate churn effectively and LTV and CAC. And it’s just, people are pretty inconsistent about this. So when people are reporting these numbers that are non-GAAP SaaS numbers, it’s really hard to know how you would compare with those. So for me, I would just like more rigor around that so that we can more easily benchmark and talk to peers about it.

Harry Stebbings:

I totally agree. I’d also love it if we had some open source platform where we can do anonymized dataset benchmarking. That would be even better. I do want to move into my favorite, which is next five years for you and for Salsify. Paint that picture for me, Rob.

Rob Gonzalez:

Yeah. So we intend to IPO, I mean, certainly within that five years, unless we’re doing something wrong. We’ve also started creating a category called commerce experience management. And what I’d really like to see is for that category to take shape and for others to see the future that we see, in terms of how a brand executes and goes to market in this new multi-channel world of the digital shelf that we’re in now. So for us, that’s really it. Just keep the operational growth going, hit an IPO with our feet on the ground, running hard, continuing to accelerate, and make the category that we’re building a real thing that everybody’s talking about.

Harry Stebbings:

Rob, as I’ve said, I’ve heard so many great things from Michael before this episode. I’m so pleased that we got to do it, and I so appreciate your patience and really letting me go off schedule quite so much.

Rob Gonzalez:

No, absolutely. It’s been a fun conversation. Hopefully it’s valuable to the audience and thanks so much for having me on board.

Harry Stebbings:

Absolutely love that. And such exciting times ahead for Rob and Salsify. If you’d like to see more from us behind the scenes, you can on Instagram at HStebbings1996 with two Bs. I always love to see that. We have a very special show for you in the coming weeks. We have Tamar, Head of Product at Slack, and then we also have Felix, founder and CEO at Collibra on the show. Stay tuned, some very special ones to come.

 

The post SaaStr Podcast #398 with Salsify Co-Founder & CMO Rob Gonzalez appeared first on SaaStr.

Why You Should Kill Your Competitor in SaaS


This post is by Jason Lemkin from SaaStr

IMHO and experience, most SaaS CEOs/founders aren’t Killers.  They can’t be.  They’re Builders.  In fact, the two jobs of a founder/CEO are antithetically opposed to zero-sum and attack thinking.  First, at a strategic level, the founder/CEO has to see the future, a positive future, that is 100x bigger than today.  Focused on putting the internal pieces together it takes to get there.  Second, at a tactical level, the founder/CEO has to be super win-win at heart and in practice, to build a team, to manage a team, to drag the squad and the platoon through the war.

So most founder/CEOs want to take the hill, win the war, be good to their customers, and protect the team.  Killing the enemy dead isn’t the primary goal.  Here’s how we generally think:

If you are #1 in your category and growing nicely, then great, we’ll keep building on that lead.  We have more money, more resources, more customers, more, more, more.  Success breeds success.  We’ll stay #1, the market will grow, we’ll be even more #1-ey.  Probably True.

If you are #2 in your category and growing nicely, then great, you’re scrappier.  You’ve got the better product, by definition, at least for some customers (because otherwise, they’d all go for #1).  You have a clear target in #1.  It’s fun to win against #1.  And #1 can’t beat you in your zone.  And you’ll keep growing and knocking it out of the park.  Probably True.

And everyone can indeed have success and make a lot of money in this #1/#2 or #1/#2/#3 semi-equilibrium.   Look at our classic case study of Eloqua/Marketo/Pardot.  Everyone did win/is winning.  And more recently, take a look at the “Postmates Effect“.  With every Cloud leader now a Decacorn, not a Unicorn, even the #3 in a market today can be worth a billion dollars or more.  BigCommerce may be far behind Shopify, for example, but it’s still worth $4b+.  It looks like Wix is a lot bigger than Squarespace, but both are worth billions.  Twilio has 3 smaller competitors worth $1B+.

Great.  But the thing in is, in most SaaS categories, you can and probably should try to do even better than this.  You should try to kill your top competitor.  Dead.  Because it pays.  Look at what Zoom did to WebEx.  Look at what Slack did to HipChat.  Look how DataDog really took over its space.

Screen Shot 2012-12-03 at 8.38.22 AM

There are two reasons to kill your competition, one strategic, one tactical.

  • First, you want to achieve Dominant Strategy as Quickly as Possible and Not Let Your Competitor Achieve It.  More about dominant strategy here.  But basically, when you are in this equilibrium phase with your competitor, you are both picking and choosing.  Playing to your strengths.  Doubling down on the categories where you are winning.  Taking your time with categories and customers that don’t work as well.  That’s great.  But if you really want to Go Big in SaaS, ideally, you want to double down where you are losing, too.  Where the ROI is negative for you, but positive for your competitor.  You want to play in Every Single Possible Category and Win Every Single Customer, even the ones with highly negative ROI.  Because imagine if you had Infinite Capital — you would do this in SaaS.  Because the SaaS multiples on revenue are huge for the big winners.  So the one that can play Dominant Strategy has a huge advantage.  Examples include entering segments (e.g., Real Estate or Healthcare or whatever) where you are weak, or pushing upmarket even if you are strong in SMB.  Etc. etc.
  • Second, SaaS Multiples Highly Reward Killing Your Key Competitor.  Here’s some basic shorthand for SaaS multiples today.  Very good SaaS companies, growing 100% YoY at $10m in ARR, and even 60%+ at $50m ARR, are going for as much as 20x ARR today.  But the ones growing at half that rate have extremely low multiples (2-4x) relatively speaking — 1/10th or 1/20th of that, or less.  And the top ones truly defying gravity — and there are few, but more than just a few years ago — the ones growing at 150%+-200%+ ARR at $10m+ ARR, the ones still accelerating at $100m ARR — they have insane multiples.  30x-50x ARR, more in the private markets.  If by killing (or buying) your competitor, you can push yourself above 100% YoY growth, all the expense, headaches and pain will more than pay for itself.  Your value will go up insanely in the IPO or acquisition.

And a few things here that are easy to implement now:

  • Do buy-out deals.  This is one of the easiest tactics, and Zoom did it aggressively in the early days.  If your competition signs folks up to 3 year contracts, “buy out” their contract by not charging them for overlapping time periods.
  • Pay your reps a big spiff on rip-out deals.  And put a few reps just on this.  Related to the prior point, and expensive.  But pay-up if your reps can get a deal ripped out of the competition.  Even better, put a specialized team on it.  That’s all they do.  Call into your competitor’s accounts.  Back in the day, DocuSign would pay their reps a full sales commission if they stole a deal from us — and then give the product away for free for the rest of the term.  Aggressive?  Yes.  Smart?  Probably, if you have the capital.
  • Have dedicated marketing and campaigns to lost customers.  The best SaaS companies know they can get back deals they lost to the competition.  The very best ones have dedicated, segmented marketing here.
  • Get really, really good at FUD and counter-FUD.  Does your sales team know how to counter ever aggressive point from the other guys?  Does your sales team know how to win on every tough question?  They should.
  • Never lose a key logo account.  Swarm them. I know you already do this.  But go all in.  The CEO should always be involved.  Do whatever it takes.  When you can again, get on a jet.  Deemed a Lost Key Logo as a Total Failure.  The most aggressive SaaS CEOs and CROs do.  Rather than dust themselves off and move on, as most of us do.
  • Build relationships with CEOs at your top competitors.  Sometimes, the best way to kill your competition is to buy them.  Zoominfo did this and is worth $15b+.  This is easiest if you’ve built relationships early.

Ok, you say, I get it, but if I somehow manage to kill my top competitor, won’t another just pop up like a weed?  Won’t my next largest competitor grow to be my next big threat?

>> The answer is probably No. Probably Not in SaaS, If (x) You are Post-Scale, say post $20m, or even $10m, in ARR, and (y) if you are in an Oligopical space, like many SaaS companies are.  {Probably Yes if you are in a semi-commodity space, like email marketing, see Scenario B below.}  But in a rich workflow, high functionality space, the market can really generally only support 2 leaders, and maybe 1 follower.  No one else can make the investment to serve the medium and larger size customers.  I’m being a bit simplistic.  New competitors always pop-up.  But it may take them 5-10 years to catch you, and even if they really do, you’ll be so far down the road, it may not matter much.  The top leaders in the last generation of SaaS are all at $1B+ ARR now — from Zendesk to Hubspot to RingCentral and more.

I’m not saying you should spend 50% of your scarce energy and time on Killing Your Competitor.  Doing this half-baked can be very distracting and dilutive.  Lawsuits, threats to customers, excessively aggressive sales tactics, etc. can consume too much internal energy and capital.  Also, be careful when you do it.  Many seem to get the Killer Instinct Too Late — once their competitor is too large to kill.  But it’s worth challenging yourself and your team to see if you can do it, if you are in an oligopical-ish market.  Because if you can, if you succeed, it pays.  Even if it feels … strange.

——

When Not to Try to Kill Your Competition:

Screen Shot 2012-12-03 at 8.35.34 AM

(note: an updated SaaStr Classic)

The post Why You Should Kill Your Competitor in SaaS appeared first on SaaStr.

Why You Should Kill Your Competitor in SaaS


This post is by Jason Lemkin from SaaStr

IMHO and experience, most SaaS CEOs/founders aren’t Killers.  They can’t be.  They’re Builders.  In fact, the two jobs of a founder/CEO are antithetically opposed to zero-sum and attack thinking.  First, at a strategic level, the founder/CEO has to see the future, a positive future, that is 100x bigger than today.  Focused on putting the internal pieces together it takes to get there.  Second, at a tactical level, the founder/CEO has to be super win-win at heart and in practice, to build a team, to manage a team, to drag the squad and the platoon through the war.

So most founder/CEOs want to take the hill, win the war, be good to their customers, and protect the team.  Killing the enemy dead isn’t the primary goal.  Here’s how we generally think:

If you are #1 in your category and growing nicely, then great, we’ll keep building on that lead.  We have more money, more resources, more customers, more, more, more.  Success breeds success.  We’ll stay #1, the market will grow, we’ll be even more #1-ey.  Probably True.

If you are #2 in your category and growing nicely, then great, you’re scrappier.  You’ve got the better product, by definition, at least for some customers (because otherwise, they’d all go for #1).  You have a clear target in #1.  It’s fun to win against #1.  And #1 can’t beat you in your zone.  And you’ll keep growing and knocking it out of the park.  Probably True.

And everyone can indeed have success and make a lot of money in this #1/#2 or #1/#2/#3 semi-equilibrium.   Look at our classic case study of Eloqua/Marketo/Pardot.  Everyone did win/is winning.  And more recently, take a look at the “Postmates Effect“.  With every Cloud leader now a Decacorn, not a Unicorn, even the #3 in a market today can be worth a billion dollars or more.  BigCommerce may be far behind Shopify, for example, but it’s still worth $4b+.  It looks like Wix is a lot bigger than Squarespace, but both are worth billions.  Twilio has 3 smaller competitors worth $1B+.

Great.  But the thing is, in most SaaS categories, you can and probably should try to do even better than this.  You should try to kill your top competitor.  Dead.  Because it pays.  Look at what Zoom did to WebEx.  Look at what Slack did to HipChat.  Look how DataDog really took over its space.

Screen Shot 2012-12-03 at 8.38.22 AM

There are two reasons to kill your competition, one strategic, one tactical.

  • First, you want to achieve Dominant Strategy as Quickly as Possible and Not Let Your Competitor Achieve It.  More about dominant strategy here.  But basically, when you are in this equilibrium phase with your competitor, you are both picking and choosing.  Playing to your strengths.  Doubling down on the categories where you are winning.  Taking your time with categories and customers that don’t work as well.  That’s great.  But if you really want to Go Big in SaaS, ideally, you want to double down where you are losing, too.  Where the ROI is negative for you, but positive for your competitor.  You want to play in Every Single Possible Category and Win Every Single Customer, even the ones with highly negative ROI.  Because imagine if you had Infinite Capital — you would do this in SaaS.  Because the SaaS multiples on revenue are huge for the big winners.  So the one that can play Dominant Strategy has a huge advantage.  Examples include entering segments (e.g., Real Estate or Healthcare or whatever) where you are weak, or pushing upmarket even if you are strong in SMB.  Etc. etc.
  • Second, SaaS Multiples Highly Reward Killing Your Key Competitor.  Here’s some basic shorthand for SaaS multiples today.  Very good SaaS companies, growing 100% YoY at $10m in ARR, and even 60%+ at $50m ARR, are going for as much as 20x ARR today.  But the ones growing at half that rate have extremely low multiples (2-4x) relatively speaking — 1/10th or 1/20th of that, or less.  And the top ones truly defying gravity — and there are few, but more than just a few years ago — the ones growing at 150%+-200%+ ARR at $10m+ ARR, the ones still accelerating at $100m ARR — they have insane multiples.  30x-50x ARR, more in the private markets.  If by killing (or buying) your competitor, you can push yourself above 100% YoY growth, all the expense, headaches and pain will more than pay for itself.  Your value will go up insanely in the IPO or acquisition.

And a few things here that are easy to implement now:

  • Do buy-out deals.  This is one of the easiest tactics, and Zoom did it aggressively in the early days.  If your competition signs folks up to 3 year contracts, “buy out” their contract by not charging them for overlapping time periods.
  • Pay your reps a big spiff on rip-out deals.  And put a few reps just on this.  Related to the prior point, and expensive.  But pay-up if your reps can get a deal ripped out of the competition.  Even better, put a specialized team on it.  That’s all they do.  Call into your competitor’s accounts.  Back in the day, DocuSign would pay their reps a full sales commission if they stole a deal from us — and then give the product away for free for the rest of the term.  Aggressive?  Yes.  Smart?  Probably, if you have the capital.
  • Have dedicated marketing and campaigns to lost customers.  The best SaaS companies know they can get back deals they lost to the competition.  The very best ones have dedicated, segmented marketing here.
  • Get really, really good at FUD and counter-FUD.  Does your sales team know how to counter every aggressive point from the other guys?  Does your sales team know how to win on every tough question?  They should.
  • Never lose a key logo account.  Swarm them. I know you already do this.  But go all in.  The CEO should always be involved.  Do whatever it takes.  When you can again, get on a jet.  Deem a Lost Key Logo as a Total Failure.  The most aggressive SaaS CEOs and CROs do.  Rather than dust themselves off and move on, as most of us do.
  • Build relationships with CEOs at your top competitors.  Sometimes, the best way to kill your competition is to buy them.  Zoominfo did this and is worth $15b+.  This is easiest if you’ve built relationships early.

Ok, you say, I get it, but if I somehow manage to kill my top competitor, won’t another just pop up like a weed?  Won’t my next largest competitor grow to be my next big threat?

>> The answer is probably No. Probably Not in SaaS, If (x) You are Post-Scale, say post $20m, or even $10m, in ARR, and (y) if you are in an Oligopical space, like many SaaS companies are.  {Probably Yes if you are in a semi-commodity space, like email marketing, see Scenario B below.}  But in a rich workflow, high functionality space, the market can really generally only support 2 leaders, and maybe 1 follower.  No one else can make the investment to serve the medium and larger size customers.  I’m being a bit simplistic.  New competitors always pop-up.  But it may take them 5-10 years to catch you, and even if they really do, you’ll be so far down the road, it may not matter much.  The top leaders in the last generation of SaaS are all at $1B+ ARR now — from Zendesk to Hubspot to RingCentral and more.

I’m not saying you should spend 50% of your scarce energy and time on Killing Your Competitor.  Doing this half-baked can be very distracting and dilutive.  Lawsuits, threats to customers, excessively aggressive sales tactics, etc. can consume too much internal energy and capital.  Also, be careful when you do it.  Many seem to get the Killer Instinct Too Late — once their competitor is too large to kill.  But it’s worth challenging yourself and your team to see if you can do it, if you are in an oligopical-ish market.  Because if you can, if you succeed, it pays.  Even if it feels … strange.

——

When Not to Try to Kill Your Competition:

Screen Shot 2012-12-03 at 8.35.34 AM

(note: an updated SaaStr Classic)

The post Why You Should Kill Your Competitor in SaaS appeared first on SaaStr.

Why CEOs Should Outsource Thought Leadership Content


This post is by Kiara Williams from Startup Grind - Medium

Thought leadership is a key component of your company’s content marketing strategy.

Why your LTV might be higher (or lower) than you think


This post is by Christoph Janz from Point Nine Land - Medium

If you’re an early-stage SaaS startup, still in the process of getting to Product/Market Fit, or doing your first experiments to attract and convert leads, you shouldn’t worry too much about customer lifetime value (LTV or CLTV) and related metrics. Sooner or later, you have to develop a good understanding of your LTV, though, since your LTV determines how much you can spend on acquiring a customer. In this post, I’ll look at a few different ways to estimate LTV and will try to explain why your LTV might be higher (or lower) than you think.

The simple LTV formula

The simplest formula to calculate LTV in a subscription business is (Customer Lifetime x Gross Profit), where customer lifetime is (1 / Customer Churn Rate) and gross profit is (Average Revenue per Account (ARPA) x Gross Margin). So you get this:

The math behind the customer lifetime formula is explained here. If your customer churn rate is, say, 2% per month, your ARPA is $100 per month, and your gross margin is 80%, you get to a customer lifetime of 50 months and an LTV of $4000.

If you want to get a bit more advanced, you can replace customer churn rate with revenue churn rate, so the formula becomes (Gross Profit / Revenue Churn Rate). This way the formula factors in account expansions and contractions (e.g. due to upgrades and downgrades), which gives you a better approximation of LTV. In this formula, gross profit should be based on the ARPA of your new customers (AKA “Average Sales Price” or ASP), since account expansions are already factored in in your revenue churn rate.

These formulas are a good start, at least if you keep in mind a few basics:

  1. I’ve seen many LTV calculations that were based on revenue instead of gross profit. That makes no sense. Use gross profit.
  2. If most of your customers are on a monthly plan and some are on an annual plan (typical for SMB SaaS), don’t mix them together when you determine your churn rate. This is particularly important if you’re early and/or growing fast. In this case, the number of annual plan customers you’re adding is much larger than the number of annual plan customers coming up for renewal, so your monthly churn rate across the entire customer base is deflated by all those customers that cannot cancel ⁽¹⁾. So if you have a mix of monthly and annual plans, calculate the LTV for each of these two segments separately.
  3. If you have a very wide ACV range — let’s say some customers pay you around $3000 per month and others pay you around $100 a month — it doesn’t make much sense to calculate the average LTV across the entire customer base. Instead, try to estimate your LTV for each of your customer segments.

Negative churn leads to a (luxury) problem

The simple LTV formulas have serious limitations, though. One of them relates to negative churn. If your revenue churn rate is negative, first and foremost, congrats! Second, ping me if you’re pre-Series A. Third, you will have noticed that the simple (Gross Profit / Revenue Churn Rate) formula breaks down for negative revenue churn values.

The underlying issue is that with perpetual negative revenue churn, the revenue stream of a customer cohort would keep getting bigger and bigger forever, which is obviously not realistic. In his excellent article “What’s your TRUE customer lifetime value”, David Skok explains how the formula needs to be extended for negative churn values. I highly recommend reading the full article, but the TL;DR is that if you have a negative revenue churn rate of, say, 12%, you should look at it as the result of two variables:

  • Customer churn of, say, 10% annually
  • Growth of your remaining customers’ spend by, say, 22% of the original contract amount every year

The “trick” is to (a) assume a positive customer churn rate (which makes sense, because customer churn can’t be below zero and is almost always above zero) and (b) assume that remaining customers will increase their spending by a certain % of the original contract value. This way, revenue lost from churned customers will eventually offset account expansions from remaining customers. That solves the problem of the simple formula, where negative revenue churn meant infinite, exponential revenue growth.

David also suggests that you should apply a discount rate to future revenues, which makes sense, arguably even in the no-interest world we’re living in, since future revenues are associated with uncertainty.

Smiling cohort charts?

Another scenario in which the classical formulas can be inadequate is if churn isn’t spread linearly over the customer lifetime. In other (simpler) words, let‘s say that within the first lifetime month of a customer cohort, you lose 5% of MRR to churn; in month 2 another 5%; in month 3 another 3%; and from month 4 onwards, your churn rate drops to 1.5% per month. A high churn rate in the first months of a customer cohort can be the result of factors like poor onboarding, signing up of non-ICP customers, or customers who view the first months as an extended (paid) trial. This is not an unusual pattern in SMB SaaS.

In consumer subscription businesses, the effect tends to be even more pronounced. As Mr. Consumer Sub Nico Wittenborn pointed out here, consumer subscription companies typically lose 50–60% of their subscribers in the first year and another 10–15% in the second year. What can make these companies great businesses nonetheless is if most of the 30–35% of subscribers who “survive” the first two years remain customers for a very long time. If some of these loyal users upgrade to a more expensive plan over time (or you’re good at re-activating/winning-back customers that churned), you’ll get one of those nice smiling MRR cohort graphs.

If you look at the monthly churn rate of a business like this and use it to calculate LTV, the result can be way too low or too high depending on the size of the business, the speed at which it’s growing, and the resulting mix of older and younger cohorts. How can you estimate LTV in this case?

One quite simple option is to restrict your definition of „customer“ to include only those customers who survived the initial drop-off and calculate LTV using the post-drop-off churn rate. As a consequence, you will have fewer customers according to the new, tighter definition, but those customers have a higher LTV. Since you care much more about those customers than about the ones that leave within a few months, looking at it this way can make a lot of sense. A corollary of a tightened customer definition is that your CACs will be higher because you’ll divide your sales and marketing spend by a smaller denominator, but again, it may well be a better reflection of the reality of your business.⁽²⁾

This solution works really well if you have a steep initial drop-off during the first few months, followed by a relatively constant churn rate over the rest of the customer lifetime. If your churn rate decreases more gradually, it doesn’t work well, since it would be hard to decide where to draw the line for your restricted customer definition.

The ultimate way to estimate LTV 🙂

What you can do in this case is to take the revenue retention data of your existing cohorts, extrapolate each cohort’s future revenue development, and calculate LTV based on the NPV of the projected revenue streams:⁽³⁾

In fact, this is my favorite way of approaching LTV in almost all cases.

Here’s a Google Sheet with some sample data and a cohort-based LTV projection. I’ve recorded a Loom to explain in some more detail how the calculations work:

If you’d like to use the template, create a copy or download the sheet and replace the sample revenue retention data (first tab, rows 82–99) with your own data. If you’re a ChartMogul customer, all you have to do is go to Reports > Cohorts > Net MRR retention, select “MRR” from the “Show” dropdown, export the numbers to a CSV file, and import them into the template.

A mouse hunter, a rabbit hunter, and an elephant hunter

Let’s look at three fictional companies and the LTV estimates produced by the different approaches:

Fit.ly

Fit.ly (data) is a mobile fitness app that charges end consumers $10 per month, making the company a mice hunter.⁽⁴⁾ Fit.ly loses lots of customers in the first lifetime months, but its churn rate stabilizes after around nine months. What’s more, over time more and more of the remaining customers upgrade to a more expensive premium plan. The result is what I’ve mentioned above, a smiling cohort MRR chart:

What you can see in Fit.ly’s KPI sheet is that if you had calculated the company’s LTV in September 2019 using the simple formula, you would have gotten $41. Nine months later, in June 2020, you would have gotten $56. Not because anything fundamentally improved in terms of retention or ARPA — it did not –, but just because of the different mix of older and newer cohorts. The cohort-based LTV forecast, on the other hand, gives you an estimate of $217, which I think is much closer to the truth. Remarkably, if you had looked at the cohort-based LTV forecast in September 2019, the model would have calculated an LTV of about $137, again much closer to the truth than the $41 produced by the simple formula.

Cario

Cario (data) is a SaaS solution for car repair shops. The company is an example of a rabbit hunter. Customers pay around $100 per month, customer churn is at 3% per month, and there’s some expansion revenue when customers subscribe for extra features.

In the case of Cario, there’s not a big difference between the simple (LTV = Gross Profit / Customer Churn Rate) formula and the cohort-based LTV forecasts. The reason is that at Cario churn happens almost linearly over the customer lifetime, and that’s exactly the scenario in which the simple formula works well. Note that the formula based on revenue churn rate produces a number that’s too high, though.⁽⁵⁾

Acmentir

Acmentir (data) is a business intelligence solution for enterprises (AKA elephants) with an initial ACV of $72,000. All of Acmentir’s customers are on annual plans, so there’s no churn within the first 12 months. After the initial contract period of one year, 90% of Acmentir’s customers renew. Acmentir’s customers increase their spend over time, in particular when contracts are renewed.

Note: The chart on the left is not the best way to visualize customer churn for annual plans. If you’re looking at customers on annual plans, I’d recommend showing churn on an annual basis as well.

Acmentir’s case shows one of the limitations of the simple revenue churn rate based formula that I’ve mentioned at the beginning of this post: Since Acmentir’s revenue churn rate is negative, the formula produces a negative value LTV, which obviously doesn’t make any sense. Using the cohort-based approach, and assuming a 101.5% m/m revenue retention rate from month 18 onwards, you get an approximation of $1.26 million. Note that in contrast to Fit.ly and Cario, it’s hard to estimate Acmentir’s LTV within the first twelve months because you don’t have much data on your renewal rate and contract expansions until a few cohorts have come up for renewal.

All right, this has been quite a lot to process, so let me try to summarize the key takeaways:

  1. Don’t use revenue instead of gross profit to calculate LTV, and don’t mix monthly and annual churn rates (AKA avoid the LTV rookie mistakes 😜).
  2. If your churn doesn’t happen linearly over the customer lifetime, the simple customer churn rate based LTV formula doesn’t work well.
  3. If you have negative revenue churn, the simple revenue churn based LTV formula doesn’t work.
  4. If your churn is heavily skewed towards the first few lifetime months, consider removing customers that canceled within the first few months from your customer definition.
  5. The best way to approximate LTV is to take a close look at your cohorts. In the beginning, this might feel like an overkill, but cohort data can give you lots of insights, so you’ll need that data anyway.
  6. Don’t forget that all LTV calculations, no matter what formula you use, are always just approximations. You won’t know the precise LTV of a customer cohort until the last customer of that cohort has left. 🙂

Any feedback, let me know!

(1) For customers on an annual plan, you calculate the annual churn rate by taking the number of customers that didn’t renew in any given month and dividing it by the number of customers that were up for renewal in that month. If you want to make the annual churn rate of your annual plan customers comparable with the monthly churn rate of your monthly plan customers, you can convert a monthly churn rate to an annual churn rate using this formula: Annual Churn Rate % = 1-((1 -Monthly Churn Rate %)¹²). If you want to predict the churn rate of annual plan cohorts before they’ve come up for renewal, see you can identify at-risk customers by looking at their usage activity.

(2) What about the gross profit generated by the (non)-customers who fell out of your customer definition? I like to think of these gross profits as a positive side effect of your sales and marketing spend and would therefore recommend that you consider them as a contribution to (i.e. a reduction of) your CACs.

(3) NPV = Net Present Value. If you’re not familiar with this, here’s a primer on DCF (discounted cash flow) calculations.

(4) If you’re wondering what kind of mice I’m talking about, have a look at this post.

(5) If you’re curious, the reason is that the revenue churn rate based formula implies a revenue churn rate that is constant over the customer lifetime. That is not the case for Cario: While the company’s customer churn happens linearly over the customer lifetime, its revenue churn increases slightly over time.

Thank you for reading a draft of this post and for providing valuable feedback, Nick Franklin, Nicolas Wittenborn, and Louis Coppey!

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Why your LTV might be higher (or lower) than you think was originally published in Point Nine Land on Medium, where people are continuing the conversation by highlighting and responding to this story.

SaaStr Podcast #390 with Outgrow Co-founder Randy Rayess


This post is by Amelia Ibarra from SaaStr

Ep. 390: Randy Rayess is the Co-Founder @ Outgrow, a growth marketing platform that enables marketers to build interactive content/tools to increase customer engagement and boost demand generation. Prior to founding Outgrow, Randy co-founded VenturePact, an invite-only marketplace that connects companies with trusted software development firms. Before VenturePact Randy held roles at Ampush and then on the investor side at Silver Lake. If that was not enough, Randy is also an investor having invested in the likes of SmartyPal, Nooch, Alie and AirCare Labs, to name a few.

 

In Today’s Episode We Discuss:

* How Randy made his way from the world of PE with Silver Lake to changing the game of digital marketing with Outgrow?
* What does interactive content mean? What are the most common forms? When should one start to use interactive content? What resources and team does one need to engage with an interactive content strategy? Where do many people make mistakes with using interactive content?
* How should one think about idea generation for interactive content? How does one know what interactive content works best? How should we test it’s effectiveness? How should interactive content be promoted? Where should it be placed? How many text inputs is it optimal to request for?
* How does it convert more leads? How does Randy think about using interactive content to maximize sales rep efficiency? How should customer success engage with interactive content? What can be done to make the sales and customer success teamwork so well together?

 


 

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
SaaStr
Harry Stebbings
Randy Rayess

 

Below, we’ve shared the transcript of Harry’s interview with Randy.

 

Harry Stebbings:

We are back for another week in the world of SaaStr with me, Harry Stebbings, and following from our episode with Ryan at Okta, I wanted to dive deeper into the mechanics of SaaS marketing today. I’m so thrilled to welcome Randy Rayess to the hot seat. Randy is the co-founder at Outgrow, a growth marketing platform that enables marketers to build interactive content and tools to increase customer engagement and boost demand gen. Prior to founding Outgrow, Randy co-founded VenturePact, an invite-only marketplace that connects companies with trusted software development firms. Before VenturePact, Randy held roles at Ampush and then on the investor side at Silver Lake. If that wasn’t enough, Randy is also an investor, having invested in the likes of SmartyPAL, Nooch, ALICE, and AirCare Labs. To name a few.

Harry Stebbings:

But that’s quite enough for me, so now I’m very excited to hand over to Randy Rayess, co-founder at Outgrow. Randy, it is so great to have you on the show. I’ve heard so many good things from many prior guests, so thank you so much for joining me today.

Randy Rayess:

Thanks for having me.

Harry Stebbings:

Not at all. I’m excited for this, but I’d love to start with a little bit of context. So tell me, how did you make your way into what I call the wonderful world of SaaS, but come to found Outgrow most recently.

Randy Rayess:

Sure. As you probably remember in the early 2010s, their mobile app store launched and kind of started to scale out. What we realized was that there was a lot of uncertainty and there was a lot of information that people wanted to gather around building mobile apps. As you remember, very few people had mobile apps because it had just launched. But, it became pretty clear that nearly everyone is going to have a mobile app and so that required an insane amount of mobile app developers and understanding and explanation of what are the things involved in building a mobile app.

Randy Rayess:

And so we built a mobile app cost calculator to help people understand all the moving pieces. We made it just 10 questions, and on the results page, we’d show you how the price varies by the features you listed in the 10 questions, and how the price varies kind of by the geography of the tech talent. So, it was really informative, really useful, and it turned out to be such a great marketing strategy that we said, “Hey, every marketer should be able to build this without requiring their own tech talent to build it. And so that’s when we got into world of SaaS. It’s like, “Hey, let’s create a SaaS tool for marketers to build this without any tech talent,” And that’s how we got into Outgrow and we got into SaaS.

Harry Stebbings:

I absolutely love it and I think it’s such a great lead gen with so many more should do it lovely, but I would love to center the discussion today really around the funnel itself, I guess we saw the very beginning in the majority of cases, we need the hook to fundamentally acquire that customer. And before we dive in, I guess into the hook, the question that I went with a little [inaudible] on is the ideation process. And so if we start on that and like first, what does interactive content mean in your eyes?

Randy Rayess:

So I just think of it as a way to communicate with customers. So it’s a dialogue, it’s an interaction. For example, right now, what we’re doing is we’re having a conversation. My responses are personalized to your questions and vice versa and that’s great in human to human interactions. But from a marketing standpoint, it’s a one way kind of communication. And what we’re trying to do is we’re trying to enable marketers to build this two way communication. So an example would be like, if I have a chat bot, I’m personalizing my answers based on your inputs, right? If I have a recommendation engine or a calculator or a greater I’m personalized information, I’m giving you based on the information you’re giving me. And so that’s basically interactive content. It’s just a way for you to communicate in an interactive way. And there’s so many different examples of it, like chatbots and assessments are calculators are common examples of [inaudible 00:03:35]`

Harry Stebbings:

No, totally. I love the calculator is [inaudible]. In terms of like what stages [inaudible]. Often we hear that SaaS founders have to be the ones onboarding, selling the first customers and asked me to kind of boutique almost kind of handheld process. So I guess my question is why don’t you want to start to think about interactive content in your eyes?

Randy Rayess:

It’s kind of like a blog. Most companies will start a blog very early on in their process and then the way they execute on the blog will change over time. And so I think it’s very similar to interactive content. So if you’re in the early stage, you’re going to build something to help maybe an assessment, or if these a content is going to help build some awareness and help build some trust because you’re a very new brand, but then the way you launch and promote it will change as the company evolves and grows. So once you have an ad budget, you’re going to send ad traffic to it. Whereas if you’re a small company, you kind of create one and you just have it maybe as an exit intent when someone’s leaving your page or you have the link to it on the homepage. And so I think it’s kind of relevant across the whole spectrum, but the way you launch promote and the types of content you create will vary as you grow.

Harry Stebbings:

Totally get you in terms of kind of resourcing up. I think resource allocation is the most important thing. And we think about resource allocation and tracking content and founders thinking about implementing it as a strategy, what resources both in terms of structuring of teams for teams themselves, do they need to put in place, do you think to be effective when starting interactive content as a strategy.

Randy Rayess:

From a cost standpoint, it’s pretty cost-effective if you’re using a SaaS tool. Obviously if you’re using developers, it’s a bit more time consuming and a bit more expensive, but if you’re using SaaS, the cost is relatively low. So it’s really just about the time investment. And so when it comes to time, one thing we’ve seen is sometimes content marketing department, the same content marketing team that’s building out your blogs will come and build the content on Outgrow. And we’ve seen people do that, but then we also see companies coming to like, say, Hey, we’re overwhelmed. Can you guys build it for us? And so we had added the custom build option, or you can go to agencies and freelancers to build it for you.

Randy Rayess:

So the key thing though, regardless of who’s building it is to make sure that it’s useful. And so you want to make sure that people from the content marketing team or the people from your sales or CS or product team kind of really understand the product and the value of deriving and making sure that’s some key, valuable insights are being given in the content piece. So that is very useful. So that’s the most important thing. And that time is critical, then it’s not that long, but you want to make sure you have a few hours to really think it through and make sure you’re driving that. And then the actual design and building out that can be done by company like us or by agencies or freelancers. So that’s less of an issue.

Harry Stebbings:

I’m interested, in terms of building it out. I’m sorry, this is off schedule, a lot of VCs shit on services revenue, claiming that it’s not such a high quality revenue of SaaS revenue. I fundamentally believe that’s a brilliant retention to a one thing it’s a brilliant engagement tool and I’m a big clash you thought a healthy amount of services revenue. How do you think about services revenue today driving Outgrow?

Randy Rayess:

So this is a very, very good question. And it’s Funny because we have, I didn’t give you the backstory, but basically we didn’t have a custom build option at all. And we got it a lot, actually like, Hey, can you build this for us? And we rejected it because as you said, like services, revenue services, and it’s not easy to do because we have all these change requests after you’re done, because they might be like, Hey, can you change this design? Or can you do this in like five other languages? And so like a small, simple request can quickly become much larger. And so you kind of, how do you make sure you kind of deal with all the issues that are standard in services? But what we realized was sometimes people are trying to build very complex advanced math calculators, right? If a lot of our financial services customers have advanced calculates our recommendation engines, if you’re in automotive or in many industries, the recommendation engines can get really complicated quickly.

Randy Rayess:

And so we need to be there to help them. And we realized this pretty early on it’s like, why are we making it harder for people who want to build things? So we added it and now we’ve obviously made the product better and easier to use and in the early days, but we’ve kept it and it’s worked out well for us. So I think it just depends on your business and your use case, but in our case, it makes a lot of sense. So I think it’s fine. I think we shouldn’t get over concerned with this mentality that, Oh, someone told me at a conference that you shouldn’t have services revenue, if you’re SaaS, because then you’re not SaaS. I disagree with that.

Harry Stebbings:

I’m thrilled to hear it. And I’m totally aligned to you. Okay. So now we know that kind of, we need to interact with content. We know that we can do it across the life cycle of the business. A lot of companies that I work with just struggle bluntly on the ideation of ideas and great ideas to put into content. How do you think about what it takes to come up with great ideas for useful content from a first standpoint?

Randy Rayess:

This is a great question. Because we get that question a lot, as you can imagine, but what we usually say is your sales people, support people, and success people already have the ideas, right? So we ask them to send a list of questions. These kind of three departments will already see regularly, right? So let’s go through those frequently asked questions. And as you go through the frequently asked questions, you’re going to see many questions where your answer is, “It depends.” So for example, it’s like, where should I spend my ad dollars? Well, it depends. It depends on your business. It depends on who you’re targeting, depends on your audience. So there’s so many things it depends on, and those are the types of questions where it’s great for interactive content. And so that’s where we start. And we tell them like, look, if you only have one plan and it’s a $20 per user per month plan, then you don’t need an interactive content tool to tell people what plan they should get.

Randy Rayess:

Or what’s the price because it’s just $20 per user per month is the same for everyone. But you might want to compare your tool to other tools in that case, most companies will have multiple plans. And so maybe trying to help people understand which plan and which features are relevant to them. So there’s so many moving pieces, but what we usually start with is an assessment. So companies will start with an assessment. So let’s say you’re a sales software or an email marketing tool, look for an assessment to help people evaluate the way they currently run their sales processes, or assessment to evaluate the way they currently run their email marketing processes. And you can highlight your value through that assessment. And that’s a really good way to start.

Harry Stebbings:

I totally agree with you in terms of that being a great way. Can I ask, you’ve see multiple companies implement this from zero to one. What are the main reasons that they go wrong?

Randy Rayess:

The biggest mistake we see is people not understanding that the value of the interactive content is making it useful to your end user, whoever you’re targeting. And so what we’ll see people come in and do is they’ll say, Hey, we want to acquire name, email, company size, function, or department, and then the consent and all these fields, right? And so they’re saying, okay, we want to acquire this information. Let’s add a few questions here and put a basic result. You want to make sure that the result is valuable and you’re building trust to be honest. So that’s the first biggest mistake people make is they don’t understand that the number of fields you have in the lead form, it’s not just lead capture. It’s also value generation from the end user. It’s an understanding that balance of saying, actually, maybe we should only ask for an email because this is a basic content piece and for the more advanced ones, which you’d usually charge for and you’re giving for free, then you might be able to add a few more lead fields.

Randy Rayess:

And so kind of understanding that difference is important. And then the other thing is when you’re A/B testing, there’s so many variables you can AB test, you can have the same content piece and just A/B test the way you embed it or the way you run it. So you cannot change six items in your content piece and change the way you embed it and then say, this is an A/B test because then you don’t have signal in terms of what’s driving the change. You have to be careful with the way you run your tests so you’re able to actually find signal in terms of which specific change is driving the value.

Harry Stebbings:

I’m so interested. You said that about kind of the amount of input fields. What’s the data around conversions on input field amount? And if you have four, is it 50% less likely to convert than two? What are your suggestions of actually just the number of input fields. Cause it’s easy to get like, Oh, name, Oh, email, oh company is necessary. Oh, whatever else is. And suddenly you’ve got five or six. What do you see in terms of conversion and drop off rate with the number of input fields?

Randy Rayess:

So first you have to look at number of input fields. And second thing is to look at is words, and the question, right? Those are two things. So let’s assume you’re asking for name and email on the welcome page and you ask them four questions. And then you ask for phone number and then you have the results page.That model generally works really well if your results page is useful. So people are more likely to give you the phone number. If the results page is not as useful, you want to put the phone number field on the results page after you showed them the results. You already got the name and email, the phone number is a nice to have. You put it on the results page so people can kind of drive value. And then if they really interested, they see the results, then they’re like, Oh, now I want to give you my phone number.

Randy Rayess:

There’s a lot of nuance here in terms of how to execute on it. But you know, usually what people will do is they’ll put name and email before the result page. But you only ask for those two before the results page. And then on the results page, you can ask for a phone number as well, but that is in general, the best conversion rate that we’ve seen, the drop off rate is actually very significant. If you have name, email, phone number, if you have four or more fields on the welcome page. And so basically in terms of start rate, if you usually have a 70% start rate, it’s going to drop to below 50%. If you go from two to four or more fields and that’s a big drop off. And so you generally, there are a few caveats, obviously for people who are sharing their content, you’ve done say you have a really, really powerful assessment of security assessment.

Randy Rayess:

Okay, if it’s really powerful and people usually charge for it and people are start to share it, then you can get by. But with asking for fields, you can get by with asking, even on the welcome page, because so many people are validating and seeing it’s useful. And so you are going to find use case examples of companies doing something and it working really well for them, but you have to understand the quality of their assessment and the results page is so high that this is something people are used to paying for. And so that is why they’re able to have so many fields and even put it early on. But in general would say, be careful with that and focus on good value you’re giving to end users because we’ve seen a lot of customers where they just focus so much on all this qualification data. And they forget that the goal of this is to actually build trust with the audience and give them value. So you have to balance these two forces,

Harry Stebbings:

That’s fascinating to hear the drop in start by raising two to four. I didn’t know that. That was pretty huge. In terms of the location you mentioned as the second, what’s important to understand about the location in particular of the fields.

Randy Rayess:

Yeah. Well, so the key thing, when you want to think about location is what value are you giving the user? And when are you giving the value? And so in general, if you’re giving a lot of feedback, it’s eight questions or 10 questions. And so you can say, okay, well, I’m going to ask five questions, give them feedback throughout it. Then I want to ask for email. Then I ask for five more questions. And then I asked for phone and company size before the results, if you’re going to do it, something like that. So as you can see, I like dividing things. There’s simple ones that are easy to get and then the hard to get. And I really like to think about, it’s like a relationship, like I’m not going to ask you for your phone number or your home address or things like that when you first meet someone in a personal relationship.

Randy Rayess:

You want to say, okay, when is the right time to ask something? And it might not be at all, like, it might be like this content piece, like five fun things you should know about email,subject lines. Take this test and see if, you know, like these five fun things. There. you’re probably just asking for name and email and you might put it on the results page. So after they’ve completed the whole thing there’s showing the result, then you ask for name and email. And so, because it’s the fun one, it’s more for engagement. It’s not really a lead–It’s not focused only on lead acquisition. And so you get the brand exposure there. So I really like to think about first, how to divide it second, which fields you actually need. And third for this specific content type and this specific content piece, does it make sense for me to ask for function and company size and phone number, etc. If it’s more of a fun one, then a really value driven one.

Harry Stebbings:

Can I ask you, you mentioned the testing on them before, but when I think about kind of A/B testing, the question is always like how long is it enough to gather enough data to build conclusions on whether it’s effective or not, and how you think about the right amount of time to gather enough data versus too short. And what do you advise on like A/B testing?

Randy Rayess:

Sure, Okay. So it depends on traffic. So let’s say some companies are able to generate a thousand visits in a few hours. And so you’re able to get data very quickly on what’s working and what’s not working, but in general, you have about 300 visits at about a 100 leads. You are able to get some insights into, is this working? What’s my start rate? Where’s the drop-off, but what we like to look at is the whole funnel. There’s the question funnel. And so you see traffic coming in and so you want to make sure that you don’t have traffic coming in from an ad or from your homepage. And then you have the visit to the welcome page and then you have start rate and then you have all the questions. Then there’s the separation, depending on how you’ve divided the lead form, how that converts, and then you have on the results page, is there some CTA or some other field capture?

Randy Rayess:

So you want to look at that whole funnel and across the whole funnel, you want to look at kind of drop off rates and see how that compares. When you go from a 10 question to a six question assessment, and usually you’ll see that unless it’s a really powerful assessment, people would rather go from 10 to 6 and you give a range instead of giving a more accurate number at the bottom. Like your conversion rates are going to be better in general, if you go from 10 questions to six questions to actually drive that result. Again, these are in general. So you’re going to see some people with 12 questions and they’re hitting it out of the park, but the results page and the value they’re driving is going to be much higher. So that’s the first thing/ is that when you’re looking at the A/B testing, understand what things you’re optimizing for, is it email conversion rate?

Randy Rayess:

Is that your number one thing? Okay. So then we’re going to look at that and make that the key focus. So that’s number one. And then what are the changes you’re making? What’s your core metric? If it’s email capture or is it all four fields that you want to capture and then it’s, what are the variables we want to test? Is it the number of questions and embed location as exit intent, pop up and chat bot? Or is it just on the homepage? Doesn’t like, you kind of play with that. Now what we’ll do is you’ll say we’re going to do an ABC test or UCD test. And there’s always a version there’s only one change between the two versions. So then when I evaluate these two content pieces, I’m evaluating them based on the thing we talked about, which is, let’s say email capture rate, we evaluate them based on email capture, and we’ve only made this one change.

Randy Rayess:

Now I know that once it’s significant and significant just means that your confidence in that variation is in general over 95%. I’m over 95% confident that the difference between these two content pieces is not chance. It’s actual because of this change, right? Obviously you’re never a 100% certain that it’s not a chance. So you just say, okay, well, if I’m over 90% confident, it’s not a chance. It’s not a random difference. Then it’s basically considered to be statistically significant or whatever you want to call it. But it’s basically like this version is better. So I’m going to kill the other version and invest more in that version that’s winning. And so that’s usually how we think about it.

Harry Stebbings:

Got it. No, and I love that. I guess the question for me is when I hear about kind of the effectiveness of driving through the A/B testing and the data that you accumulate, my question is, yes, I completely see it’s an incredible lead gen tool. I completely see it as an incredible qualification tool, but I think about an actual conversion, honestly, I don’t understand how it helps with conversions. So help me out here. How does it convert more, from your perspective and does it not just lead to more leads being handed to reps?

Randy Rayess:

Okay. So when we look at conversion rate, we look at a few things. We look at traffic to email capture, how that rate changes, then from email capture to activation or purchase or acquisition. So we kind of look at these two things. So let’s look at the first one: traffic to lead. So usually if you have traffic, your blog or your homepage, you want to capture leads. Having just a contact us form is just saying, give me your email. And I tell you, thank you, right? So that’s like a survey or just a regular form, but now I’m saying, Hey, you’re on our legal page. And we have some law software that helps you better manage all your legal docs. I’m going to tell you how much time you’re going to spend on your legal docs. And I’m going to tell you how much I’m going to save by using us.

Randy Rayess:

And so you’re going to put information around how many paralegals you have, et cetera, et cetera. And then I can tell you how much time you’re saving. So it’s much more valuable. So the likelihood that someone goes through that versus just give me your email, maybe schedule a call in two weeks. That’s much more valuable. So usually what we see from traffic to lead, that conversion rates goes up from a , say, usually at 20, it goes up to around 40. So you get that big jump in traffic to lead conversion rates. But you’re right. The question is how does that lead improve traffic to lead? How does it improve your lead [inaudible] From that standpoint, think about it from the standpoint of the sales person who’s getting this lead. And so we do a couple of things here. The first is, once you acquire the lead, you’re going to know all the information about the lead.

Randy Rayess:

You’re not just getting their name and email, right? Cause you to provide that recommendation on the results page, they’ve given you, maybe let’s say six questions of answers. So let’s say you had an ad allocation calculator. You ask some questions of marketing budget, audience targeting, and you ask them questions about industry and B2C versus B2B, etc, demographics, and current budget allocation. Then you give them a recommendation for, okay, well, you should actually spend more on Snapchat and less on Facebook and more on Instagram and less on TikTok, et cetera, et cetera. You give them these recommendations based on the information they gave you. The salesperson now isn’t just getting a name and email and this guy or girl wants to talk at X time. They are now getting your current marketing budget. They’re getting your current allocation of spend across these channels. And you might ask them a question on strategy.

Randy Rayess:

Like if there’s specific keywords or specific audiences, they target within Facebook, within Instagram, etc. And then they get to see the results you have to give them. And the person that opted into this call. So you’re getting so much more qualified lead, and it’s not going to the salesperson unless the budget is relevant to that salesperson. Like the salesperson might usually work with marketing companies that have 50K a month in budget. So they know that this person’s qualified relevant to them. And you can segment the person coming through to say, if they have less than 10K budget, then I’m going to put them on this specific email list. And maybe in a one or two years, they’ll be ready. Their budget will match our requirements, but if they have XYZ budget, then I’m going to auto send them to my CRM and assign them to a sales person within that budget range.

Randy Rayess:

Sales people love it because imagine for they’re getting onto a call, they know your budget, they know your allocation. They know everything. The ability to pitch and talk to you is much more personalized because they already know everything before the call. And so their ability to prep. So if we see this activation rates actually go up a lot because of that. And of course, if you’re selling a million dollar contract versus a thousand dollar contract, your activation rates are going to vary, but in general, that boost is significant. So those two things, traffic to lead and then lead to activation are amazing.

Randy Rayess:

And then the last thing is, does it increase the actual traffic you get to your site? And I would say in general, the traffic increase happens when you have for your signature content piece, right so if you have a signature assessment, it’s amazing. People are going to start to share it for you. And so you get free organic referrals, organic traffic from it that you might not have done otherwise. So you also get a boost in traffic as well. So from all three standpoints, which is increasing traffic, traffic to lead and lead to activation, it’s better, but obviously the increase in traffic, that first one is really only relevant for your top three content pieces, which are amazing that people are actually going to share on your behalf.

Harry Stebbings:

Can I ask? When you look at the sales team. I love that in terms of kind of what it does to sales rep efficiency. When you think about kind of sales training and sales playbooks, does one need to alter sales training and sales playbooks. When you incorporate interactive content into your core strategy.

Randy Rayess:

A little bit. I do think you need to do that. And we have the companies that have been using us for the longest and the most successful do incorporate this added information, because the thing is most companies, the way they do lead scoring is they look at certain information they generate from a tool like Zoom and for there better things like this, which are useful. And you can do these scoring based on this. But the thing now is that you’re getting a lot more information. And so you’re going to have to update the way you do lead scoring with all this added information, because you’re not used to getting all these fields. And so what happens is we usually recommend, and we’ve kind of built this in Outgrow. We built our segmentation feature, such that you can run the whole lead scoring and lead routing, right? Within Outgrow because we want you to run a more powerful lead segmentation and lead scoring system than just based on location, company, size, title, and things like that.

Randy Rayess:

Because now I can add marketing budget, current allocation of spend, let’s say you’re focused on Facebook marketing and you know they’re spending 50K total budget and they’re only spending 20K of their 50K on Facebook, etc. You want to say if they’re in this level of spend on Facebook, this level of total marketing spend, I’m going to give them this much of a boost on my lead score. And then I want to send them to my reps that usually work on this type of, let’s say, enterprise deal in this territory. And so I think both lead scoring and lead routing should incorporate the added information.

Harry Stebbings:

Yeah, no, listen, I totally agree in terms of being incorporated. Can I ask? The other big thing was going to content that always comes up for me. It’s like ROI and payback periods on content. And when you have blogs and much more kind of native organic content, payback periods are long. As everyone knows, six to nine months is not completely unexpected. How do you think and advise on payback periods for interactive content and how does that differ?

Randy Rayess:

It took a long time for people to get used to these very long payback periods on blogs. And that’s a challenge because blogs are mainly going to be SEO based and the lead conversion rate on blogs, it’s hard. So I think the advantage that we have is that people are used to long payback periods on blogs. And what we do is we kind of say, you’re going to have a few of your main content pieces. Your assessment, your key ROI calculator, your key recommendation engine or chatbox. And then you’re going to take your top 10 blog posts and create maybe a knowledge test out of them. And so if you’re kind of doing the all encompassing strategy, or you want to look at the actual individual content piece ROI, it’s a bit different in terms of how you look at it. But in general, you want to look at obviously how much time you’re taking to build it, how much you’re spending on the SaaS tool or software, and then how much you’re spending on promotion and you see kind of assess the ROI on it.

Randy Rayess:

And so usually what we say is that let’s say you’re taking a week to finalize the idea and really iron it out, a week to build it and make sure you’re happy with it, and then the first two weeks you are in this kind of implementation phase of really kind of like starting to get a sense of what’s working with your audience. So that’s one month. And then after the first month, you’re starting to see, these are things that kind of work. And then from month one to three, you’re running a wide range of different tests, right? So it’s going be fields. It could be questions. It could be promotion channels. And usually within that second or third month, you start to find that all this is generating positive ROI, and this is working. So usually it’s within that second or third month.

Randy Rayess:

And obviously companies with a lot of traffic, it could be by the end of the first month. And then they’ve really identified, okay, this is working and the ROI is going to be way higher than my spend relative to profits. There’s going to be a big difference there. So you can kind of get a sense of that pretty early on. If you have a lot of traffic. If you don’t have a lot of traffic and you don’t have a lot of ad budget, then it’s going to dive in towards the end of the second month or into the third month to get the data around the costs versus potential sales that’s driving.

Randy Rayess:

Because you also have to look at, if you’re looking at it from a sales standpoint, you also have to look at your own sales cycle, but people can look at MQLs, marketing qualified leads, and things like that, to get a sense of it earlier on. And then if you have a really long sales cycle, then you might take even longer to really make sure that you are getting more, your dollars in versus dollars out is positive. But I think you can kind of get a sense of that pretty early on.

Harry Stebbings:

Totally. No, and I think it is dependent on sales cycle, but as you said there, I think that the litmus test is clear pretty early on. I do want to move into my favorite around here, which is a quickfire. I say short statement, and then you give me your immediate thoughts. How does that sound?

Randy Rayess:

All right. Let’s do it.

Harry Stebbings:

Okay. So what’s the biggest challenge for you of your role with Outgrow?

Randy Rayess:

I think it’s kind of balancing all the feature requests from like our power users, who’ve been using us forever, and then the new customers who want the product to be accessible, to kind of balancing that out as a challenge,

Harry Stebbings:

Always adding to the team, what was the hardest role to hire for today?

Randy Rayess:

In our customer success team. We have a lot of math related questions. And so we try to find great mathematicians who also want to be in customer success and customer facing roles and kind of finding those two components in one person can be a bit of a challenge.

Harry Stebbings:

Yeah, no, I totally see that as challenge. What angel investor’s been most impactful to you?

Randy Rayess:

Oh, there’s so many great angel investors. I think Paul Graham is great.

Harry Stebbings:

Totally Paul is the best. And it was actually his blogs in the early days that inspired a lot of my thinking. Tell me, what would you most like to change about the world of SaaS today?

Randy Rayess:

I think when we think of success, we think a lot about activity and product. So like these other customer success, how much time this time is people spending on a product and let’s see if 10 users and they’re spending X hours in Outgrow. That’s great, but I think we should look a bit deeper. So for us, specifically, at least for people to be successful, they need to have an idea. They need to build it to launch it. They need to promote it. They need to generate leads from it and they need to activate those leads and make sure those leads are successful with their product. And that’s a lot, right? But that’s the right way to look at success. Obviously it’s hard to do and because activities are easy, like I know how much time this person spends on the product.

Randy Rayess:

And so you can say, okay, well, I guess we’re successful. But then the question is their goal is not to spend time on your product. Their goal is to actually like, what’s their goal. So you want to understand from their perspective. And I think it’s a bit harder to do. It’s harder to quantify. It’s harder to fully internalize this value in customer success, but we think that customer success should be more focused on the entire value chain for the end customer than just activity.

Harry Stebbings:

Penultimate one here. But what moment in your life has maybe served to change the way you think?

Randy Rayess:

I mean, when we launched that mobile app cost calculator, it really changed the way I thought about marketing. And it helped me realize that the intersection of marketing and software in that case, like marketing and kind of software development skillset, that intersection is really interesting because most marketers don’t have that easily accessible. And so you don’t see a lot of marketers using that. And so obviously we’re trying to democratize that right now, but I think in general, this intersection between certain fields, it’s pretty interesting.

Harry Stebbings:

Totally with you in terms of that. Tell me the final one. I’m probably the most exciting of all. What do the next five years hold for you and for Outgrow? Paint that picture for me.

Randy Rayess:

Sure. Well, so at a high level, I think we want to continue to improve how successful our existing and how successful our new customers are with Outgrow. So that’s kind of like the high level goal, which is basically the same goal we’ve always pledges how can we make the marketers using our product more successful? And so that breaks down into many things. Like obviously number one would be like hiring, find the right people, bring them on board, training them with our processes and our methods. So that’s number one. The second is our performance tab, like within Outgrow, we have a performance tab. And so where we give personalized recommendations based on your content. Handling the questions that you’ve been asking me, right about location, number, fields, all these things. And so we already have a version of that. How do we continue to improve our personalized recommendations so that you’re not making a mistake that our previous customer has made or that we’ve seen other people make in the past.

Randy Rayess:

And so you can have learning from best practices from all the data we have. So continue to grow our performance tab and then continuing to maintain like a very good reply rate. So right now our average reply rate to questions is under two minutes. So anyone who asks a question can go to the bottom right of their chat and ask us a question and we’re usually averages less than two minutes. How do we maintain that as we grow? And that’s a big challenge. And then the final thing I would say is continuing to increase kind of the power and value that marketers generate from using Outgrow and making sure that they’re able to continue to types of things they want to build and content pieces they want to create that can’t do that with Outgrow, so.

Harry Stebbings:

Some very exciting times ahead, Randy, as I said, I’ve wanted to do this for a while and I so appreciate you putting up with me going so far off schedule, but thank you so much for joining me today.

Randy Rayess:

Thank you. This was great. I loved the questions and it was very thorough.

Harry Stebbings:

I mean, my word, what a strategic and tactical episode that was with Randy. And if you haven’t got your notebook out with multiple lines of incredible notes, then I will be very surprised. If you’d like to see more from us behind the scenes, you can on Instagram at HStebbings1996 with two Bs. I always love to see you there. As always, I so appreciate all your support and I can’t wait to bring you a fantastic episode next week.

 

The post SaaStr Podcast #390 with Outgrow Co-founder Randy Rayess appeared first on SaaStr.

Building the Next Normal: 5 Key Insights for CMOs Delivering Virtual Events from Someone Who Knows…


This post is by Scott Brown from Sapphire Ventures Perspectives - Medium

Building the Next Normal: 5 Key Insights for CMOs Delivering Virtual Events from Someone Who Knows | Sapphire Ventures

Like most companies, Sapphire Ventures converted all of our marketing events to virtual experiences at the outset of the Covid-19 pandemic.

And, like many others, we initially thought of Zoom as our default home for events for the foreseeable future.

However — while Zoom (and Google Hangouts and Microsoft Teams) have served us well for webinars, roundtables and virtual cocktail hours — we quickly realized it would take far more functionality to to deliver the immersive, high-quality experience we wanted for Sapphire’s annual, large-format

Even in our initial steps, we quickly realized producing virtual events requires thought, time, organization and planning on par with any similar in-person event.

For CMOs currently developing their own event strategies, here are five key insights essential to producing a virtual summit from beginning-to-end.

1. Set the stage: A virtual event is not “just another” online meeting

Without the physical venue, the medium is the message with virtual events. That’s why a lowest-common denominator tech experience like Zoom or Teams doesn’t translate well to hosting a multi-day event with 30+ sessions, 50+ speakers and hundreds of C-level attendees.

When you move to a virtual summit, Dwight Eisenhower’s quote “Plans are useless. Planning is everything” becomes even more applicable. That’s because in addition to your typical content and event plan, you’re going to have the added complication of delivering your event to and from everyone’s home. The best laid plans go out the window as soon as your speakers’ Wifi goes down, someone looks like they’re broadcasting from a cave due to poor lighting, or the dog will bark at the most important part of a keynote.

You have to accept that you can’t control everything, but once you shift your mindset from this being “just another Zoom” and start planning for what could happen, you’ll be able to focus on the attendee experience you really want to deliver — and where things are likely to break.

Spoiler Alert: Something will “break” during your event. Take my word for it. In the planning process, identify what levers and knobs you can pull in the moment to avoid failure. In Eisenhower’s words: “planning is everything.”

2. Don’t cheap out: virtual and physical events are more alike than you think

In my experience, a quality virtual event is no less expensive or complex to produce than a physical gathering. Full stop.

When we started working on the CIO Summit, I was stunned at the initial cost estimates. I knew we would need to pull down a whole new technology stack, but I thought for sure that would still be a fraction of what a comparable, in-person event would look like.

Then, after receiving almost identical bids from several production agencies, I realized we were thinking about it all wrong.

“For in-person events, you are generally dealing with one venue or vendor that covers an array of costs: the space, existing infrastructure, and an execution and support team,” explains Marcy Karpowitz, owner of MKMCreative and our eventual partner on the CIO Summit. “The same goes for your A/V where you have someone delivering sound, lighting, technical expertise, etc. Some of the fixed costs are spread across multiple speakers or activations, which provides the opportunity to move budget around and potentially gain economies of scale. In the virtual world, you have to purpose-build the infrastructure around the show’s objectives, elements and each participant’s needs.”

Because of this purpose-built model, costs tend to be higher as no “off-the-shelf-one-stop-shop” virtual solution exists. That means you have to stitch together a variety of solutions to deliver the seamless registration, content, and networking experiences you want attendees to have.

You have to realize that in a virtual environment, your company has become a media company and your content is a product you are selling. To be successful you have to take on the cost of producing distributing your content. Few CMOs are used to paying the full cost of distribution, which means the cost of the additional technology, equipment, and expertise can be surprising if you’re still thinking about this like a physical event.

3. Plan with strategic intent: Virtual events are conversation starters, not deal closers

Historically, most marketers think about events as moments in time; they’re programs you produce and then you move on. In the virtual world, you have the opportunity to shift your organization’s perspective from events as a point solution, to their being the start of a community you can engage — through multiple channels, campaigns and points in time.

In other words, if you’re not thinking about your virtual event as the start of a year-long campaign, you’re leaving value on the table.

That means CMOs need to allocate more time, planning and resources to post-show activations (more on this #5 below) across your go-to-market organization. To maximize the value of the larger audience you can reach online, you need to develop customer journeys that keep the conversation going. This will require an audience-based approach where your touchpoints can vary from direct email to social to sales outreach and even follow-on events.

4. Package the value: Virtual events provide better data, but value can be difficult to articulate

I’ve talked to numerous people who have had difficulty selling even their long-time sponsors on virtual event sponsorships. I attribute this to two issues:

  • Event producers haven’t been able to articulate the true value of virtual events.
  • Sponsors haven’t shifted their mindset to embrace the inherent benefits of digital.

In a physical world, sponsors were happy to have their brand associated with a show, speakers on stage. They could pick up some business cards (or scan some QR codes) at their booth, network in the crowd, and look potential customers in the eyes. All of the same opportunities exist with virtual events, only with greater value because of the richer targeting and engagement data.

For example, in the virtual world, not only can you get someone’s contact information, you can see what sessions they say they’re interested in, what sessions they actually went to, how long they stayed, who they shared your content with, whether they asked a question, and whether they took any follow up action. All of these are more granular signals of purchase intent or interest in a sponsor’s offerings.

Event producers need to spend more time articulating how companies can take advantage of this value, and marketers on the sponsoring side of the equation will need to evolve their thinking. One sponsor who at our CIO Summit, Silicon Valley Bank , is already ahead of the curve.

Rather than relying on the same activations used in-person, SVB delivered:

  • Highly-quality explainer video detailing their services that ran before every main session
  • Senior executives to deliver an overview of each day’s content and its relevance to SVB’s mission
  • Downloadable market report as value-add content to what was being delivered on stage.

5. Prioritize post-show activities: You don’t get to strike the stage and go home

In organizing a typical in-person event, most time and resources go towards the pre-event and day-of efforts: attracting registrations, programming the content, delivering the content. Once the post-show clean up is over and you’ve handed off the leads to the sales team, there’s relatively little marketing follow-up required.

Virtual events are completely different. The investment of marketing resources needs to be evenly distributed before, during and after the main event. That’s because the virtual world generates so many assets, data, and interactions that your marketers not only should, but must, plan on leveraging them after the show, or you risk losing the majority of the potential value you created.

Shifting your mindset to think of virtual events as a starting point — and not a singular moment in time — can help you realign your efforts and priorities. Your investment in post-show planning and activities is where you will earn this value.

Building for the Next Normal

Most of us look forward to a world where we can host in-person events again. While virtual events have their unique advantages, they can never replace the energy of a conference full of intelligent colleagues and competitors, where the chorus of conversations strike new deals, partnerships and friendships.

While physical events will return in some capacity in the future, the trend of virtual and hybrid events will continue to accelerate. They, too, have their unique advantages, especially in efficiently bringing together parties across geographies. And so all marketers will need to adjust to the digital environment knowing that technologies, best practices and even relationships with our audiences are all rapidly evolving.

For marketers planning a virtual event, I wish you the best and hope these insights help you deliver an amazing experience. If you have additional lessons you’d like to share and best practices from your own virtual event experience, I’d love to hear about them at scott@sapphireventures.com .

Originally published at https://sapphireventures.com.


Building the Next Normal: 5 Key Insights for CMOs Delivering Virtual Events from Someone Who Knows… was originally published in Sapphire Ventures Perspectives on Medium, where people are continuing the conversation by highlighting and responding to this story.

Building the Next Normal: 5 Key Insights for CMOs Delivering Virtual Events from Someone Who Knows…


This post is curated by Keith Teare. It was written by Scott Brown. The original is [linked here]

Building the Next Normal: 5 Key Insights for CMOs Delivering Virtual Events from Someone Who Knows | Sapphire Ventures

Like most companies, Sapphire Ventures converted all of our marketing events to virtual experiences at the outset of the Covid-19 pandemic.

And, like many others, we initially thought of Zoom as our default home for events for the foreseeable future.

However — while Zoom (and Google Hangouts and Microsoft Teams) have served us well for webinars, roundtables and virtual cocktail hours — we quickly realized it would take far more functionality to to deliver the immersive, high-quality experience we wanted for Sapphire’s annual, large-format

Even in our initial steps, we quickly realized producing virtual events requires thought, time, organization and planning on par with any similar in-person event.

For CMOs currently developing their own event strategies, here are five key insights essential to producing a virtual summit from beginning-to-end.

1. Set the stage: A virtual event is not “just another” online meeting

Without the physical venue, the medium is the message with virtual events. That’s why a lowest-common denominator tech experience like Zoom or Teams doesn’t translate well to hosting a multi-day event with 30+ sessions, 50+ speakers and hundreds of C-level attendees.

When you move to a virtual summit, Dwight Eisenhower’s quote “Plans are useless. Planning is everything” becomes even more applicable. That’s because in addition to your typical content and event plan, you’re going to have the added complication of delivering your event to and from everyone’s home. The best laid plans go out the window as soon as your speakers’ Wifi goes down, someone looks like they’re broadcasting from a cave due to poor lighting, or the dog will bark at the most important part of a keynote.

You have to accept that you can’t control everything, but once you shift your mindset from this being “just another Zoom” and start planning for what could happen, you’ll be able to focus on the attendee experience you really want to deliver — and where things are likely to break.

Spoiler Alert: Something will “break” during your event. Take my word for it. In the planning process, identify what levers and knobs you can pull in the moment to avoid failure. In Eisenhower’s words: “planning is everything.”

2. Don’t cheap out: virtual and physical events are more alike than you think

In my experience, a quality virtual event is no less expensive or complex to produce than a physical gathering. Full stop.

When we started working on the CIO Summit, I was stunned at the initial cost estimates. I knew we would need to pull down a whole new technology stack, but I thought for sure that would still be a fraction of what a comparable, in-person event would look like.

Then, after receiving almost identical bids from several production agencies, I realized we were thinking about it all wrong.

“For in-person events, you are generally dealing with one venue or vendor that covers an array of costs: the space, existing infrastructure, and an execution and support team,” explains Marcy Karpowitz, owner of MKMCreative and our eventual partner on the CIO Summit. “The same goes for your A/V where you have someone delivering sound, lighting, technical expertise, etc. Some of the fixed costs are spread across multiple speakers or activations, which provides the opportunity to move budget around and potentially gain economies of scale. In the virtual world, you have to purpose-build the infrastructure around the show’s objectives, elements and each participant’s needs.”

Because of this purpose-built model, costs tend to be higher as no “off-the-shelf-one-stop-shop” virtual solution exists. That means you have to stitch together a variety of solutions to deliver the seamless registration, content, and networking experiences you want attendees to have.

You have to realize that in a virtual environment, your company has become a media company and your content is a product you are selling. To be successful you have to take on the cost of producing distributing your content. Few CMOs are used to paying the full cost of distribution, which means the cost of the additional technology, equipment, and expertise can be surprising if you’re still thinking about this like a physical event.

3. Plan with strategic intent: Virtual events are conversation starters, not deal closers

Historically, most marketers think about events as moments in time; they’re programs you produce and then you move on. In the virtual world, you have the opportunity to shift your organization’s perspective from events as a point solution, to their being the start of a community you can engage — through multiple channels, campaigns and points in time.

In other words, if you’re not thinking about your virtual event as the start of a year-long campaign, you’re leaving value on the table.

That means CMOs need to allocate more time, planning and resources to post-show activations (more on this #5 below) across your go-to-market organization. To maximize the value of the larger audience you can reach online, you need to develop customer journeys that keep the conversation going. This will require an audience-based approach where your touchpoints can vary from direct email to social to sales outreach and even follow-on events.

4. Package the value: Virtual events provide better data, but value can be difficult to articulate

I’ve talked to numerous people who have had difficulty selling even their long-time sponsors on virtual event sponsorships. I attribute this to two issues:

  • Event producers haven’t been able to articulate the true value of virtual events.
  • Sponsors haven’t shifted their mindset to embrace the inherent benefits of digital.

In a physical world, sponsors were happy to have their brand associated with a show, speakers on stage. They could pick up some business cards (or scan some QR codes) at their booth, network in the crowd, and look potential customers in the eyes. All of the same opportunities exist with virtual events, only with greater value because of the richer targeting and engagement data.

For example, in the virtual world, not only can you get someone’s contact information, you can see what sessions they say they’re interested in, what sessions they actually went to, how long they stayed, who they shared your content with, whether they asked a question, and whether they took any follow up action. All of these are more granular signals of purchase intent or interest in a sponsor’s offerings.

Event producers need to spend more time articulating how companies can take advantage of this value, and marketers on the sponsoring side of the equation will need to evolve their thinking. One sponsor who at our CIO Summit, Silicon Valley Bank , is already ahead of the curve.

Rather than relying on the same activations used in-person, SVB delivered:

  • Highly-quality explainer video detailing their services that ran before every main session
  • Senior executives to deliver an overview of each day’s content and its relevance to SVB’s mission
  • Downloadable market report as value-add content to what was being delivered on stage.

5. Prioritize post-show activities: You don’t get to strike the stage and go home

In organizing a typical in-person event, most time and resources go towards the pre-event and day-of efforts: attracting registrations, programming the content, delivering the content. Once the post-show clean up is over and you’ve handed off the leads to the sales team, there’s relatively little marketing follow-up required.

Virtual events are completely different. The investment of marketing resources needs to be evenly distributed before, during and after the main event. That’s because the virtual world generates so many assets, data, and interactions that your marketers not only should, but must, plan on leveraging them after the show, or you risk losing the majority of the potential value you created.

Shifting your mindset to think of virtual events as a starting point — and not a singular moment in time — can help you realign your efforts and priorities. Your investment in post-show planning and activities is where you will earn this value.

Building for the Next Normal

Most of us look forward to a world where we can host in-person events again. While virtual events have their unique advantages, they can never replace the energy of a conference full of intelligent colleagues and competitors, where the chorus of conversations strike new deals, partnerships and friendships.

While physical events will return in some capacity in the future, the trend of virtual and hybrid events will continue to accelerate. They, too, have their unique advantages, especially in efficiently bringing together parties across geographies. And so all marketers will need to adjust to the digital environment knowing that technologies, best practices and even relationships with our audiences are all rapidly evolving.

For marketers planning a virtual event, I wish you the best and hope these insights help you deliver an amazing experience. If you have additional lessons you’d like to share and best practices from your own virtual event experience, I’d love to hear about them at scott@sapphireventures.com .

Originally published at https://sapphireventures.com.


Building the Next Normal: 5 Key Insights for CMOs Delivering Virtual Events from Someone Who Knows… was originally published in Sapphire Ventures Perspectives on Medium, where people are continuing the conversation by highlighting and responding to this story.

How to Build a Digital Brand That Lasts


This post is by William Collis from HBR.org

Lessons from Fortnite and Nest.

Marketers Underuse Ad Experiments. That’s a Big Mistake.


This post is by Julian Runge from HBR.org

Research suggests they’re leaving (a lot) of money on the table.

Roundtrip Revenue & Buying Your Customers’ Products: Probably, Just Do It


This post is by Jason Lemkin from SaaStr

Screen Shot 2015-02-03 at 4.59.25 PMIf you’ve been around since the earlier days of the internet , a certain phrase may send shivers up your spine — “Roundtrip Revenue.”  People went to jail at AOL for this, overstating revenue by as much as $1 billion that wasn’t really real.  It was just matched against AOL purchases, making the revenues in essence nonexistent.

I was reminded of this the other day, just a smidge, when I got a  marketing pitch from a SaaS company with a case study about one of their customers … who also happens to be a customer back.

These days, basically every SaaS company does the same thing.  We are all buying from each other.  Where it gets murkier is when one sale is tied to … buying their product back.

What I mean is tech companies tend to sell to other tech companies, especially in the beginning.  And sometimes, there’s an ask back.  The ask from the customer, the prospect, is to buy their product as well.

I generally said No when I was asked to buy a customer’s product back.  First, I was worried that we often had multiple customers in the same vertical (e.g., we had Eloqua, Pardot, Marketo, Silverpop and more all as customers back in the day) and didn’t want to play favorites.  Second, I wanted real sales.  Having a customer pay just a few bucks for our product, not deploy … meant basically no renewal.  Customers that buy but don’t deploy aren’t worth much if anything at all because they often don’t renew and certainly don’t create second-order revenue.  And if a customer in a recurring revenue business doesn’t renew, it’s basically like you never had them as a customer at all.  And third, I didn’t want to encourage any games and shenanigans in the sales team, and as a corollary of that, didn’t want to encourage “loss leader” deals where we made no net revenue AND had to pay a sales commission on top of that.

All good thoughts, and sort of right … but … when done right, roundtrip revenue in the early days can be a useful, if not epic, tool:

  •  First of all, especially if the CEOs or VPs of Marketing or whomever know each other … it makes for great joint marketing opportunities.  You can each promote each other’s products and be a case study for each other.  I know, it’s a bit insider-baseball.  But a lot better than nothing.
  • Second, if you can at least get deployed, it’s at least an opportunity to get in ahead of other competitors.  Better you than them.
  • Screen Shot 2015-02-03 at 5.08.37 PMThird, even if they are only partially buying because they want your product today, you can get unique access to these roundtrip customers.  They’ll give you honest feedback, let you drive over and demo them stuff, and in general give you at least certain frank insights you just struggle to get from arms-length customers.

I’m not saying this should be a material amount of your revenue.  But you’re not AOL, back in the day.  It won’t matter in the long run if you buy a few of your customers’ products back. It will probably just end up a tiny percent of your revenues that aren’t truly 100% arms length.  And disclose it to your investors, so they know, if it’s material.  If it’s <= 10% in the early days — I say go for it.  Pay the commission.  Don’t overanalyze.  And just make sure they deploy.

Something is better than nothing.  And in SaaS, you want to build long-term relationships early in your 7-10 year journey.  In whatever way you can in the early days.

[p.s. this is not accounting (or legal) advice!  even if you can’t recognize some revenue, in the early days, the 1-2-3 benefits make it still worth it.]

note: an updated SaaStr Classic post

 

SEC roundtrip image from here.  High Horse band logo from here.

The post Roundtrip Revenue & Buying Your Customers’ Products: Probably, Just Do It appeared first on SaaStr.

Your Marketing Site Really Should Be Even Better Than Your Product


This post is by Jason Lemkin from SaaStr

When a new head of marketing joins a start-up and the first thing they want to do is “refresh the marketing site”, I always quietly groan a bit.  Look, a marketing site is important.  But don’t leads matter more?  Shouldn’t improving the funnel be job #1 first?  Shouldn’t updating lead scoring, and lead routing, and so many other things come before a big “refresh the marketing site” project?

Well.  Yes, of course leads come first.  But these marketers aren’t wrong.

Because the good VPs of Marketing know something:  Your marketing site should be even better than your product.  And when it is — you’ll move more leads down the funnel.  And close more of them.  Than you would with a mediocre website.  And since this upgrade really doesn’t require shipping any new features, fixing any bugs, or really needing anything from any other functional group … it makes sense to be a Top 3 project for a new marketing lead.  Because it will move the needle.

And importantly, I find SaaS start-ups in the $1.5m-$10m ARR often fall into this trap.  They start off all excited about their vision, and the marketing site they build at $0.1m or $1m ARR is pretty good.  But then, the product gets richer. The logos more impressive.  The integrations deeper.  And importantly, the target markets broader.  And the marketing site doesn’t keep up.  It looks like a marketing site from a year ago.

Don’t let that happen.  Especially just as you are getting a mini-brand.  As prospects start to hear about you, make sure when they drive by, they are impressed.

A few simple thoughts:

  • Get your exec team around the table and just ask: “Is our marketing site better than our product?”.  Ask everyone.  If they don’t agree, make changes this month.
  • Adopt the persona of any customer segment with > 10% of your revenue.  Does your marketing site really speak to them?  Are you sure?
  • What are the top 10 objections in sales.  Does the marketing site answer them?  Are you sure?
  • It is super, duper easy to contact sales, support, marketing, the CEO, anyone?  No?  Why not?
  • Does the marketing site make you look like you are at least 2x larger than you are?  Why not?
  • Does the marketing site let me get information how I like it?  Is there a weekly webinar?  A whitepaper?  An FAQ?  Intercom?  Why not?
  • Is the marketing site faster loading, slicker, more responsive, and better designed than your product?  It should be.  You don’t need all those engineers.
  • Are your top customers all signing your praise on your marketing site?  They should be.  Go ask them.
  • Is your marketing site more professional than the competition? It isn’t?  Then why would I pick you?

This works, folks.  Buyers now have 100s of SaaS apps deployed and evaluation 1000+ over their buying lifetimes.  They are looking for signals.  Is this the right vendor for me?  Can it be trusted?  Will they deliver for me?

And those are the questions your marketing site answers.

Upgrade your marketing site to be even slicker than your product itself.  And watch your close rate go up.  Easy peasy.

Yes, Your Marketing Site Really Does Matter

Webinars Almost Always Work

The post Your Marketing Site Really Should Be Even Better Than Your Product appeared first on SaaStr.

SaaStr Podcast #388 with Okta CMO Ryan Carlson


This post is by Amelia Ibarra from SaaStr

SaaStr Podcast 388 with Okta's Ryan Carlson

Ep. 388: Ryan Carlson is the CMO @ Okta, the leading independent provider of identity for the enterprise. Prior to their incredibly successful IPO in April of 2017, they raised funding from some of the best in the business including Sequoia, a16z, Greylock, Khosla and Floodgate to name a few. As for Ryan, he has spent an incredible 9 years at Okta in numerous different roles starting with running the product marketing team before moving to run the marketing team, leading to his promotion to CMO close to 5 years ago now. Before Okta, Ryan was the Co-Founder and CEO @ Sproost, a bootstrapped online expert recommendation system.

In Today’s Episode We Discuss:

* How Ryan made his way into the world of enterprise SaaS. Why was joining Okta the most challenging interview process he has experienced? How did it impact how he assesses candidates today?
* How does Ryan distinguish between the company story vs the product story? When do they align and when do they separate? How should your strategy change as they move apart? How does the structure of your marketing team need to change with the evolution?
* What should the first marketing hire look like? What experience should they have? Why does Ryan believe you should hire two in marketing to start? How do you want them to work together? How does Ryan ensure cross-function working seamlessly from the very beginning with marketing?
* How does Ryan think about measuring success when it comes to product marketing? How does Ryan think about marketing attribution today? How should we think through SAL vs closed revenue as indicator of marketing success? Where does Ryan believe many go wrong with regards to marketing funnels?


 

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
SaaStr
Harry Stebbings
Ryan Carlson

Below, we’ve shared the transcript of Harry’s interview with Ryan.

Harry Stebbings:

Welcome. You are listening to the official SaaStr podcast with me, Harry Stebbings. Into the show today, and one company that’s blown me away over the last few years is Okta, with their transition to being a public company and all that comes with that movement. And today, I’m thrilled to be joined by their CMO, Ryan Carlson.

Harry Stebbings:

For those that do not know, Okta is the leading independent provider of identity for the enterprise. Prior to their incredibly successful IPO in April of 2017, they raised funding from some of the best in the business, including Sequoia, Andreessen, Greylock, Khosla, and Floodgate to name a few. As for Ryan, he spent an incredible nine years at Okta, in numerous different roles, starting with running the product marketing team before moving to run the marketing team, leading to his promotion to CMO close to five years ago now.

Harry Stebbings:

Before Okta, Ryan was the cofounder and CEO at Sproost, a bootstrapped online expert recommendation system. And this schedule really was a team effort. I want to say a huge thank you to Pat Grady at Sequoia, Fred Kerrest , and Mike Maples at Floodgate for some fantastic question suggestions today. I really do appreciate that.

Harry Stebbings:

That is quite enough for me, and I’m very excited to hand over to Ryan Carlson, CMO at Okta.

Harry Stebbings:

Ryan, it is so great to have you on the show today. I’ve heard so many good things, both from Frederick and from Pat Grady. So thank you so much for joining me today.

Ryan Carlson:

Thanks, Harry. I’m glad to be here. A big fan of all your podcasts.

Harry Stebbings:

That’s so kind of you, and I always like a good ego inflation, but I do want to start today with a little bit on you. So tell me, how did you make your way into the world of SaaS, and how did you come to be CMO of the juggernaut that Okta is today?

Ryan Carlson:

My path to being CMO at Okta is not a straight one and it is filled with a lot of luck. I started in Silicon Valley a long time ago. I studied electrical engineering. And so I came out to Silicon Valley and worked for semiconductor companies, both startups and big companies. And I was always on the product side, product management, product marketing.

Ryan Carlson:

Then I started to move my way into different systems companies, and I read about Okta when they were just getting started. And I thought it was a good idea, but more than that, I thought the founding team was interesting. And so I reached out to them to try to join them. And that’s a pretty interesting story as well, my path to actually joining the company, but once I did, I built the product marketing team, the product marketing function, and after a while, I decided I wanted to tell not just the product story, but I want to tell the company story.

Ryan Carlson:

And so for tech startups, when they’re small, the product story and the company story are one and the same, but as they get bigger, the company story starts to take on a different angle. It takes on more significance. And I wanted to tell the company story. And so I eventually asked them to give me a shot at being a CMO and they did. And that was about five years ago.

Harry Stebbings:

What a ride it has been since. And we’re going to talk about kind of the actual joining process there, but I’m so intrigued. You said there about kind of the company story and the product story and how they kind of differ with time. Tell us, when did you notice that they differ? Is it with additional product lines? Is it with scale of team? What causes the differing over time?

Ryan Carlson:

Part of it is typically when a tech company has their first product get traction, and they become successful and they scale, but sometimes they scale by adding new products. And we were certainly starting to do that, but I think more significantly, what happens is, is that product has a value proposition and it has traction, it has a story, but you really want to try to convey that there’s something bigger there than just that product, or that there’s more significance to the product than meets the eye. And the company’s story necessarily has to take on that in order to be the winner in that market. And I know we’re going to talk about category creation in a little bit, but if you are really going to win the market, the company story has to start to take on a significance more so than just the product story.

Harry Stebbings:

No, I do agree with you in terms of that company story significance. I do want to touch on the element of your actual joining, because I spoke to Frederick before the show and he said you have to, have to ask him about the interview process. He asked, was it the longest of your career and how do you remember it?

Ryan Carlson:

It definitely was because it took almost a year. When I first met Freddy and Todd, the co founders, I was interviewing for a product role, the first head of product management. And they were about nine people at that time. And that’s where I’d spent most of my career, was in product management. And the team really liked me, but I had no real experience in what Okta was doing, which was security and identity and enterprise software.

Ryan Carlson:

But I went through something like four or five rounds of interviews. And I think they came close to hiring me, but they ultimately decided, and they were right in doing this, that they needed somebody on the product management side who came from that industry, and the person they hired instead of me is still here. He’s a VP in the business development team. He’s awesome. He’s a good friend.

Ryan Carlson:

But when I met them, I became convinced, especially meeting Todd and Freddy, the cofounders, that they were going to build a company that was going to be special. Not just one that was going to be successful, but one that was going to be successful in what I considered to be the right way, that they were going to build a company that you’d be proud to be part of. They were going to build a great place to work.

Ryan Carlson:

And so I kept on them. I went out and interviewed companies that I thought could be their customers. I learned about their market. I learned about their competition. I kept sending them ideas. So about 10 months later, when they wanted to build the product marketing function, they reached out and said, “Do you want to come and do that for us?” But even then it wasn’t a slam dunk. I still went through many interviews with them. My final interview started at 7:00 in the morning on a Friday and finished at 7:00 PM that same Friday. I came back two different times that day, and that finally cinched the deal, and that was back in 2011.

Harry Stebbings:

I mean, I just love that in terms of the persistence. Can I ask, I’m sorry, we will get to the schedule, but does it change how you think about interviewing, having seen and been through that journey and the persistence that it took you to get the role? Does it change how you think about candidate assessment and experience importance?

Ryan Carlson:

100%. I don’t know if that in particular changed my view, but I do look for people who really want the job. Now, of course, everyone’s going to say they want it, but how do you measure that? Do they put in the time to research the company, to research you, to research the competition? A lot of times I will ask candidates for their thoughts on something, maybe a small project, and the effort they put into that in the interview process, to me, is a real signal of their drive, their desire for the role and just their hustle, because that tends to account for so much in success, in a hire. And so I 100% look for that kind of hustle in any kind of hire that we’re doing.

Harry Stebbings:

Product marketing is such a hard role to hire for today, and it’s just intensely competitive as well. Do you find that you can ask that of the best candidates, or they’ll say, “Hey, Ryan, I can go to Uber, or name your billion dollar company, tomorrow, and I don’t have to put in this effort and this mind mapping and all the additional work.” Do you find, of the very best candidates, you kind of can ask them to do the leg work up front, without them being a little bit disjointed?

Ryan Carlson:

It’s a great point. It can be off putting to ask them to do work as part of an interview process. And so you have to do it in the right order. First, I’m trying to sell the candidate. If I think they’re a great candidate, I am in selling mode. Obviously you’re always selling, but you’re selling them on the opportunity, on the role, on the impact they can make.

Ryan Carlson:

And then the way I position the work that we would do as part of the interview process, it is not a test. It’s more of a trial of us working together. It’s an opportunity for them to figure out what I’m like, to figure out what the company’s like. And so it’s really a way for both us and for the candidate to become comfortable working with each other. And I feel like the best candidates know how hard it is to assess a company, whether it be their culture, what they’re really like. And so the more time they can spend with you, the better it is for them as well. And I think that is a way to make it not an off-putting request.

Harry Stebbings:

I totally agree. And I think kind of having that mindset removes a little bit of the risk for them as well by kind of giving them the freemium version of working with you. I do want to touch on the creation that you mentioned earlier, because, for my sins, a VC by day, and I’ve been trained for years, that the big wins in venture are when you bet on category creators, and we create new categories in the markets. But a little birdy tells me, when it comes to category creation, you’re a slight skeptic. So why is that, Ryan? Why are you a skeptic on category creation?

Ryan Carlson:

Well, category creation is so popular now in terms of a framework and a thought process, about how you make a winning company, that I think people have reversed the order and they’ve confused correlation and causation. Certainly, the winning companies have created a category, but I talk to a lot of founders who ask about marketing strategies and asking about marketing advice. And they say, “Okay, I want to create a category.”

Ryan Carlson:

And I say, the way you do that is, win the market. You don’t create a category and then win the market, you win the market and then that has allowed you to create a category. In other words, the winners rewrite the history. They write the rules. And so I feel like people put category creation as something that they want to do too early in the stage of a tech startup.

Ryan Carlson:

Now, it’s important to think about category creation because you want to think about the category you’re in. In Steve Blank’s terminology, are you a disruptive innovation or are you a sustaining innovation? And I think the reason that I’m a “skeptic” on category creation is because people think about it so much that they start to talk about their product or their company in ways that aren’t clear. They’re so focused on trying to create a new category that they describe their product or their company in an unclear way, because they’re trying to make it sound different.

Ryan Carlson:

Sometimes you’re just a better version of the thing that came before you. And that’s totally fine. And if you win the market by being a better version of the thing that came before you, then you will have created a category. But I think it’s the correlation and causation error that people make when talking about category creation, which makes me a skeptic.

Harry Stebbings:

Can I ask, how do you feel about the build in public marketing strategy that a lot of companies are pursuing, where they’re aggressively telling the story, trying to category create, and in a lot of cases, pre-product and pre-product launch to build the community and that engagement within the community. How do you feel about that build in public as a marketing strategy? I’m interested.

Ryan Carlson:

You mean build something while everybody’s watching you do it, they see the progress instead of waiting and then launching? Is that what you mean?

Harry Stebbings:

Yeah, absolutely. So if you look at like Fast on Twitter, for example, have really done a huge amount in terms of building hype, brand, community, ahead of time. And they haven’t launched a product yet. And it’s becoming more and more prominent as part of people’s campaigns.

Ryan Carlson:

I think that can work. But I think the ultimate test of that, you want to launch when you know you have repeatability in your go-to-market. I have a product, I know it solves this problem for these types of buyers, I know with some repeatability and predictability that if I get this many people into my funnel, I’ll convert a certain percentage of them to customers. I think you launch when you have some semblance of that. Now, you can’t wait too long, but if you launch before then, then you’ve wasted the opportunity to build a lot of pipeline, to build a lot of awareness.

Ryan Carlson:

And those things only matter if you can turn them into paying customers. And so I’m of the opinion that you build for a small audience, you figure out that you have something that they really want, and then you launch, but I can also see the fact that building awareness in general is hard, and any way you can do it can help, but I fall in the category of make sure you have repeatability before you launch big.

Harry Stebbings:

I’m interested. You said there about Steve Blank, and have many great writers in our industry, and many great books. Some have got kind of more seminal places in our hierarchy than others. Good to Great, being one of the many named ones. I knew that maybe you have a different view. And you said to me before, there’s a slight element of BS. And so I’m intrigued. Why do you think that when it comes to some of these more seminal books and how do you think about that?

Ryan Carlson:

Well, the Steve Blank mindset in his book and his whole approach to customer development to me is really relevant to your question, because Good to Great and Built to Last, those books, the fundamental flaw, I think, in those books in particular is survivorship bias and hindsight bias. They go and interview people who worked at companies that either failed or the companies that were really successful, and the way that those people describe what they did is inevitably influenced by the fact that they failed or the fact that they succeeded.

Ryan Carlson:

So for example, you can say the thing that made us really successful is that we didn’t get de-focused. We stuck to our knitting, we doubled down on our core, and we didn’t get distracted. Or you could say the thing that caused us to fail is that we did not diversify quick enough from our core product. We didn’t get into adjacent markets. Both of those decisions, at the time that they were made, are the same decisions, but you described them as a good decision or a bad decision based on the outcome.

Ryan Carlson:

And so I feel like that’s a fundamental flaw in those books. They’re backward looking. And the people who are interviewed as part of them have these biases that influence their responses. And so I feel like another book, it’s not very well known, that I think should be alongside those, it’s called The Halo Effect by Phil Rosenzweig. And it does a really good job of talking about how hard these decisions to make are in the moment, when you don’t obviously know what’s going to happen after the fact.

Harry Stebbings:

Can I ask a really hard one? In terms of making decisions in the moment, and do say if it’s too lofty and out there, but the hardest thing for me, when I look at a role like yours, is the amount of decisions you have to make with imperfect data. How do you think about getting comfortable with that, executing at speed on those decisions, and how do you kind of address that?

Ryan Carlson:

I think a really important framework for making all kinds of decisions, but decisions about marketing as well, is knowing whether it’s a reversible decision. Something that’s irreversible, that you can’t undo, you have to be sure about, and you should take your time and you should get more data and you should test and all of those things. But if a decision is reversible, and there’s very few decisions that are truly irreversible, then get as much data as you can quickly, and then go for it and test and be willing to change your mind and be willing to adapt as you learn from putting the decision into practice.

Ryan Carlson:

So many people analyze the decision before making it so long that they can also, and this is another important part of this, they become so tied to their viewpoint because they spent so much time on the decision and the analysis, that they think they’re right. Sometimes putting a decision into practice earlier than you think can also ensure that you keep an open mind because you don’t get biased. You don’t fall prey to confirmation bias, looking for things that confirm the analysis you just spent six months on.

Harry Stebbings:

Totally with you in terms of that confirmation bias and kind of being aware of it. In terms of moving a level deeper, I guess, into kind of functional areas of expertise, we’ve spoken a little bit about marketing. So let’s start on that one. And I spoke to Frederick, as I said, before the show, and he said, do you agree with Frank Slootman, that the CMO should have the pipeline target tattooed on their head? Talk to me about that.

Ryan Carlson:

I do, but with a giant caveat. In fact, I agree so much with that quote that I put it in a presentation that I gave to a thousand salespeople at one of our sales kickoffs, to emphasize how important pipeline creation is to the marketing team. But that really got me into trouble. I made a giant mistake with that approach. I believed so much in that. And the way you measure pipeline in many companies is you look at the dollar value of the opportunities that marketing has created, that sales is accepted, and you add that up and you say, we’ve created this much pipeline and dollars.

Ryan Carlson:

We did that. And we made that the number one metric. And to really make it clear that I was tattooing that on my forehead, the thing that I did is, every meeting I had, whether it was a staff meeting, whether it was a marketing leadership meeting, whether it was a marketing all hands meeting, the first agenda item every meeting was a review of our pipeline creation to date in the quarter. I did that for about a year and a half.

Ryan Carlson:

And I was doing that to tell everybody in all parts of marketing, that pipeline matters. Sometimes if you’re in PR or if you’re in product marketing or you’re in sales enablement, you don’t look necessarily at pipeline creation, but I wanted them all to know that pipeline creation was the thing that matters. But what I did that was a mistake is my emphasis on that one number worked, and everybody focused on that one number. They focused on sourcing and creating pipeline, but there’s a lot of things that you do in marketing that may not source pipeline today, but will make it easier to source pipeline in the future. And the team stopped doing those.

Ryan Carlson:

So I accidentally and inadvertently caused them to focus on the short term and not the long term. And of course, you have to have a blend of both. And so the way we fixed that is we still have everybody focused on pipeline, but now we have a very holistic scorecard to measure all aspects of pipeline creation and it starts with PR awareness. And then it goes all the way through to the pipeline that a sales team needs. With that, I very much agree with the Frank Slootman quote, but I had to learn that the way you measure pipeline was an important part of that equation.

Harry Stebbings:

Can I ask in terms of the measurements in that pipeline, I always believe that it has to be tied, when you’re measuring marketing team success, it has to be tied directly to a revenue number. And my question there is, association with pipeline, is that on closed contract signed or is that just on sales accepted leads? And then how do you think about the right stage qualification, where it can be attributed to marketing, so to speak?

Ryan Carlson:

We could do a four hour podcast on this question of how you measure pipeline, multitouch attribution, how far down in the funnel do you go to measure marketing. I think the next giant marketing tech company, if somebody is going to solve this, it’s really hard. The way that I’ve come to think about it is it does have to be tied to revenue, but it’s more effective if you focus on sales accepted opportunities, because then you always have this cliched argument between sales and marketing.

Ryan Carlson:

The sales team says those leads aren’t great. Marketing says sales isn’t following up on those leads. And so if you tie them together and say, marketing is going to get measured on pipeline that sales has accepted, then you bridge that gap as much as you can. But you can’t go too far down the funnel because then you lose any tie to what marketing’s really doing. So I do think that this holistic scorecard that we’ve talked about is a way to do that. You don’t look at just one number, although everybody wants to look at just one number, you look at a variety of them and you just know that there’s a priority order in the metrics that you’re considering when measuring pipeline creation.

Harry Stebbings:

I love the idea of doing a four hour podcast on that, which shows how much I need to get out, probably. But I do have to ask, in terms of having it as the central number, we mentioned sales enablement, we mentioned PR, product marketing, some of the functional areas which aren’t so tied to pipeline as the core metric. How do you not discourage them when you put it so front and center? Do you know what I mean? Cause if it’s so front and center, and it’s not a core focus for them, but what you do is still really important. Is that a challenge?

Ryan Carlson:

It totally is. And that’s actually one of the challenges in leading a marketing team that gets quite large, that has a lot of different disciplines associated with it. How do you ensure that they all see themselves in pipeline creation? They see the hand that they play in it. And so a big part of that is when we do a campaign, an advertising campaign or a marketing campaign, it is meant to be very cross functional so that the PR team is trying to get stories written about this new product, and the way in which we pitch those stories it supports and it compliments the way that we’re going to do advertising around that new product.

Ryan Carlson:

And the sales enablement team has already educated every SDR and sales executive and sales engineer to know that this is the way we’re positioning this from the PR aspect, all the way through to the advertising aspect. That’s what we try to do to make sure everybody sees themselves in pipeline. It is really hard to do well, but it’s something that we focus on.

Harry Stebbings:

No, I totally see the challenge there. You mentioned the scaling of the team itself. I’m really intrigued, ’cause I get a lot of founders say to me, “Harry, I love the shows, but often my biggest question is simply the first marketing hire. What should it look like for me as an enterprise company?” I’m intrigued. When you have this question posed to you, how do you answer? What should that first marketing hire look like for an enterprise company today?

Ryan Carlson:

I talk to a lot of startup founders about this question and they always typically say, “I’m looking for a VP of marketing. What kind of candidate should I look for?” And if this is their first hire. And I say don’t hire a VP of marketing. I think, and this advice is very particular to enterprise software, I think you should hire two marketing people to start with; a product marketing person and then a demand gen infrastructure person, because you’re iterating and you’re experimenting and you’re refining two different things at the same time.

Ryan Carlson:

You’re refining your message, your value proposition. How do I describe the product? What problems it solves, how you quantify that, how it’s better than the competition. That’s all product marketing. And early stage, you’re iterating on that. You’re trying to find the messages that work really well, that accelerate your sales process. And at the same time, you’re also iterating and experimenting on the channels and the method you use to get that message out.

Ryan Carlson:

Is it webinars? Is it in person events when we could do that? Is it virtual events now? Is it digital advertising? And you want to instrument that demand gen part as much as you can as early as you can. So I advise a lot of founders to hire a product marketing expert and a demand gen infrastructure expert, and have them team up. Iterate on the message and iterate on the tactics at the same time.

Harry Stebbings:

You mentioned the VP of strategic marketing there. I often have a lot of founders also, I’ll say, what’s the difference between VP of marketing and CMO? CMO sounds more grandiose and more important, and maybe I should go for that. And that’s what the candidate’s requesting. How should I think about the difference between VP versus CMO and how that should look within my org? How do you think about that?

Ryan Carlson:

That probably is related to how you have company titles. I think if… This is specifically for early stage. If early stage leaders are coming in and they’re hung up on CMO title versus VP of marketing title, that probably is a red flag, frankly. If this is specific to early stage, you want somebody who’s going to come in and run the function. And I do think that function changes in the ways that we were talking about before.

Ryan Carlson:

A CMO at a company that has scaled has to care about things like investor relations. They have to care about things like internal communications, crisis communications. There’s so much more that you have to take on in a marketing function, once a company has scaled and they’ve reached a large size, that an early stage person wouldn’t. And so that’s probably maybe a difference between a VP of marketing who knows product marketing. You can figure out demand gen, but they don’t know anything yet about creating an S1 for a company that’s going through an IPO and things like that.

Harry Stebbings:

I’m really pleased you said that. Cause I spoke to Frederick about this before and he said, ask him, what was it like being CMO during the IPO process? And do you have any big takeaways from that experience?

Ryan Carlson:

I mean, it was one of the most interesting experiences that I’ve been through, because in our case, in Okta’s case, what we do is simple on the surface, complex underneath, and to really understand the depth of what we do, it takes a while. And so I was helping with the S1 process by bringing the bankers and everybody who was helping us go public, helping them understand the story, and then together crafting that in a way that we would go out and bring to investors.

Ryan Carlson:

And so that was interesting in part, because it was, like I said, the Okta story is complex, but there’s a lot to work with there, but it was also interesting because as a marketing person, you want to be as bold as you can. You want to be as brash as you can. You want to be as audacious as you can. We had a lot of jokes in the process because the lawyers typically are trying to keep you from being as brash as you can. And that dynamic was pretty fun.

Ryan Carlson:

You do this thing after the IPO where you have a dinner with everybody that goes through the process, the bankers and the lawyers and the company, and our lead bank that took us public during that post-IPO celebration dinner, created a PowerPoint presentation, which pretty much made fun of me the whole time, because they were calling back to the fun we had in the rooms debating about how we should tell the Okta story.

Harry Stebbings:

I love that in terms of them taking the piss. I do have to be honest, you said there about kind of the different layers of complexity to the business. I’m interested because, going back to the product marketing aspect, you said before, tech product marketing is easy to describe, but actually hard to do. I’m interested. How do you describe it and why is it hard to do? And why do you think there’s that kind of conflict between the two?

Ryan Carlson:

When I describe product marketing to people, the vision for product marketing is, you’re describing the solutions that your product provides, why those solutions matter, and why you’re better than anybody else at solving them. And that second part, why those solutions matter, a lot of times, you’re trying to quantify it. It’s simple. It’s simply that. But people get so caught up in describing the features of their product. In many cases, because they’ve worked on those features and defined those features. They want to bring the features to the surface and say, “Here’s the main thing about our products.”

Ryan Carlson:

But the features don’t matter. It’s what solutions they provide and why those things are relevant now, and why you are the only product that they should choose. And people get too far away from just the core answers to those questions. And I think they get too caught up in what Steve Jobs would say are speeds and feeds, and not really what is the primary job that your product is providing.

Ryan Carlson:

And I think measuring product marketing is especially hard because how do you know it’s working? And so this is also something that we could do a four hour podcast on, but I feel like the primary metrics for product marketing are, are you shortening the sales cycle? Are you increasing the competitive win rate? And are you increasing the average selling price over time? Because you’re doing that, you’re conveying to people that they should buy your product, you’re doing it more efficiently because they’re buying your product more quickly. They’re buying it more than your competitors at an increasing rate and they’re paying more money for it. You’re demonstrating value. Those are the primary quantitative metrics, I think, for product marketing.

Harry Stebbings:

How do you think about product marketing, working with the wider marketing team? Not that it’s a challenge, but it can be challenging to integrate them so efficiently. How do you think about that integration, communication and workflow between product marketing and wider marketing?

Ryan Carlson:

I think a lot of tech companies, marketing generally gets a bad rap, because you’ll hear people say, “I have to wade through the marketing BS to figure out what’s really going on with this product or this technology.” And I think that reputation is sometimes deserved, because a lot of people in marketing are trying to say what sounds good, and they forget to say what is true and authentic and genuine to their product.

Ryan Carlson:

And so I think product marketing can help because they can educate the broader marketing team on, what really does this product do? What really is it not good at, from a competitive standpoint? What gaps does it have? How do you know that? And ultimately, and this is probably the most important part, pulling the customers into this discussion. There’s a lot of marketing people in general who start to tell their own stories, and the way that it sounds good to them, and they forget to validate that with customers.

Ryan Carlson:

When I joined Okta, the first thing I did on the very first day I started was I called the five customers that the company had at that time, and I asked them to tell me why they bought the product. Because if I understood that, that was going to make the product marketing that we built much better. So I think product marketing can help educate the rest of the team and ensure that customers are always part of that discussion.

Harry Stebbings:

I love that, in terms of calling the five customers there, and I think it’s a totally great way to do it. I do want to dive into the team a little bit before we do the quickfire round. And if we think about kind of team assembly and team scaling, you’ve said before that actually a high performing team can produce the unintended side effect of stifling innovation. Help me out here, Ryan. Why is this? And then I guess, do we want a high performing team then?

Ryan Carlson:

So this was another lesson that I learned. I took somebody out to lunch, she’s a rising star on the team, and so I was just taking her out to lunch to figure out what she wanted to do in her career. What does she want to do longterm? How can I help her with that? How can I give her opportunities? And she was asking me for feedback on her. And I said, “Well, one of the things that I think you could do is give more direct feedback to Todd and Freddie.”

Ryan Carlson:

This person is in PR. She worked with them a lot. I said, “You have really good ideas. You should tell them your ideas more than I think you do.” And she said, “Okay, great. Can I give you some feedback?” I said, “Yes, please do.” And she told me that we had such a high bar for quality in the marketing team, that many people were afraid of failure. And I was just shocked and embarrassed by that.

Ryan Carlson:

And it comes back to some of the things that we were talking about before, reversible decisions and irreversible decisions. A high performing team, some things need to be done really well. Some things need to not fail. They have to be done perfectly and you can’t mess them up. But not all things. In fact, few things need to be like that. And knowing the difference between something that has to be done right, where there is no room for failure, and something where there is room for experimentation, where there is room for trying something in a new way, where there is room for innovation, knowing the difference between those two is important.

Ryan Carlson:

And so I’ve, since that time, I’ve really focused the team on knowing the difference between something that has to be done really well, and something that can fail if we’re trying something new. And obviously nobody’s setting out to fail, everybody’s trying to do their best, but if we’re going to keep growing and keep scaling the way that we have, we need to find new and innovative ways of doing what we’re doing. And if people feel like there’s no room for trying something new, that’s never going to work.

Harry Stebbings:

Can I ask, as you said there about imbuing that to the team, as a leader, it’s your responsibility to ensure that people feel that they have the safety, internally, to present those ideas, to present whatever it is that they’re presenting, in a safe and secure environment where it doesn’t matter if it’s shot down. How do you think about what works in terms of providing that environmental security to the team, that they can bring whatever they have to the table?

Ryan Carlson:

There’s a couple things that I do specifically for that. One is, every time that I make a mistake, I talk about it in an all-hands presentation or in a leadership meeting. I will talk about how I screwed something up, because I want everybody to feel like it’s okay to say that they screwed up. But we also do things like we have a leadership meeting that we do across the marketing team. It’s the cross functional leadership team. And we do that every month or two. And we set one of those meetings aside and we did nothing but let people come in and talk about issues that were not working. They didn’t have to have solutions to the problems. I’m not of the opinion that… Some people say don’t bring me a problem unless you also have a solution, because I think that it ties people’s hands.

Ryan Carlson:

Maybe they see a problem. They don’t know how to solve it. You want to know about that as a leader. And so we set aside a meeting where we did nothing but talk about things that weren’t working and it created the space where it was okay, because nobody was focused on, why isn’t it working? Why are you not getting your job done? We just wanted to get these problems out in the open for everybody to know about. And then you see this magic happen, where people from other groups chime in and say, “Well, have you tried this? This has worked for me.” And formally creating space for people to talk about things that aren’t working helps with that a lot.

Harry Stebbings:

Totally. And I love that in terms of the transparency around kind of mistakes that you’ve made. So that’s super interesting to hear. Can I ask, speaking of stifling innovation, one that I thought was fascinating was when someone said to me on the show, you don’t want to have an amazing customer success team. Because if they’re so good, they can actually stifle product innovation because they just deal with it all themselves. Would you agree with that? And how do you think about that one?

Ryan Carlson:

I would slightly agree with it in that a customer success team that’s really good can mask the problems in the product, and then the product team doesn’t know about them, but you still won’t have amazing customer success team. So I think what you need to do is have a feedback loop. Here are the top five problems that we are having to solve with the professional services team or with getting in and helping the customer do a custom deployment. If that is fed back into the product team and the product team looks at that, then I think that’s a winning combination. I would never say you don’t want to have a great customer success team, but I wouldn’t want your really great customer success team to try to do it all on their own.

Harry Stebbings:

Yeah, no, I think having a deliberately mediocre CS team would be a challenge. I do want to touch on one final element, though, before the quickfire, and it’s in terms of companies scale, obviously kind of company culture becomes more and more important. How do you think about your company culture at Okta? And I guess, how does it relate to brand specifically?

Ryan Carlson:

I think in general, what I’ve learned as managing a larger and larger team, culture becomes the most important tool that you have to lead a large and diverse team. And what I mean by that is, and maybe this is specific to Okta, but we don’t have a very much of a top-down hierarchy. “Here’s a plan. Now go execute it.” We have a very empowering culture. We believe that people who are closer to the action are better able to make decisions and they will act quickly. And that’s the way we’re going to get things done.

Ryan Carlson:

If you have an empowering culture like that, where decisions are getting made at the lowest level possible, the thing you need to do, I mean, what I’ve found to make those decisions effective, is to make sure that the culture, the values around which we make decisions, are really clearly understood. If people know how we value customer success or how we value integrity, or how we value transparency, those are three of Okta’s core values, if they know that, then the decisions that they make on their own, quickly, and the actions they put into place, quickly, are going to be the right ones.

Ryan Carlson:

And so I feel like culture is a way to get a team aligned and to get a team moving in the same direction without having to tell them exactly what to do. Now, how that relates to brand is I’m very much in the Ben Horowitz school of thought that what you do is who you are, and your brand ultimately is a byproduct of the actions of every single person at your company. And that’s closely related to your values and to your culture. Every Monday at our company, we have a new hire orientation.

Ryan Carlson:

And one of the first presentations they get is typically from me or somebody on the marketing team where we’re giving them the company pitch, but we’re also talking about the company’s values and how that feeds into our brand, because the brand for your company is not just the responsibility of your marketing team or your sales and marketing team. It’s the responsibility of everybody. If you’re in finance, you’re going to work with vendors. If you’re in engineering, you’re going to talk with a partner, for example, and how you interact with people outside your company is going to affect your brand. And that comes down to your values and your culture in many cases.

Harry Stebbings:

I can agree with it being everyone’s responsibility. I think that’s always a big problem in terms of everyone, they should be seeing it just to marketing. I do want to dive into my favorite though, Ryan, which is a quick fire round. So I say a short statement, and then you give me your immediate thoughts. So you ready to rock and roll?

Ryan Carlson:

Let’s do it.

Harry Stebbings:

So what’s your biggest challenge with your role today at Okta?

Ryan Carlson:

Getting people to continue to think bold. As you get big, as you have something to protect, people can sometimes be conservative. When you’re small, you have nothing to lose. And I want people to think boldly and be aggressive as they can.

Harry Stebbings:

What do you think makes Frederick the great leader that he is?

Ryan Carlson:

There’s an excerpt from a Malcolm Gladwell book, where he describes the type of person known as a connector. I think it was in his book, The Tipping Point. And Freddy is the most connector of connectors that I’ve ever met. He thinks about so many people. He makes connections between them in ways that help them. And he does it in a very selfless way. And I think that’s one of his biggest assets.

Harry Stebbings:

Speaking of his attributes, he did offer me one fantastic question here. Why are you not in the NBA?

Ryan Carlson:

Yeah, that would come from Freddie. I’m not in the NBA because I’m not good at basketball. I am way better at basketball than Freddie is, which is probably why he thinks that. But I’m not that good.

Harry Stebbings:

That is hilarious. Tell me, what moment in your life has maybe kind of served as like a transition point or changed the way that you think?

Ryan Carlson:

Coming to Okta was, from a professional standpoint, one of the things I realized is that, and this sounds dumb in hindsight, I am only going to be as good as I make the people around me. I think a lot of people younger in their career, they try to really work hard themselves and stand out and be the top of the class, or get the highest rating and get the best performance reviews. It took me longer than it should have to realize that I’m only going to be as good as the people that I make around me, and the better I make them, the better off I’m going to be. And so that was really a foundational part of me, my professional career. And it kind of coincided with me joining Okta, actually,

Harry Stebbings:

Let’s put on the element of hindsight hat. What advice would you give to a younger self of yours, when you think about the experiences you’ve had now?

Ryan Carlson:

I think a lot of people have a longterm plan for their career. And I think you should have a much shorter view for your career. Technology changes so fast, things change so fast that if you look too far out for your career, you miss a lot of opportunities. And I wish I’d had that advice when I was young.

Harry Stebbings:

Ryan, it was such a joy to do this one. As I said, I had so many good things from Frederick and Pat, so thank you so much for joining me today, and I really appreciate it.

Ryan Carlson:

Thanks, Harry, it was a lot of fun.

Harry Stebbings:

My word, I just loved doing that show and I actually moved completely away from the schedule with those questions. So Ryan was incredibly patient in putting up with me for that. And if you’d like to see more from us behind the scenes, you can on Instagram at @hstebbings1996. 

Harry Stebbings:

As always, I so appreciate all of your support, and I can’t wait to bring you a fantastic episode next week.

The post SaaStr Podcast #388 with Okta CMO Ryan Carlson appeared first on SaaStr.

SaaStr Podcast #385 with Balsa Founder & CEO Paul Rosania


This post is by Amelia Ibarra from SaaStr

Ep. 385: Paul Rosania is the Founder & CEO @ Balsa, the company that recognizes that builders move the world forward and so they are building the best second screen for builders, integrating tools you already use like Jira, GitHub, and Figma. Coming out of stealth today with their seed round being led by Andrew Chen @ a16z and joined by former CPO @ Slack, April Underwood, Chapter One’s Jeff Morris Jr and then of course, 20VC Fund. Prior to founding Balsa, Paul was Senior Director of Product @ Slack and before Slack was a Group Product Manager @ Twitter where he was responsible for the home timeline, including timeline ranking.

In Today’s Episode We Discuss:

* How Paul made his way into the world of startups with Twitter and Slack and how that led to his founding SaaS company, Balsa.
* Paul was central in the decision-making around changing the Twitter timeline from chronological to ranked, how did he think about that decision? How does Paul approach such large product decisions today? What were his biggest operating takeaways from seeing the internal mechanics of Twitter & Slack?
* What does really effective product marketing mean to Paul? How does Paul think about driving really effective change management? When engaging with bottoms up sales models, where does Paul identify the tipping points of going from bottoms up to top down?
* Why does Paul believe that the builders are the new pro athletes? How will the structure of orgs change around them? How will the support they receive change? How will their training change? How will their comp change? How does on do this and not discourage other functions in the org?

 

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
SaaStr
Harry Stebbings
Paul Rosania

Below, we’ve shared the transcript of Harry’s interview with Paul.

Harry Stebbings:

This is the official SaaStr Podcast with me, Harry Stebbings. I’m very excited for our show today, as we have a launch. An incredible company and founder making his foray into the public eye for the first time. And so with that, I’m thrilled to welcome Paul Rosania, founder, and CEO at Balsa, the company that recognizes that builders move the world forward. And so they’re building the best second screen for builders. Integrating tools you already use like Jira, GitHub and Figma. As I said, coming out of stealth today, and with their seed round led by Andrew Chen and Andreessen Horowitz and joined by former CPO of Slack, April Underwood, Chapter One’s Jeff Morris Jr. And then, of course, the newly announced 20VC Fund. Prior to founding Balsa, Paul was Senior Director of Product at Slack, and before Slack, was a Group Product Manager at Twitter, where he was responsible for the home timeline, including timeline ranking.

Harry Stebbings:

I do also want to say a huge thank you to Matt here at Robinhood for some fantastic question suggestions today, I really do so appreciate that. 

Harry Stebbings:

But that is quite enough for me so now I’m very excited to hand over to Paul Rosania co-founder and CEO at Balsa.

Harry Stebbings:

Paul, it is so great to have you on the show today. I’ve been so excited for this one for a long time. I would love though, to start today with a little bit on you. So tell me Paul, how did you make your way into the world of SaaS and how did you come to found Balsa most recently?

Paul Rosania:

Well, I’ve been in and out of startups my whole career and my big break came close to 10 years ago now. In 2011 I got a call from Andrew Chen to come out and work for him at a startup that he was running, which was my first time working in a very, very rigorous environment, focused on user growth and experimentation. And that catapulted me to Twitter and a chance to run the home timeline team there. And from Twitter to Slack, where I ran the core product team, which is essentially the nuts and bolts of Slack, the parts that people use every day. And most recently shared channels, as we started to think of Slack as much a network as it is a product.

Paul Rosania:

And so from there, and across that experience of seeing hypergrowth across the two really big companies, starting to get the sense that as companies grow the tools that people use to build software, start to dull a little bit, and yet we’ve got these amazing supercomputers that can do so much and starting to wonder, could we build better tools for builders at scale where some of the tools that we have to adopt, that work for larger organizations are not as fun to use as the tools that we use that companies like Slack when we were a lot smaller. And so that was kind of the genesis for Balsa.

Harry Stebbings:

Now I absolutely love it as a thesis. I do want to touch on a couple of elements of the background before we dive in. And as you mentioned the time at Twitter and time on the timeline itself. And I spoke to Matthew at Robinhood before this episode. We talked about changing Twitter from a chronological list to a ranked feed, you absolute prick. No, I’m joking. So my question to you is, how did you think about it? I mean, it’s a massive product decision. How did you think about this product decision? And what was that process?

Paul Rosania:

I think my stock line post-2016 is, “Forgive us, we knew not what we were doing at the time.” But I think even in today’s world, you could look back and make a similar decision. We knew at the time that the vast majority of users were seeing way less than 10% of their timeline. And if you think about the Twitter timeline prior to ranking, the tweets that are coming through are essentially random in quality. So we had this vague intuition that there are going to be some things that you’re going to miss that are going to be better than the things you saw. In fact, you’re missing more than 90% so you’re probably missing a lot of really interesting stuff that’s going on in the world. So the core intuition was really, really basic. It was just, can we take some of that stuff you’re missing and swap it in for some of the stuff you’re seeing that might not be as interesting?

Harry Stebbings:

Can I ask a question? When in such a big product decision… When you apply that now to decision making, around product in particular, are there takeaways from that experience that you take with you now? Be it made decisions faster earlier, be it a specific kind of process around the decision-making itself. Were there lessons from it?

Paul Rosania:

Yeah, a really big takeaway that’s external and customer facing and another big takeaway that was internal. So the external one is, the metrics bore out that we have made the right decision here. On the contrary, there was a big backlash around the decision from customers. And the main takeaway that I had from that, was something we had actually debated a lot internally, it’s how much control to give to the people who were going to start seeing this ranked timeline? And there was one line of thinking that simpler was better. Most people don’t want to customize their software. It’s faster to get this to market and iterate on it and make it great if we skip over a lot of those controls. And then something that I had a hunch about, but we didn’t go down this path and I learned a lot more about at Slack was, the value that comes from giving people the sense that they’re in control of the tools that they are using, ends up mattering quite a bit.

Paul Rosania:

And so that was a big takeaway that I had just from observing the backlash. What I took away was essentially, people felt like they were in control and they understood why you were making the change you were making and had some levers to pull to kind of customize it for themselves, I think that change would have been tolerated little bit more than it was. And then the internal observation is, change is just as hard within a company as it is for the customers who are affected. And especially when there’s a polarizing change, everybody shows up to work wanting to do right by the people who are using your software all day. And there’s a lot that goes into managing the internal culture within an organization when you’re going through a big change. And that was a big learning experience for me as well.

Harry Stebbings:

So if, that’s the time at Twitter… If I can just summarize your many years of work into about three minutes. Then I do want to touch on Slack itself, close to five years there. What are the biggest takeaways from your time really seeing the hyper-growth at Slack? And how do you think, I guess it impacted your operating mindset today with Balsa?

Paul Rosania:

So it was quite a leap. Twitter was a very data-driven company and one of the things that appealed to me most about going to Slack… And Slack was much smaller at the time. I think Twitter was 4,000 people on Slack was about 250. I really wanted a chance to work directly with Stewart in a very vision-driven organization, in contrast to that more data-driven culture that I felt like I had grown to be very comfortable and to really challenge myself to do something very different.

Paul Rosania:

And I felt at the time… And I still believe that Stewart is one of the great product minds of our time and a lot of what I learned and took away, had to do with just really believing in yourself and your ability to take a audience that you care a lot about and know a thing or two about, and just focus on the pure experience of building software for that audience. Watching them use it, using it yourself, with them in mind and just refining it. And how quickly you can improve the experience and add to the experience. And how often those improvements end up landing successfully.

Paul Rosania:

If you really, really focus on really deeply understanding an audience, as opposed to treating everything totally scientifically and as a matter of analysis, which I think I’m somewhere in between. I really do love pouring over the data. And so I think for Balsa, will be a mix of data-driven and vision-driven. But it was just incredibly intoxicating being able to sit with Stewart with a customer problem, sketch solutions on a whiteboard, and sometimes see those solutions reach customers within, if not days then certainly a couple of weeks, at most.

Harry Stebbings:

I’m sure it was pretty amazing to work with Stewart. I do want to kind of take a shift though, and talk about kind of the landscape we’re in today and really recognizing the challenging times, but also not being kind of morose and dull. And luckily I’ve got such [inaudible 00:07:56] through that. But, you speak to many CEOs today, and they will say the same thing with the shift of fully remote, no bloody idea what’s going on in my organization. Tell me, Paul, what can we do to cope with this? And how would you advise them?

Paul Rosania:

First of all, what we’re going through is really hard and unprecedented. And so I think taking a step back and just acknowledging that it’s a difficult time is really important to gain a little bit of perspective. Keeping track of work within organizations, especially under hypergrowth or above a certain size, is hard normally. And the shift to remote, especially so suddenly, makes it excruciating because all of the hallway conversations that you realize that you relied on to keep abreast of changes, kind of evaporate overnight. So I think the big thing that I think a lot about is that chaos can cause you to really need to feel some pressure to speed up and get organized.

Paul Rosania:

But really more than anything, I think slowing down a little bit, spending a little bit more time writing things down and using long form writing or some equivalent, more thought out and edited way of communicating is actually what’s needed in a time when it’s hard for people to communicate. And so I think we’ll see more of that. And I think as people gain a little bit of time in their really busy days right now to do some of that, they will find that over time they’ll need fewer meetings and less check-ins to start to be a little bit more aware of what’s going on in these suddenly totally distributed companies. And maybe you start to see more of that productivity gain in the long run that remote work evangelists have been talking about for a long time.

Harry Stebbings:

Can I ask? In what ways do you think the writing is so powerful? And what I mean by that is, what are the tangible things that you would write around? Is it like a weekly update to the whole team? Is it product decisions? Is there hiring decisions? Where can leaders proactively use writing to kind of unify the team?

Paul Rosania:

You could apply it for sure, in all of those ways. The way that I think writing is so powerful right now, especially is… I think great leaders understand how to get a fully formed thought from someone, kind of conversationally that, you ask someone a question in a meeting, they give you an answer that comes from some intuition, and then they’re really good at pulling this thread to get that intuition, to spill out into a concrete argument in favor of doing something.

Paul Rosania:

And writing is that same journey. But instead of doing that via dialogue, the process of writing forces you to spot the problems in your reasoning. And so that’s why I think writing is so important. It’s a way for people, without needing to speak face to face, to be able to tighten their arguments and really come to a position on something.

Paul Rosania:

Now, actually having spoken so much about writing, for weekly updates, I really like Loom. Or something where you’re seeing a face, because I think that human connection is really important. Where I think about writing, is stuff like, any sort of decision that’s being made, that’s going to shape the business. So product strategy decisions, vision documents. If you’re hiring right now, I think it’s extra important to have the hiring criteria all the way down to specific things you’re looking for, for a candidate or red flags documented, so that everyone is super tightly aligned. Because, you’re not getting as much of that by bumping into someone in the hallway outside the interview room, going, “Hey, can you ask about this thing? Because I didn’t get to it.” Getting that stuff really locked down and agreed to, makes a big difference when people aren’t in that normal day-to-day contact that they’re used to.

Harry Stebbings:

Totally. And I think you miss a lot from not having those kinds of hallway discussions. From that, you kind of hear [inaudible 00:10:42] speaking with the hallway discussions. People are struggling ,as well as organizations, obviously, but they’re also super willing and keen to try new things to improve how they work. How do you think… And this is quite a specific one actually, to just dive into, but how do you think about effective product marketing? In a COVID world, where employee appetite is actually pretty high to try new tools.

Paul Rosania:

Well, I think the thing that we keep coming back to in a lot of our conversations at Balsa, is what we’re running into is, people are very curious for ways to help with this new world that we’re in. But they have much less mental energy than they’ve ever had to actually engage in those changes that they’re considering. And so I think… You know, I’m a product person, so I naturally gravitate towards some of the more product led marketing solutions. But anything you can do to simplify the experience of just kind of testing the water with some kind of change.

Paul Rosania:

If you have a great product and the promise that you’re making to someone really is just a matter of getting them onboarded and they will actually see a little bit more productivity in their Workday. I think everyone craves that right now, but trying to make that as lightweight as possible, either through simplifying your onboarding and doing more of a product led marketing approach, that’s focused entirely on getting people to value super quickly. Or by tuning your marketing message to be very concrete and productive. I think some of the more aspirational and vague messages are a little bit less likely to land right now, just because people are very short-term focused on kind of finding ways to cope with this radical shift in the short run.

Harry Stebbings:

A couple of things that I just have to ask. I know they’re not on the schedule. How important do you think time to value is? I’m totally with you on the importance of kind of simplicity in products, but then also sometimes, beauty comes over time in the product itself. How do you think about time to value is imperative for you?

Paul Rosania:

I speak a lot in metaphors. So you have to tell me if this lands or not. I think right now time to value matters a great deal, but I also agree that you can’t build a company just on the veneer of value that comes from that first interaction. The metaphor that came to mind for me is thinking about a nicer meal at a fancy restaurant, and they want to make sure that you’re comfortable and you’re not starving while they prepare something from scratch, that takes a long time. Bringing out something in your product, a little bit the way a chef might bring out an amuse-bouche. Or some kind of little tasting thing, to just prove that you’re serious, that there is going to be value there. And that your product is built in a really high quality and focused and thoughtful way. To keep people sated while they can discover that value.

Paul Rosania:

It’s kind of how I would think about it. So I actually would stay very long-term focused, in terms of building products that have deep, deep sustaining value. Because, people want real change in this very different environment. But I think you just have to marry that with something that somebody can look at right away and go, “Oh, that’s cool. That’s different, that’s fresh. And I hope to see more of that over time.” I don’t think people have the patience today to have that first wow moment come a little bit later, than they might’ve had the patience for a year ago.

Harry Stebbings:

Terrible metaphor. Awful.

Harry Stebbings:

No, I’m kidding. I thought it was brilliant, actually. I think the question is… And this should be the title of the show. What is your amuse-bouche? I think that’s that. Is it enticing enough to make people see the beauty that kind of lies thereafter? I think the second question I was asking, it really kind of ties back to the product simplicity, which is, how do you think about the rise of Superhuman style onboardings? Apparently it means it’s kind of enough complexity that it kind of needs it. How do you feel about it from your product standpoint?

Paul Rosania:

I was in a conversation the other day, where people were wondering if that’s overwrought. I think Superhuman’s been so successful with it, that maybe it’s being applied in places where it’s not necessary. But I will tell you, especially from my experience at Twitter. The power of sitting down with someone and asking them what they’re interested in and helping them set up their home timeline was just… I mean, if we could do that for all of the hundreds of millions of people who were trying Twitter back when I was working there, I think we could have had a big impact on the growth curve for the company. So I really think that there’s no substitute for an expert in a tool helping someone get oriented. Now that said, it’s not an excuse for having a product that’s hard to adopt. And something like Superhuman, where it’s entirely keyboard driven and it’s very focused on power user productivity.

Paul Rosania:

Having someone teach you the ropes is a bit like having someone teach you an editor like VIM or Emacs, from the generation where just nothing is obvious on the surface, but you can be intensely productive once you’ve mastered it. And I don’t think most products that’s their core value prop. And so I’d be wary of applying this as a panacea in situations where the product is actually something that is intended to be adopted by people, who might not want to memorize all of the shortcuts. And might not want to do a ton of customization, just to get that initial value.

Harry Stebbings:

Totally get you. I think it’s got its place in a lot of ways. I think one challenging thing is when you look at the scale of organizations and you think about change management with new tools. Change management’s always kind of a big thing that I think about. How do you think about effective change management? Maybe, especially with Balsa, today and moving forward.

Paul Rosania:

So to me it comes back to value, and it comes back to why. And I think what you’re trying to do is, you’re trying to get a customer to slow down in order to speed up. So that argument needs to have some form of an ROI based justification, where we’re saying basically you’re going to change from product A to product B or from workflow A to workflow B. Where Flow B is going to be 10, 15, 20% more efficient or productive for you, but there’s going to be some amount of time where you’re slowing down. And so I think you need to come back to all of the same tactics you would use in a sales conversation in general, which is just to say rather than spending money and then getting your money back, you’re spending your time and then getting your time back.

Harry Stebbings:

I totally get it, in terms of that messaging. I think what it brings into question for me is, as a product leader within big orgs, and then now obviously building your own org. What do you think in terms of the ideal relationship between product and marketing? And how would that play out to you in an ideal world?

Paul Rosania:

I have a strong opinion about this. I think that storytelling is a bit of a lost art in software development and we’re starting to rediscover it. And you’re seeing companies that lead with a story and then build product around that. Building software has been such a hard thing for us to figure out how to do in a predictable and reliable way, that I think some of the traditional marketing tools around having a schedule and having the thing that you’re selling lineup on a release cadence with that schedule where… We kind of had to throw them away because as an industry, it was hard to reliably have the product ready for the marketing events, but we’re getting a little bit better about building software in an agile way, which means there’s always component parts that are ready to go out to customers. And so I think the long answer to your question is, I want to sit down with marketing and talk about what we think our narrative arcs that will land with customers right now.

Paul Rosania:

Obviously a lot of companies are leaning into remote work. So let’s take that as an example. What are the contributions that we can make to the sudden shift to remote work, to making that a more pleasant experience for this entire workforce globally, that’s gone through this? What are the things our product can do? And can we shape the product options ahead of us with the marketing narratives that we think will land and kind of pace them out? And in organizations that I think do this well, you need to leave some slop because building software is a little bit unpredictable. But I think in most organizations you can maybe budget 25 to 50% of your forward progress on engineering, toward lining up with these narratives and still have tons of room for the things that happen in engineering.

Harry Stebbings:

Got you. I totally agree with you, in terms of that relationship. So I’m pleased to hear it. I often see challenging relationships between products and marketing. You mentioned kind of [inaudible 00:17:11] company there. And I do want to kind of move with a slightest stone towards kind of more Balsa’s [inaudible 00:17:14]. And it’s like, when you look at those trying to innovate in serving newly remotely teams. Every VC, especially that I have on the show has been kind of looking for the new platform shifts gears. And you look at the likes of like Jira and GitHub, as embedded as they are. You said to me before, “The opportunity isn’t actually in competing with them, but it’s in building on top of them.” So what did you mean by this building on top of these kinds of pretty embedded incumbent structures?

Paul Rosania:

So let’s imagine I went to you as a CTO. And my pitch to you was, “The main productivity issue that you’re facing is actually the design of the electrical sockets in your building.” You would probably think I had totally lost my mind and it would be a very short conversation. So to me, I think that some of these productivity tools that people love to hate, like Jira. They’re misunderstanding that all of these systems, in order to be deployed ubiquitously and have value in every organization, they’re going to pick up some croft and some flaws along the way. And that’s actually a sign that they’ve reached a stage of maturity.

Paul Rosania:

Organizations are complex. Their needs are complex. The domain that a tool like Jira or GitHub needs to fit into is complex. And so the resulting tool is going to be in a sense messier than the tools that maybe came before when the category was not as developed or the company that was using the tool was smaller. And so when we were founding Balsa, we thought a lot about this. And my point of view is I think we’ll see another layer in the software stack where some tools like Jira and GitHub become fundamental infrastructure, kind of like the electrical outlets or the water pipes. And the question isn’t, what version of the water pipes do you want to have in your office building? It’s, what are you doing with all of this infrastructure that you’re paying for? And how are you leveraging it to gain more productivity?

Harry Stebbings:

Can I ask two things? One is the obvious one, which is dependency risk. And if you built on top of, you’re obviously dependent on the powers that be within those incumbent structures. Let’s start with that. How do you think about that dependency risk?

Paul Rosania:

So especially coming from Twitter, where lots of people were building Twitter clients on top of the Twitter API, and we were shutting them down. This is something that we thought about. So it’s a little bit different in enterprise SaaS, right? Incentives are much more aligned. We’re building software. In Balsa’s case, integrating into these tools is, we’re doing it in order to further increase the productivity of the end user as another accelerant on top of the original accelerant that comes from adopting things like source control and issue tracking. And so we’re still delivering on the same value and we’re not actually replacing the value created by those tools.

Paul Rosania:

The first thing is, we’re upselling it with the exact same message alongside these tools. And the people who are buying our software are also buying this other software. All of the relationships are symmetrical. And then the software that we are integrating with is an essential part of our tool. Is the existence of these other tools for us to tap into. So if you’re running one of these businesses, we’re just further enhancing the value that you’re creating for your target audience. And so I think even if you look at the other players in the space, unseating us or cutting us off would only be harmful to the customer. And our existence doesn’t really affect their ability to sell to that customer.

Harry Stebbings:

Can I ask? A big question that I have as an investor, is okay, totally get you in terms of building on top and kind of augmenting the experience for that consumer. The question that I have is, is that a feature? It’s always the question that investors ask. Is it a bug? Is it a feature? How do you think about that product versus feature discussion? When you’re building on top of core infrastructure.

Paul Rosania:

Well, so you have to do something that couldn’t just be on the whiteboard at the company that you’re building on top of. Right. So I think for us, the things that make us feel confident that building on top of these tools in some way, and maybe just the backup for a second… We’re talking about building on top of multiple tools and tying them together a bit more. And so when you start to think about mapping across and kind of building a metal layer across all of these productivity tools that people use to get work done and giving an end-user a single screen experience that encapsulates all of that. That starts to be something that none of the individual players could do well. It’s kind of like how, no matter who your bank is, that bank kind of wants to be mint.com, but the experience is never really right.

Paul Rosania:

And part of that is because none of those institutions really is the right place to put the center picture for your personal finances, that kind of wants to live on its own somewhere where the company that’s building it is totally focused on doing that job really well. And so we have a similar thesis here. And I guess to broaden that, I would just say, I think making one product better is a dangerous game. Trying to make a bunch of products that people use, weaves more tightly together in a way that helps you get work done is something that is best done by an independent company.

Harry Stebbings:

Yeah. I totally agree. I think it also diversifies risk in many ways in terms of dependency that…

Paul Rosania:

For sure.

Harry Stebbings:

So I totally agree with that. In terms of kind of brilliant things that you said, you’ve said many wonderful things to me. You said one thing, and it’s like, when we think about builders within these companies. The builders are… Check this out, the new pro athletes. I mean, my word, I wish that was the case. Because, then I would have incredible endorsement deals. But tell me, what did you mean by the new pro athletes?

Paul Rosania:

And I should credit Jeff Morris Jr here, because it was on a call with him when we were raising money, that I think he said the same thing to me. I know no thought is original, but credit where credit’s due on that one. So what did I mean by that? One thing that I think is sometimes lost when we look at these big logos, is we lose sight of the people that power these organizations. It feels with computers sometimes, like the machines somehow made the software that we use. But behind that, just like 100 years ago when we were making things with our hands, is people typing on keyboards, solving really hard technical challenges, keeping sites up under scaling load.

Paul Rosania:

There’s just a ton of sweat equity that goes into building software. And just broadening out to builders in general, everything that we have in this world that’s human made was made with the ingenuity and expertise and problem solving ability of this incredibly important class of people in the world. And what makes me think of pro athletes is that job, you can’t really manage that job or schedule an hour for someone to have ingenuity. That’s something that just manifests when you sit someone down with a team and a bunch of laptops for days and days working on hard problems. And to me that feels much more like athletes training and being out on the ball field together, than something that is more tightly managed, like I think sometimes people picture when they picture an office full of cubicles or something like that.

Harry Stebbings:

Can I ask? With that change in mind. I guess, how does the org change itself, in terms of structure and support system to accommodate these athletes?

Paul Rosania:

Well, I think you’ll see… And in some companies you’re already seeing more of a coach support model, where managers view their jobs as supporting and enabling and unblocking the people who are doing the hard work. And to draw another parallel here, in the same way that the coach’s job is to get the team to execute the plays and to believe in their ability and to really go out there and win. I think similarly really excellent product managers, engineering managers, all the way up to like CTOs and CEOs. They understand the training their team, and then managing their psyche while they’re in this incredibly competitive industry that we’re in is the vast majority of the value that’s created. A lot of the CEOs that I know and think about… Like Stewart talking about what his greatest job was, is telling the story that gets everyone pointed in the same direction. And I think that’s very similar to the job that you expect of a coach on the sideline in a big game.

Harry Stebbings:

Totally. It is. I think that’s absolutely comparable. Last one is, not rising [inaudible 00:00:23:49], but with the athletes style metaphor for the builders themselves. How do you think about not ruining morale in other functions within organizations? Not creating a preferred [inaudible 00:23:58].

Paul Rosania:

Maybe this is a bit counter-intuitive, but I think that starts with honesty. If you run a ball club, everyone knows the athletes are the people that everyone’s coming to see, and it’s their performance that matters to the fans. And without the fans, you don’t have the club. So I think really being honest and speaking truthfully to your company and making sure that everyone’s aligned on where the value is getting created. If you’re a software company, you’re building a tool that people are using. And so if that tool is not being built, you don’t have a business. One of my mentors, April Underwood, her framework was you build a product and that product enables you to build a company. You can build all of the functions that you need to run a company around that initial product success.

Paul Rosania:

And then the success of the product and the success of the company building effort enables you to build an enduring business, where you have the revenue to enable that company to continue existing over time. And so I think you can get people behind that. Thinking about the back office, I mean, sports clubs nowadays have enormous back offices. And I bet if you were to ask people who are doing finance projections or who are thinking about facility renovation or things like that.

Paul Rosania:

They know, intuitively, how to tie their work back to that cycle. And they know that without their hard work, the club wouldn’t be the success that it is. That team is the kernel, but they need the enormous stadium in order to house all the fans. And the fans bring the revenue that enables the team to pay the players. I think great leaders know how to weave that narrative together so that everybody understands the contribution that they’re making. But they’re also honest about where that initial flywheel comes from and that all of the work is kind of in service of supporting that. And I think people can get behind that honesty.

Harry Stebbings:

Totally with you. And I think people will do. And I like that analogy. Again, God, you’re the master of metaphors. I do want to finish it on my favorite, which is a quick fire answer. I say a short statement pool, and then you give me your immediate thoughts in 60 seconds or less. Are you ready to rock and roll?

Paul Rosania:

Sure.

Harry Stebbings:

What’s the biggest challenge of your role with Balsa, today?

Paul Rosania:

Keeping us anchored in our long-term vision while we’re so focused on executing. Which, with five people, we’re just entirely focused on just building the thing right in front of us. And I think it can be easy to lose sight of the long-term goal if you’re not constantly reminding yourself what it is.

Harry Stebbings:

Totally. No, I agree with that. Tell me, what’s the hardest role to hire for today? As you think about expanding the team, what’s that role that’s just a nightmare to hire for?

Paul Rosania:

You mentioned the relationship between product and marketing before. And I got to say, it takes a very special marketer coming over, not necessarily having a background in engineering. And being able to advocate for some of that story-based development and that marketing and product relationship in an effective way. So I would definitely say, getting the right marketing DNA into our company is something I worry about a lot.

Harry Stebbings:

Yeah. It’s a commonality actually, a lot of founders tell me on the show. So you’re not alone in that at least. Tell me, what angel investor has been most impactful to you and to Balsa?

Paul Rosania:

I’m gonna cheat here, if that’s okay. I mentioned April before, and the reason it’s cheating, I think to say April Underwood is so much of the reason why she’s been an amazing investor is also that she was my coach, mentor, manager at Slack for a little over three years at that critical point in my career. And I think I wouldn’t be ready to start the company if it wasn’t for her feedback and development over those years. So I credit her a great deal with being where I am. And she’s been super helpful since, but most of our relationship does predate investing. So I hope that still counts.

Harry Stebbings:

Cool. Let me just run through what just happened. I just asked you the most impactful angel investor to you, for me. And you said, someone else.

Paul Rosania:

Wait…

Harry Stebbings:

You were perfectly [inaudible 00:27:02] not to say me.

Paul Rosania:

I came into this assuming that those were my opportunities to get good editing done on the recording.

Harry Stebbings:

Oh.

Paul Rosania:

I’m taking that risk.

Harry Stebbings:

That was why I didn’t … I thoroughly agree [inaudible 00:27:20].

Paul Rosania:

I’m the first interviewee not to cite you in the answer to that question.

Harry Stebbings:

Pretty much. Yes. There’s a very definitive reason why it’s that. But listen, I’m sure April is far more impactful than me on all the important things. I’m just here to rip the shit out of you. Anyway, I do want to ask… Tell me, what would you most like to change about the world of SaaS?

Paul Rosania:

It feels to me like what I’ve seen with the rise of Slack and bottom up SaaS, is I think as an end user in an organization, people have never been more empowered to try new tools. But CEOs, CIOs, CTOs are getting extremely frustrated with tool proliferation and spend proliferation. We’re in a time when I think the economy is a little bit unpredictable and people are worried about costs. And so you’re seeing at the same time, a bit more of a focus on central control and tamping down on people, testing out whatever tool that they want. And I’d love to see a little bit more harmonization, where CIOs are still empowered to say, “We’re going to use a tool like Jira or GitHub or Workday or something like that.”

Paul Rosania:

And instead of people groaning about the end user experience not being as great as the latest hot startup that was designed from the ground up with end users in mind to say, okay, great. And we’re going to pair it with this other tool, that’s going to help make this thing work very effectively for the people who are using it day in and day out in some specific way. So I think there’s a way to allow IT decision makers to buy software and leverage the major investments that they want to make and still deliver a great experience for end users. So that’s the big change I would like to make, because right now it feels like you have to choose one or the other.

Harry Stebbings:

Tell me. What moment in your life has changed the way you think, Paul?

Paul Rosania:

I had an appendectomy when I was probably right around 30. And what was striking to me about that was, I would be dead. 200 or 300 years ago, I’d be dead. And the only reason I’m not dead is because somebody figured out that under the right conditions, you could just cut someone open and take out the thing that’s causing the pain and they would live. And so I loved playing with Legos as a kid. I loved building things in general. You could probably have put me on any team, building any kind of software and I’d be thrilled. But that experience really, I think, opened my eyes to the very profound impact, that fundamental research, human curiosity, and human problem solving ability, like what we can achieve. And appendectomy, I think nowadays is considered a pretty simple operation, but like a critical life saving one. And I think about that a lot. About the ways that the world is different because people went and studied these things and learned a lot about how the world works.

Harry Stebbings:

I love that. I actually had my out when I was like 14, 15. I just got on it with such a wise hindsight. So thank you for giving me a new perspective on the world and my appendix. Something I ever thought I’d be saying in a podcast interview. But I wouldn’t Paul, on that probably the most important of all. What do the next five years hold for you and for Balsa? Paint that exciting picture for us.

Paul Rosania:

Balsa is a very young company. It was just founded at the beginning of this year. And I have a young family also. And my leadership style as a product leader, and now as a CEO has generally been to nurture teams toward independence and to really do everything I can to infuse the thing that I think we need to do. And then let people go and do that in the way they see fit to do in their best judgment. And I think there’s a lot of parallels there with having some small kids in the home who, I think they’re trying to figure out how to engage in this world that we live in.

Paul Rosania:

So I see a lot of those parallels and I’m eager to watch both the company and my family kind of grow up. For Balsa in particular, I also see us bringing a ton of joy back to the experience of building. I talked a lot about builders, I think in this episode. And if I’m allowed something specifically for balsa, that thing would just be, I think a lot of people get into building software because they just really enjoy the act of creation of things, that they picture in their mind’s eye. And if we can contribute to bringing some of that joy to building in some small way, I think I’ll feel very fulfilled with our choice of pursuits.

Harry Stebbings:

Paul. As I said, I wanted to do this since you started the company. And so I’m shocked you let me convince you to come on and let me do this. So thank you so much for joining me. And this has been so much fun.

Paul Rosania:

Great. Thank you so much, Harry. Thanks for having me.

Harry Stebbings:

So great to have Paul on the show there. And such exciting times ahead for Balsa. And if you’d like to see more from me, you can find me on Instagram at H Stebbings 1996 with two Bs. I always love to see you there. 

Harry Stebbings:

As always, I so appreciate all your support. And I can’t wait to bring you another fantastic episode next week.

 

The post SaaStr Podcast #385 with Balsa Founder & CEO Paul Rosania appeared first on SaaStr.

Pick Up The Phone. Answer the Chat. Be Present.


This post is by Jason Lemkin from SaaStr

We’ve talked quite a bit on SaaStr about Customer Success, and there’s a very specific reason for it.  It’s one of the most non-obvious drivers of revenue growth in Years 3, 4, 5 and beyond of your SaaS start-up.  More on that here.  Customer Success can feel like a cost center in Year 1 (and indeed, it is), but by about 18 months out after your first 10 paying customers … it will be your largest profit center.  So invest in it!  Early.  And get it right.

What we haven’t really talked about is Customer Support.  Basic, reactive, customer support.  Solve the customer problem.  Try to.  Pretend to.  Etc.

mimirogersAnd we won’t talk a lot about the nuts and bolts of how to process tickets, etc.  SaaStr is about growing revenue faster with less stress.

But there are a few things in customer support that you can do that will clearly move the needle, but that may be slightly non-obvious.

NUMBER ONE IS PICK UP THE PHONE.

Let’s step back.  Almost everyone not out of a B2C/e-commerce background is going to tell you phone support is a terrible use of time and resources.

Your customer support folks will tell you:

  • It takes 10x longer to resolve a voice call than a trouble ticket.
  • I can’t filter phone calls.  I can filter tickets.  So tickets actually are like 50x more efficient than picking up the phone.
  • I just don’t have the time in the day.  I already spend 12 hours just responding to tickets and in-bound emails from existing customers and all the rest of the drama.

All 3 are true.

And your sales folks will tell you:

  • Oy.  Any in-bound call just sucks up 20 minutes of my time with d-u-m-b questions.  I could be doing a demo to a true opportunity.
  • 95% of whomever calls in never buys.
  • 95% of the rest are single seat customers I don’t want anyway.

All 3 are true.

callcenterhellSo yes, viewed narrowly, picking up the phone is one of the lowest ROI things you can possibly do.

But, that’s wrong.

Here are three things we know that are also true:

  • Customers will forgive problems much more often if they can get someone on the phone.  We all panic less, and feel better, when we reach someone competent.  And at the other end of the spectrum, we never forgive apps if no one responds to a ticket for 24 hours.  Do more here, customers will forgive you, and bond to you.  Do less — and they’ll never forgive you.
  • Sales prospects will believe you are much more professional, and real, if someone picks up the phone.  That’s what great companies do.  Even if the person that picks up the phone can’t really help close the deal.
  • You will build true attitudinal (vs. mere behavioral) loyalty if your customers and prospects can talk to a real human.  Even if it’s not the perfect or right human.  And attitudinal loyalty is key to building a true brand, second-order revenue, and an in-bound lead machine.  Customers that are merely behaviorally loyal, or even — prisoners — don’t churn in a day.  But they don’t buy more than they absolutely have to, they don’t upgrade, they don’t take the upsell call.  And they churn at a much higher rate.  More on that here and here.

Ok, so how do you do this?  How do you resolve the seeming paradox that picking up the phone is extremely expensive and distracting, and time consuming — but also one of the cheapest and simplest investments you can make in customer satisfaction?

There’s no perfect answer, but you can do this:

  • Screen Shot 2015-07-24 at 5.28.45 PMAt least outsource it for now, with a script.  Make sure someone ALWAYS picks up the phone, even if for now, the answer has to be “That’s a great question.  Let me have sales give you a ring back later today” or “Oy.  Sorry to hear things aren’t working right for you.  That’s a new one for me. I’m going to create a ticket right now!”  You can outsource this with a good script, for the cost of just a few dollars per call.  It’s not great if they can’t solve the problem.  But it’s much better for someone to answer the phone, even if they can’t solve the problem.  Than if no one answers the phone at all.  You know this.
  • Budget for it.  Assume you’re going to get X calls per day, and budget for it.  This sounds simple, but people don’t do it this way.  And if you can, measure your customer satisfaction afterwards.  I bet you it goes up.  And I bet you, measured over 9-12 months, it pay for itself in decreased churn or at least, increased Net Promoter Scores.
  • Segment it, when you can.  The one thing that will kill you is taking phone calls from free users.  So probably, don’t expose phone support to folks that don’t pay anything.  But expose it to everyone that has a paid seat (everyone), and everyone that might buy.
  • It works itself out with customer success.  Once your engine is running, this works itself out with customer success.  Because the customers that know their CSM will just reach out directly to their CSM.  So the burdens here aren’t as great as you think.  The larger the customer, the more CSM dedication they’ll get.

My main point is here is picking up the phones is one place where you definitely should not listen to your team. 🙂  Your interests are not aligned.

They don’t want to pick up the phone.  That makes sense.

But you do.  Make it happen.  Especially because while it does have expense associated with it in the short term … It’s easy.  It’s simple.  It’s a quick improvement you can make right now, this month.  You don’t need any engineering team, any new features.  It will make things better, and give you a lift over the medium term.

It pays for itself in your brand, your NPS, your customer happiness.

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Screen Shot 2015-07-24 at 5.38.17 PM

(note: an updated version of a Classic SaaStr post)

The post Pick Up The Phone. Answer the Chat. Be Present. appeared first on SaaStr.

Defense Might Win Championships, but Offense Wins Customers in a Recession


This post is by Jaclyn Robinson from Blog – Crunchbase

Budget cuts across the marketing lineup may feel necessary in a recession, but they ultimately result in a loss for the business. 

According to ​Forrester​, “less investment in marketing undercuts brand and customer experience. It weakens companies’ ability to connect with customers at a highly uncertain and emotional moment. It puts sales teams at a disadvantage through diminished lead volume and quality and lack of pipeline nurturing.”

 

It Pays To Play Offense

To survive and thrive in an economic decline, companies should go on the offense and make the customer experience the winning play for their businesses. A historical look at previous recessions shows there is strong evidence that it pays to maintain—and in some cases increase—marketing expenditures during a slowdown. 

In fact, studies show that companies going on the offense with a sustained marketing presence throughout a downturn, recover faster, are more resilient, and are better positioned to grow their way out of the crisis.

Bain & Co.studied nearly 3,900 companies worldwide during the last recession and found that winners diverged from losers, with winners growing at a 17 percent compound annual growth rate during the downturn, compared to no growth among the losers. Among other tactics, the winners were proactive in their game plan by reinvesting selectively for commercial growth—including maintaining marketing while competitors cut back. And they focused on improving the customer experience, making it more simple and personalized through investments in digital capabilities.

It’s not surprising that winning brands ranking high in customer experience often are bolstered by a highly effective and personalized email marketing program. The ROI of effective email marketing is unparalleled—organizations ​gain $42 for every $1 spent on email​. In challenging times and when budgets are tightening, it’s a no-brainer for marketers to double down on reliable programs that deliver the best ROI, help them achieve their business goals, and support customer care.

 

Drill Down The Fundamentals

Much like an athlete who tirelessly drills the fundamentals to get better at her sport, it’s time to get back to marketing basics, drill the fundamentals of better email, and put email first in your overall marketing programs mix. As you go on offense with an email-first strategy, there are three fundamentals you should make sure are in your playbook: be authentic; get personal; and create experiences.

 

1. Be Authentic

Creating meaningful connections starts and ends with authenticity. Your emails need to strike the right empathetic tone, meet the moment, contextualize how you can help readers, and engage in a responsible way. This means you need to comply with digital privacy laws like GDPR and CCPA, ensuring that everyone on your send list has opted in to receive your communications. 

Remember, they’re inviting you into their inboxes and trusting you to deliver relevant insights and memorable experiences, while providing the highest levels of privacy and security. Make sure all of your martech vendor partners align their security practices and policies with proven industry guidelines such as ISO 2700x and the Information Security Forum’s Standard of Good Practice for Information Security, and that they have successfully completed a SOC 2 examination.

 

2. Get Personal

Regardless of whether you are a B2B or B2C company, the most effective customer communications are H2H—human-to-human. Firmographic segmentation is table stakes in a digital world. Your customers expect you to go beyond their first and last name and understand what they care about today and into the future. How much time did they spend engaging with your last email campaign? How do you know if the content was relevant and valuable to them? On what devices was it viewed? What percentage of the recipients viewed your email in dark mode? What did they do with your email when they finished reading it? What new information did you learn about them? 

The key thing is to know where customers are along the buyer’s journey, where they are trying to go, and how to bring together data, technology and advice to drive higher engagement and stronger retention, and create loyalty-inspiring experiences.

 

3. Create Experiences

Winning brands are easy to remember and even easier to forget. Your goal isn’t to win customers today, but rather to create customers for life by delivering on your brand promise. An effective email marketing program empowers you to cultivate and nurture relationships, provide valuable insights that help customers achieve their goals, and celebrate their successes, creating an unparalleled experience that turns one-and-done customers into shout-it-from-the-rooftops advocates.

As part of this, it’s important to treat every touchpoint as the single most important touchpoint in the customer journey. From an email perspective, you should test every email—even transactional emails—every time on relevant browsers, devices and operating systems. Imagine the poor experience if you send an email without first testing for dark mode rendering and discover that 40 percent of your subscribers view their emails in dark mode. Imagine the missed opportunities if a critical link is broken or your email lands in the spam folder.

An email-first approach creates a multiplier effect by providing powerful insights that can be easily applied to improve your complete marketing mix and enrich the entire customer experience. For example, if you see great engagement on a new topic, you can quickly and easily harness these insights into a relevant thought leadership series, a new paid media campaign, and a virtual event, creating a post-click customer journey that is far superior and more memorable.

In an environment where the world is changing on a daily basis, making accurate predictions is tough. Based on what we know today, the winners who play offense and invest more in their MVC (Most Valuable Channel)—like email marketing—can emerge stronger on the other side. 

The post Defense Might Win Championships, but Offense Wins Customers in a Recession appeared first on Crunchbase.

Defense Might Win Championships, but Offense Wins Customers in a Recession


This post is by Jaclyn Robinson from Blog – Crunchbase

Budget cuts across the marketing lineup may feel necessary in a recession, but they ultimately result in a loss for the business. 

According to ​Forrester​, “less investment in marketing undercuts brand and customer experience. It weakens companies’ ability to connect with customers at a highly uncertain and emotional moment. It puts sales teams at a disadvantage through diminished lead volume and quality and lack of pipeline nurturing.”

 

It Pays To Play Offense

To survive and thrive in an economic decline, companies should go on the offense and make the customer experience the winning play for their businesses. A historical look at previous recessions shows there is strong evidence that it pays to maintain—and in some cases increase—marketing expenditures during a slowdown. 

In fact, studies show that companies going on the offense with a sustained marketing presence throughout a downturn, recover faster, are more resilient, and are better positioned to grow their way out of the crisis.

Bain & Co.studied nearly 3,900 companies worldwide during the last recession and found that winners diverged from losers, with winners growing at a 17 percent compound annual growth rate during the downturn, compared to no growth among the losers. Among other tactics, the winners were proactive in their game plan by reinvesting selectively for commercial growth—including maintaining marketing while competitors cut back. And they focused on improving the customer experience, making it more simple and personalized through investments in digital capabilities.

It’s not surprising that winning brands ranking high in customer experience often are bolstered by a highly effective and personalized email marketing program. The ROI of effective email marketing is unparalleled—organizations ​gain $42 for every $1 spent on email​. In challenging times and when budgets are tightening, it’s a no-brainer for marketers to double down on reliable programs that deliver the best ROI, help them achieve their business goals, and support customer care.

 

Drill Down The Fundamentals

Much like an athlete who tirelessly drills the fundamentals to get better at her sport, it’s time to get back to marketing basics, drill the fundamentals of better email, and put email first in your overall marketing programs mix. As you go on offense with an email-first strategy, there are three fundamentals you should make sure are in your playbook: be authentic; get personal; and create experiences.

 

1. Be Authentic

Creating meaningful connections starts and ends with authenticity. Your emails need to strike the right empathetic tone, meet the moment, contextualize how you can help readers, and engage in a responsible way. This means you need to comply with digital privacy laws like GDPR and CCPA, ensuring that everyone on your send list has opted in to receive your communications. 

Remember, they’re inviting you into their inboxes and trusting you to deliver relevant insights and memorable experiences, while providing the highest levels of privacy and security. Make sure all of your martech vendor partners align their security practices and policies with proven industry guidelines such as ISO 2700x and the Information Security Forum’s Standard of Good Practice for Information Security, and that they have successfully completed a SOC 2 examination.

 

2. Get Personal

Regardless of whether you are a B2B or B2C company, the most effective customer communications are H2H—human-to-human. Firmographic segmentation is table stakes in a digital world. Your customers expect you to go beyond their first and last name and understand what they care about today and into the future. How much time did they spend engaging with your last email campaign? How do you know if the content was relevant and valuable to them? On what devices was it viewed? What percentage of the recipients viewed your email in dark mode? What did they do with your email when they finished reading it? What new information did you learn about them? 

The key thing is to know where customers are along the buyer’s journey, where they are trying to go, and how to bring together data, technology and advice to drive higher engagement and stronger retention, and create loyalty-inspiring experiences.

 

3. Create Experiences

Winning brands are easy to remember and even easier to forget. Your goal isn’t to win customers today, but rather to create customers for life by delivering on your brand promise. An effective email marketing program empowers you to cultivate and nurture relationships, provide valuable insights that help customers achieve their goals, and celebrate their successes, creating an unparalleled experience that turns one-and-done customers into shout-it-from-the-rooftops advocates.

As part of this, it’s important to treat every touchpoint as the single most important touchpoint in the customer journey. From an email perspective, you should test every email—even transactional emails—every time on relevant browsers, devices and operating systems. Imagine the poor experience if you send an email without first testing for dark mode rendering and discover that 40 percent of your subscribers view their emails in dark mode. Imagine the missed opportunities if a critical link is broken or your email lands in the spam folder.

An email-first approach creates a multiplier effect by providing powerful insights that can be easily applied to improve your complete marketing mix and enrich the entire customer experience. For example, if you see great engagement on a new topic, you can quickly and easily harness these insights into a relevant thought leadership series, a new paid media campaign, and a virtual event, creating a post-click customer journey that is far superior and more memorable.

In an environment where the world is changing on a daily basis, making accurate predictions is tough. Based on what we know today, the winners who play offense and invest more in their MVC (Most Valuable Channel)—like email marketing—can emerge stronger on the other side. 

The post Defense Might Win Championships, but Offense Wins Customers in a Recession appeared first on Crunchbase.

When Do We Trust AI’s Recommendations More Than People’s?


This post is by Chiara Longoni from HBR.org

How marketers can account for consumer biases against algorithms.