The Fork In The Road

A Marketer’s Perspective of This Year’s SaaStr Annual

 

Last week, I attended the SaaStr Annual. This now-annual event is equal parts inspiration and celebration of companies who have achieved $0 to $100M and beyond in annual repeatable revenue (ARR). In other words, the number one goal of (almost) every SaaS company. Before I dive into why every marketer should attend similar entrepreneur-focused conferences, here’s my version of ARR:

Despite what some people think, SaaS is not a business model. It is infrastructure and a delivery model. Companies who have been successful with growing ARR have several characteristics in common: 

1. The ability to implement and repeat with little to no customization - Customers may be able to customize or personalize aspects of your service through their management dashboard, but if your developers need to get involved in significant customization for POCs, you are running a custom shop and will never be able to scale.
2. Integration with other preferred and appropriate software - For example, an analytics company not integrated into SFDC and Marketo with plans to add more integrations soon needs to reset its priorities. I say appropriate because integration and partners must match your core value. Check out MobileIron’s partner program. It’s my new favorite partner ecosystem example because the choice of partners fits perfectly with the company’s core offering and value.
3. Have hired the right type of sales and marketing executives - Since I’m a little too passionate about this subject to cover it in two sentences, I refer you to Jason Lemkin’s excellent blogs How to hire your (First) VP Sales (And not screw it up) and Hire the Right Type of VP Marketing — Or You’ll Just End Up With a Bunch of Blue Pens with Your Logo On Them.

There are many companies that have billed themselves as X as a Service that don’t fit. As cloud has become more mainstream for large enterprise, many of these have moved on to referring to themselves as “cloud-based, on-demand.” 

So, why was a marketing executive like myself absorbing everything that was said that this year’s SaaStr Annual? Because marketing’s job is the work in sync with sales, not just send them leads through pneumatic tubes. Sales and marketing working harmoniously doesn’t mean marketing needs do everything sales wants. In fact, if this were the case, it would be to the detriment of the company. Sales and marketing need to have a “business first” approach. In other words, if I’m not watching everything that affects the business, I’ve failed at my job. 

A good marketing professional, whether an CMO or a product marketing manager, needs to understand corporate goals, including all aspects of sales goals, not just quota numbers. How does the product support what is being sold now and where the market opportunities will be in the future? Are the (sales development reps) SDRs delivering (sales qualified leads) SQLs that have a good chance of resulting in a signed – and implemented – contract? 

Yes, wading through a gaggle of entrepreneurs and SaaS executives is a very good way to spend a day. 

Developing More Developers

When I was just a young lass, I was excited about math and loved to debate. I loved to figure out how things worked and why people did the things they did. Starting in junior high school, I took every advance placement course my school district offered sans physics and calculus. I wasn't necessarily the smartest kid in the room, but I was a solid B+ student.

When it came time to talk about my post-high school future, my guidance counselor suggested that I become a teacher or a nurse. In his words, "that way if your husband needs you to go back to work after you have kids, you'll be able to get a job." I didn't know enough to be offended by all the assumptions related to his guidance. I did know it wasn't the right for me. I remember saying I think I want to "go into the business world." Honestly, at 16, I didn't really know what that meant, but I knew it sounded interesting.

Why do I mention all this? Because that was a bunch of years ago. I still don't think that kind of "guidance" should have been the standard, but I chalked it up to the timeframe and where I grew up. Flash forward to now. I have a 10 year old daughter. For the last two years, she's evolved from wanting to create video games to wanting to create apps. How much longer will she want to do this? I don't know.

There are still too few girls being encouraged to embrace their geekiness.

Living in the San Francisco Bay Area my family has an advantage. There are a handful of camps and lessons to teach coding within an hour's drive of our home. Also, because of my work, I've been able to expose my child to impressive corporate executives - male and female. Even with all this, I don't know if the desire to make technology will stick. It's fine with me if it doesn't, as long as it's her decision, not an assumption about her role in the world that someone else has assigned to her.

Beyond my household and my community, there are hundreds of thousands of girls that don't have the same advantage as my family. As a global society, we need to make a shift. It starts with encouragement and the access to knowledge.

Two programs come to mind as a good starting place. The EMC-sponsored Women in Technology group has a fantastic program of mentoring female entrepreneurs from Africa and the Middle East. In this competitive program, a group of women from these two regions spend more than a month in Silicon Valley working with female executives and learning about both business and what skills other women have used to become successful. Second is App Camp for Girls, which is now raising funds to start it's first camp location in Oregon, with plans to expand to other cities soon. What will make both these program success is what the participants learn and take forward.

There is a future for women in technology, but like so many other social changes occurring now, the change will happen because we make it happen. It's here for the taking.

 

There's Only One End-user

 

I don’t have multiple personalities. I may operate in seemingly different worlds at times: marketing executive, hockey fan, avid jogger, but that doesn’t mean I need or want very different experiences when accessing content. In fact, I would argue the opposite. If I’m accessing content on my iPad while at the airport, I want to see the content as it would appear on my laptop at work. I want to find what I need quickly so I’m not wasting time and money on a potentially fee-based WiFi connection.

A cross-platform approach would give me a nearly ubiquitous experience no matter where I am or what device I’m using. I don’t stop caring about work just because I’m not in the office. I want to quickly get in and out of my content so I can get back to what’s in front of me. Thus, a fast, familiar view is preferred.

Companies that want to offer different user experiences depending on the device are going in the opposite direction from users’ natural desire. It’s a technology developer’s mistake not to think of rule #1 for user experience – make it intuitive. What’s more intuitive than what I’m already experiencing on other platforms?

User experience is king, queen and the rest of the regal family. It’s also key to end-user adoption and loyalty.

 

Beyond Virtualization – What Comes Next

While cloud computing continues to be widely discussed, its cousin virtualization continues to be strong and growing as well. According to a 2012 Kaspersky Lab survey:

• 69% of US companies are in the process of implementing or have implemented server virtualization
• 46% plan to implement a virtual desktop infrastructure
• 51% plan data storage virtualization 

Although these are strong numbers, virtualization as we know it today is just the latest step in the evolutionary march.

While some people believe their needs to be a cloud versus virtualization decision, others are arguing that virtualization is cloud. VMware makes this argument and to a degree its correct. Virtualization is at least private cloud and in some cases, could be more. In fact, a strong argument can be made that virtualization has fueled infrastructure cloud adoption.

Many new developments are already here and their adoption is growing like a snowball rolling down a mountain. Three trends – Security, Cross-platform availability, BYOD - are quickly switching from nice-to-haves to must-haves.

Let’s face it.  Although security is always on the requirement list for any technology, there are assumed limitations that have been accepted as “the best we can do.” This will not do. Security must be baked into all virtualization or cloud-based offerings. We can’t continue to expect enterprise companies to purchase their security from yet another company. Layering another technology on top of what is already being used is a clunky solution that should be temporary. Every new technology MUST sufficiently address security.

Originally, the Bring Your Own Device (BYOD) trend was addressed when senior management wanted the freedom to use whatever device they chose or when the engineering and creative teams might be on different systems than the rest of the company. Today, BYOD is a must for a global, mobile workforce. When implemented well, it addresses the need for superior and flexible security, support, collaboration and cross-platform usage.

Speaking of cross-platform, 2013 is the year it becomes a must-have. Business users are running out of patience with applications that don’t operate on multiple platforms or have vastly different experiences depending on the platform.  If as marketing budgets seem to suggest, 2013 is the year mobile marketing takes off, it must also be the year cross-platform become ubiquitous. Although there’s still confusion in some organizations if apps and mobile are the same thing, as the mobile experience becomes more tailored and apps become more sophisticated, it’ll become more clear how these differ.

Tools and applications that don’t operate cross-platform will begin to see declining new sales and limited adoption. Soon after, they’ll be on the list of soon-to-be-obsolete technologies. It isn’t enough to roll out tools for one platform and then a second or third a month down the road. The patience we’ve had for startups’ development roadmaps is waning. When it's an established company that's saying the "it's on the roadmap" line, it's even more unforgivable.

Forget about what will be developed in 2013 or 2014. What’s exciting are the adoption rates that will push enterprises and businesses overall to a new way of operating.

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What Corporate Leaders Can Learn From Dr. King

                                                                                    Image by L. Kragt Bakker

As the US prepares to inaugurate President Barack H. Obama for a second term, it makes sense to think about where the country is headed. Not only is President Obama leading the country, we in the US are following. It’s easy to say: we follow because he is the elected president. So, why do we follow leaders who are not elected? Or, what makes a great leader?

Because it’s also the Martin Luther King Jr. holiday, this gives us an example of a great leader to examine. It’s true that Dr. King was charismatic, but charisma only takes you so far. Charisma is like a candle. It may burn bright, but eventually it burns out. Unless there are other attributes to keep interest, it’s a short-lived experience.

Dr. King was a great leader because his strengths went beyond his ability to captivate. An intelligent and studious man, Dr. King prepared for every speech, article, match and conversation. His writings and oration included scripture, spiritualism, historical fact and intellectual concepts. Simple ideas of right and wrong were presented on multiple planes.

Although Dr. King was African-American, his work was not to help better his own existence. He took a stand for others, people outside his immediate community and eventually the world. In addition to being a non-violent leader in the civil rights movement, he eventually took on poverty and the Vietnam War. Leaders must possess pathos to be able to say and truly mean: we cannot stand for things to continue this way.

It seems silly to say a great leader must also be organized, but Dr. King most definitely wasn’t the person on the ground organizing every visit and every march. Too many inexperienced CEOs believe they must have their hand in everything to make sure it’s done the way they would want it. This is the sign of someone who happens to currently be in charge not a leader. Micromanaging is one of the clearest signs of a non-leader.

Lastly, a great leader must be willing to sacrifice. I don’t mean the ultimate sacrifice that Dr. King made. A leader must be willing to sacrifice their time, comfort and sometimes even their dignity for the good of the organization, cause, employees or shareholders. With this complete definition, there aren’t many truly great leaders, but when you find one, they can lead well beyond the horizon.

Four Myths of Branding to Forget

Brand building has been making a comeback. As one of the current marketing buzzwords, it’s thrown around in phrases like: “we need a brand expert” and “we want to build our brand.” While the term is used – or misused – outdated or just plain wrong, assumptions about branding persist. Here’s a list of five to forget immediately:

1)   Brand is only advertising/graphical

Although I often think common sense will remove these assumptions, unfortunately I’ve seen this repeatedly in very painful ways. Not too many years ago, I attended a sales and marketing kickoff that included the unveiling of a new corporate brand. The “Why should anyone would care?” and “Why is this relevant?” were missing. The CMO, who only had an advertising background didn’t have the experience or possibly the desire to bridge the gap between visual image and what was being sold.

There are great CMOs that have come from the advertising discipline, but each that’s been successful has embraced the full business environment. A company’s brand cannot sit separately from the rest of sales and marketing. Like an integrated marketing program that leverages themes to create a greater impact, a good brand program pulsates through every aspect of the company. 

2)   Quality technology wins over a strong brand

You silly, silly engineers. Don’t kid yourself into believing if you have a better product, people will naturally pick it. The reality is most people purchase what they know, not what’s the best after thorough side-by-side comparisons. Of course, the perfect company has the best product and a strong brand, but if you have to pick one, pick the strong brand. Just ask Syncplicity. What, you’ve never heard of it? Now owned by EMC, Syncplicity may be a better option than Box.com, but its market share is a fraction of its competitors.

3)   Brand development is a one-way communication

This was never true, and in a world with social media is even less so. In 2012, McDonald’s tried to promote how good it was for farmers and the freshness of its produce with a paid Twitter campaign - #MeettheFarmers. How could the McDonald’s marketing team not see what was coming when it morphed to #MDstories? While McDonald’s wanted to promote its quality, instead the brand was overwhelmed with individual negative experiences, nutritional facts, and ugly rumors. 

4)   Global brands and positioning are the same worldwide

I’d like to say that only a fool would think they can use the same brand attributes and messaging globally, but it would be rude to call so many people fools. Instead, let me give two simple examples. Marketing automation is a widely-used term in the US. However, when starting to sell in Europe, Marketo used the much simpler term of email marketing. How did it know to do this? By monitoring social media and general business conversation, the Marketo marketing team learned what terms where used and understood in the local marketplace.

Conversely, at this same time, I began working with Luma, a Belgium-based company that originally used the term marketing automation to describe its SaaS tool. Luma’s offering had nothing to do with email marketing and thoroughly confused US marketers. Even though technically Luma’s offering was automating part of the marketing process, it was more aligned with localized web-to-print offerings than what most marketers now define as marketing automation. Without listening and understanding what is being said in each region, companies are doomed to at best have missteps and at worse alienate potential customers.

All marketing trends are cyclical. Branding won’t stay the sought-after buzzword. That’s fine. What all marketers need to learn and embrace is branding’s role in an effective overall marketing approach.

How to Spot a Failed Company Before It Launches

I love that I regularly get to talk with new companies.  I learn so much and always leave with a better understanding of current and future market trends.  What’s also interesting are the statements that raise red flags which have become consistent over the years.  There are several clichés that signal a company is heading in the wrong direction based on what their executives say.  The most obvious is:  Our company will be the next FILL IN BLANK.  

When I started in business, CEOs pitched me by saying they would be the next Microsoft, then it was Yahoo, then it was Amazon, then it was eBay, then it was Google.  You get the picture. If a company is trying to be the next big thing but focuses on existing market leaders, they’re destined to be left in the dust.  By the time said young company raises funds, fully builds its product and enters the market, the large company it was aspiring to be has already moved on.

In the last few years, it’s not the young entrepreneurs who are making these aspirational claims.  It’s executives in their 50s and 60s who seem to be more likely to chase after someone else’s success.  Age of course doesn’t mean someone would know better, but it feels like they should.  

We have a running joke in my home that I shouldn’t be allowed to listen to my friends’ good ideas.  Too many of them have been good on the surface, but light on market research and competitive analysis.  If a company is being founded purely to chase an existing company’s current offering, it’s likely to fail.  

New companies must not strive to be more of what already exists, either in offering or size.  Entrepreneurs don’t need to be the smartest people in the room, but it helps to be the most imaginative. 

Talking Square with Small Businesses

I spent this weekend in Portland, OR.  Saturday was a lovely, sunny day and we walked everywhere.  Besides taking in the city’s amenities, it gave me a chance to speak with local small business owners, particularly food truck owners.  What could be better than eating my breakfast and lunch out of a truck and getting to ask a few business-related questions in the process.  My topic of the day: Square.

For those of you unfamiliar with Square, it is a mobile payment service designed primarily for small businesses.  Its founder is Jack Dorsey, co-founder of Twitter.  I read about the company in May 2010, but first encountered it live at a tournament later that year, when the official tee-shirt vendor used it to process credit cards.  I had seen him earlier in 2010 and it was clear his new payment system was worked better than his previous one.  He showed me the square that plugged into his phone and said it he just got it but it was working well.  

I love new technology, particularly technology that actually fixes or improves and has the potential to make real revenue – in other words disruptive technologies.  My initial interaction regarding Square almost two years ago put the company on my radar.

Flash forward to my trip to Portland this past weekend and my Square-related questions there.  The first people I spoke with were at Sonny Bowl located SW 3^rd and Washington.  When I ask what they thought of Square, the answer sounded like an ad:

• It was incredibly convenient.
• It was so much cheaper and easier than what was quoted by their bank.
• It isn’t has bulky as what the bank processing would have required.
• If it ever runs slow, they turn off the phone and turn it back on, then it works like a charm.

I assumed from this response, most of the city’s more than 200 food trucks must be using Square.  I even imagined a “Sponsored-by Square” sign on the busiest truck lots.  Interestingly, that doesn’t seem to be the case.  My limited, unscientific survey showed that about half accepted credit cards – mostly via Square – and the other half were cash only.

I spoke with Flo of Flogene’s Home Cookin’, at SW 9^th and Adler.  Her food truck has been open a year and business has been booming.  Her business is cash only and she hasn’t seen a need to begin accepting credit cards.  In fact, she said they have a credit card machine from the bank, but only receive one request to use a credit card about every three months.  Arguably, the large “cash only” sign and the abundance of ATMs around the site could be the reason for the low requests for credit card payments.  Flo puts it simply, “We haven’t seen a need. If we thought we would lose business by not accepting credit cards, we would start.  So far, we don’t have a need.”

The third person with whom I spoke about credit cards was a cab driver.  He actually did accept them, but it was so old school that even though my credit card was swiped, he still needed to use a manual credit card imprint machine with carbon copies.  He complained about the slow process and occasional dropped connections with his cab company’s credit card processor.  I don’t work for Square, but it was the one time during the trip where I felt like I could have been an ambassador for the company.  I stepped out of the cab saying to my husband: why would the company use such an antiquated system, when the driver has a smartphone right there and could be running the payments so much easier?

The next 12-18 months should be interesting for Square.  A year ago, Kleiner Perkins led its $100 million series C round.  The company continues to grow.  I’m looking forward to seeing the product and business developments sure to come soon.

 

 

 

 

 

 

 

 

 

 

Facebook Won't Open IPO Flood Gates

Whether Facebook’s IPO occurs on Friday, May 18 or is delayed is still yet to be seen.  As of the morning of Saturday, May 12, MarketWatch was reporting that the company was still awaiting approval of its latest S-1.  I expect they’ll be able to debut as a public company on the much-reported May 18 date, but we’ll know for certain in a few days.

Either way, I have no doubt Facebook will be a public company soon.  I’ll also be surprised if it doesn’t top expectations.  If this happens, we need to remember short-term market growth doesn’t equal long-term success.

Groupon is a recent example of this.  On its first day of trading, Groupon was up more than 31%.  It closed at $26.11 per share.  On Friday, May 11, it closed at $9.90.  Even if their pre-IPO hype hadn’t existed, the current trading rate would be disappointing. 

Just as Groupon was expected to be, Facebook is now the new company to be heralded as the IPO market starter.  Despite what some people believe, a good performance from Facebook doesn’t mean the market will soon be flooded with companies going public.   For all its faults, Facebook has been able to show consistent growth in users and revenue.  Yes, it still has to develop additional sustainable revenue streams, but it is at the point in its history where a public offering is warranted. 

We aren’t in 2000 anymore and I tell myself today’s market won’t accept ridiculously underperforming companies going public as they did before that bubble popped.  I may be very wrong, but I’ll continue to cling to this belief. 

In February 2000, Pets.com raised $82.5 million in a less than stellar IPO; nine months later it collapsed.  Webvan’s IPO and collapse was even more spectacular with $375 million raised in a November 1999 IPO before it died in 2001. 

Of course, the one I still personally mourn is the downfall of Kozmo.com.  I knew at the time it was too good to be true – movies, Ben and Jerry’s ice cream, Krispy Kreme donuts, and just about anything else you wanted, at your door in an hour or less.  Unfortunately, Kozmo.com only introduced minimum order requirements a few months before it officially died.  That means the dozen Krispy Kreme donuts I had delivered to my hotel room in NYC, which was delivered by a man who was probably paid $10 an hour, actually cost the company a few bucks.  Yes, I loved the concept and I helped contribute to its downfall.

So, although there will be more IPOs to come in 2012, it will not be the flood some are anticipating.  In the end, the market and those of us doing business in it will be much better off.  

 

The Art of Knowing When It’s Time to Give Up

Success sales today are part mathematics and part art.  Sales teams are assisted by a number of programs that help assess the readiness of a lead to move through the sales process. 

Marketing automation solutions such as Marketo and Eloqua include advanced lead scoring capabilities.  Marketing campaigns can now be created to automatically initiate depending on a lead’s reaction to a previous campaign.  For example, because Mr. Jones registered and attended our webinar about online security, he is sent an email through which he can download a related white paper.

Meanwhile, sales teams can also access real-time business and social intelligence through companies like InsideView.  Knowing the latest of what’s happening with prospects in real-time is something that wasn’t possible a few years ago.

When you add to all these solutions measurement and predictive analytics, it’s plain to see how much investment has been made in creating solutions to help the sales process.  To close a deal, it comes down to the art of the sale, which includes both skill and the gut feeling of how to approach and interact with any given individual.

With all the tools that are available to find leads and advance the sales process, what could be missing?  The answer: when to give up on a deal. 

By now, 100s of millions of dollars have been invested in helping marketing people qualify and nurture leads, and sales people to gather data on any company.  However, when it comes to when to give up on a lead, it is all left to art. 

Sales reps are by nature optimistic people.  They look at a prospect and think “I can convince them to purchase my product.”  To the credit of some of the great sales people I’ve known, they often close deals that initially seemed to be long shots.  Unfortunately, not every long shot is worth pursuing.

There seem to be a few reasons for this. First, if a lead is qualified, but the person is not the likely buyer within the target organization, the sales rep may get trapped in a cycle of having “good conversations” with one person after another, but never with the true decision maker or buyer.  A sales cycle that should be 45-60 days could easily become 9+ months if the initial lead doesn’t hold the budget.

Second, culturally, it may be impossible or unlikely that the sales target will come out and say no.  For example, this is often a surprise to US-centric sales teams, who may come out of a meeting in China thinking their project is moving forward only to learn later it wasn’t approved or would take several more trips to gain approval.  China is not the only place on the globe where people avoid saying no to a salesperson’s face, but it is known for it.

Third, if the sales process extends too long, it raises questions with the lead’s company.  “If we haven’t purchased already, do we really need it?”  In the end, these sales fall apart simply because there is no longer any momentum behind the project.

Honestly, I don’t have an answer for how to know when a deal is artificially lingering.  I’d love to see someone develop a formula that would help companies know when it’s time to pull the plug on a deal that will never close.  Sadly, as many a salesperson has realized firsthand, it is more popular to push revenue generators than something that will save time and money.  This means that in the end, we must continue to rely on the art of sale to not only close deals, but to know when to give up on them.