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HOW TO CREATE A
BILLION $ CATEGORY
Secrets from a serial entrepreneur

Dreamforce 2...
I helped build the marketing automation category at Eloqua,
and the advocate marketing category at Influitive.

Cloud-base...
• Vision of Eloqua: To maximize sales
productivity by generating qualified
leads, using the internet
• First product (2000...
• Email engine added to drive more chat
activity
• Chat product still largely a failure
• But reps enjoyed following up wi...
• We hit product-market fit in mid2004 with an integrated suite:
• program automation
• email marketing
• web analytics
• ...
• Eloqua becomes a platform in
2007-2012

• Both a marketing
platform, and a platform for
other companies to build on

6
The success of Eloqua and its category sowed the seeds of its own
challenges. The marketing automation platform is burning...
Ideal

Reality

• Ideal buying experience:
confidence, education, comfo
rt

• Too often, reality:
pressure, confusion, and...
The time, cost and risk to
connect to a knowledgeable
peer is trending rapidly to zero

9
Dependence on knowledgeable peers in the buying process
(B2B software buyers)

75%

Increasingly, B2B buyers
are completel...
• The most successful marketing
organizations of tomorrow will
mobilize their advocates to
surround buyers with social pro...
What does it mean to create a

category?

12
Some B2B and B2C examples of category creators

13
Salesforce.com’s status as a category creator enabled
rapid growth several years ago
Revenue growth (2004-2005)
100%
Sales...
This led to a dominant market position today
Revenue growth (2011-2012)

70%
60%

SugarCRM

50%
40%

IBM

30%

Microsoft

...
Tesla currently has tiny share vs. all luxury vehicles – similar
to salesforce.com’s broader CRM market in 2002
US unit sa...
Tesla is already dominant in the space closer to its
category of all-electric luxury high-performance cars
US unit sales, ...
Tesla’s category creator status and rapid growth drive
valuation multiples far higher than other carmakers
Market capitali...
My definition of a category:
For a distinct segment of the market,

A Transformational Experience

+

A Revolutionary Busi...
Salesforce.com: Cloud CRM, 1999-2004
High-growth, cash-strapped B2B
companies largely in Bay Area
Acquire and deploy good-...
Tesla: Electric high-performance luxury cars,
2010-2013
Green-conscious, technophile early adopter
car enthusiasts
All-ele...
Eloqua: Cloud marketing automation, 2005-2013
Process and lead-gen oriented (demand
gen) B2B marketers
Automatically nurtu...
Influitive: Advocate marketing platform, 2012 – ??
Advocate marketers and the advocates they
serve
Advocate-centered, comp...
Category creators have missionary zeal about their
category vision, not just their company mission.

Missionary

VS
Mercen...
Category creators enjoy a valuation premium; grow revenue
4x and market cap 6x faster than category entrants

Incremental ...
= ≠
26
=
Hypothesis-driven, iterative approach
Vertical niche market dominance
Focus innovation on the emergent hero
Drive leads ...
= ≠
28
Use a hypothesis-driven, iterative
approach to quickly find
product-market fit

29
Pick that niche you want to serve,
document why, and test it
The goal is to build a continuously evolving
model of how you...
It’s OK if your hypothesis is wrong
If your assumptions are documented, you
know where the problem is and can fix it.

31
Pivot quickly!
Early on, CEO should be the

Chief Experiment Officer.

32
RE worked, F and I did not. So we
found a new segment that had even
more extreme economics than RE.

Market
Product

Eloqu...
Vertical niche market dominance

34
The narrower the better
Even the most horizontal companies
today like Salesforce and Facebook
started off in a narrow nich...
Your first job as an
entrepreneur is not to die
Focus lets you economize on your learning
and your product development.
Pl...
Focus innovation on the
emergent, under-served hero
Your category is created by your users
and customers, not by your mark...
Mission, Vision, Values

Our Vision
Advocates are our guiding light.
We define and unlock the full
Mission, Vision, Values...
Drive leads to achieve profitable, efficient growth

39
Treat lead gen as a
strategic imperative
Startups win because they can
choose the customers that will
be most likely to ad...
CEO must help choose
customers strategically
Don’t delegate this. You need to
figure out the message and
offering that att...
Ensure the lead flow is increasing
in quality & quantity
Once you figure out what works, you
can add automation and then s...
Use a marketing mix of
seeds, nets and spears
Inbound – real thought leadership is a
hallmark of category creators.
Open m...
Invest early in customer success

44
Build happy customers:
they scale really well

45
If you have $1 to spend on marketing,
instead consider spending $0.75 on
customer success.
BUILD ADVOCATES

Need new pic

...
= ≠
47
Iterated MVP is
insufficient: Emphasize
experience, design &
quality
The goal is to get to the right
experience, not the r...
Expand your productization
and monetization models
New, successful SaaS models
emphasize monetizing the end users,
deliver...
Build for the billion

50
More long-term focus:
design a business with
multi-billion potential.

51
Raise money earlier, but use
disruptive tools like AngelList for
a higher shareholder count
We have 44 shareholders. That’...
Build a more ambitious
product footprint
Building network effects with our
advocate users and integrating
deeply into our ...
Hire a stronger executive team
early…
Building the strongest, most talented
team has never been a mistake as
long as hires...
…but with room to grow!
It’s good when there is a learning gap: it
keeps things interesting.

The best execs for category ...
Enhanced and optimized for SlideShare

HOW TO CREATE A
BILLION $ CATEGORY
Secrets from a serial entrepreneur

Dreamforce 2...
Visit influitive.com to learn more
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How To Create A Billion $ Category: Mark Organ's Dreamforce '13 Keynote

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Why just a build a company when you can create a whole new category instead? That’s the question that Influitive founder and CEO Mark Organ explored in his packed Founders Forum session at Dreamforce 2013.

Here’s one really good reason: category creators tend to grow revenue 4x faster and grow market cap 6x faster than those companies that enter a category later on.

Based on Mark’s experience building marketing automation category creator Eloqua, what he’s learned so far as Influitive (http://influitive.com) carves out a brand new category – advocate marketing – a little over a decade later, and his observations on why other powerful category creators, including Salesforce.com, Tesla and Keurig, have been so successful, his presentation proposes a whole new framework for category creation.

*Enhanced with new content and optimized for SlideShare*

Original recorded presentation: http://youtu.be/Pw_mTsKB1R4?t=1s

Published in: Business, Technology
  • Hank Barnes at Gartner thinks so (http://blogs.gartner.com/hank-barnes/2014/12/09/the-stories-of-advocacy-marketing-success-submit-now/) - and I do too - the concept of Advocate Marketing is as "old" as word of mouth, but as a category of software, is as new and timely as Influitive. For me, Influitive created the category and will sustain leadership.
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  • Great presentation! Really interesting learnings!
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  • Thanks everyone for the comments and the likes! @webmktr the equals versus not equals framework first indicates the items that were invariant between Eloqua and Influitive, and then what has changed because of the change in environment. Hope that helps. By the way, you can read my speakers' notes if you switch to the Notes tab above. First time I noticed that feature!
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  • Great presentation and wonderful honesty about the path you took on building a company and the path you are taking on creating a new category!
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  • @ericrogness Thanks for the comment ... as soon as the folks from salesforce find my video I can post it here. I drank 2 red bulls beforehand so I was more animated than usual. With respect to = vs !=, I was first discussing the experience that was similar between Eloqua and Influitive, and then what is now different because of the change in the environment.
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How To Create A Billion $ Category: Mark Organ's Dreamforce '13 Keynote

  1. Enhanced and optimized for SlideShare HOW TO CREATE A BILLION $ CATEGORY Secrets from a serial entrepreneur Dreamforce 2013 Founders Forum Mark Organ, Founder and CEO, Influitive @markorgan @influitive
  2. I helped build the marketing automation category at Eloqua, and the advocate marketing category at Influitive. Cloud-based Marketing Automation Founded Jan 2000 Nasdaq IPO $871M - ORCL Advocate Marketing Founded Oct 2010 2
  3. • Vision of Eloqua: To maximize sales productivity by generating qualified leads, using the internet • First product (2000-2001): literally a implementation of that vision, connecting prospects to reps over chat • This product was not popular with users 3
  4. • Email engine added to drive more chat activity • Chat product still largely a failure • But reps enjoyed following up with prospects they web-tracked by phone or email • Integrated web-email became our MVP • Enabled us to be cash flow positive 20 months after founding. 4
  5. • We hit product-market fit in mid2004 with an integrated suite: • program automation • email marketing • web analytics • This integrated suite enabled companies to nurture and score leads until they were “sales ready” • The industry around this – products and services – is worth several billion dollars today 5
  6. • Eloqua becomes a platform in 2007-2012 • Both a marketing platform, and a platform for other companies to build on 6
  7. The success of Eloqua and its category sowed the seeds of its own challenges. The marketing automation platform is burning. List, Attention Spoilage Availability of Deep Knowledge Deliverability 7
  8. Ideal Reality • Ideal buying experience: confidence, education, comfo rt • Too often, reality: pressure, confusion, and drowning in vendor email 8
  9. The time, cost and risk to connect to a knowledgeable peer is trending rapidly to zero 9
  10. Dependence on knowledgeable peers in the buying process (B2B software buyers) 75% Increasingly, B2B buyers are completely dependent on know-ledgeable peers to make their decisions 50% 3.5X increase 25% 0% 2006 2010 2014F 10
  11. • The most successful marketing organizations of tomorrow will mobilize their advocates to surround buyers with social proof • At Influitive, we have developed powerful tools to do this, generating massive increases in: • Referral leads • Reference calls • Success stories • Online reviews • Social media mentions. 11
  12. What does it mean to create a category? 12
  13. Some B2B and B2C examples of category creators 13
  14. Salesforce.com’s status as a category creator enabled rapid growth several years ago Revenue growth (2004-2005) 100% Salesforce.com 80% Upshot 60% Salesnet 40% Amdocs 20% SAP Siebel 0% 0 -20% 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 Oracle (incl. PeopleSoft) -40% Note: Relative Market Share is each company’s revenue divided by the market leader; the market leader’s revenue is divided by the 2nd place company’s revenue; Precise revenue not available for Upshot and Salesnet, figures represent approximate revenue and growth estimates Source: Gartner (http://www.gartner.com/newsroom/id/493005) 14
  15. This led to a dominant market position today Revenue growth (2011-2012) 70% 60% SugarCRM 50% 40% IBM 30% Microsoft Salesforce.com 20% 10% 0% 0.00 -10% Oracle SAP 0.20 0.40 0.60 0.80 1.00 1.20 Note: Relative Market Share is each company’s revenue divided by the market leader; the market leader’s revenue is divided by the 2nd place company’s revenue. Source: Gartner (http://www.gartner.com/newsroom/id/2459015) 15
  16. Tesla currently has tiny share vs. all luxury vehicles – similar to salesforce.com’s broader CRM market in 2002 US unit sales, 2012 300,000 250,000 200,000 150,000 100,000 50,000 0 Tesla Lexus Source: Business Insider Audi Cadillac Mercedes-Benz BMW (http://www.businessinsider.com/tesla-is-not-really-outselling-bmw-audi-2013-5) 16
  17. Tesla is already dominant in the space closer to its category of all-electric luxury high-performance cars US unit sales, Q1 2013 5,000 4,000 3,000 2,000 1,000 0 Tesla Model S Source: Business Insider Audi A8 BMW 7-Series Mercedes-Benz S Class (http://www.businessinsider.com/tesla-is-not-really-outselling-bmw-audi-2013-5) 17
  18. Tesla’s category creator status and rapid growth drive valuation multiples far higher than other carmakers Market capitalization per vehicle sold $800K $700K $600K $500K $400K $714K $300K $200K $100K $60K $39K $0K Tesla DaimlerBenz BMW $13K $12K $6K $0K VW Ford GM Fisker* Fisker * Fisker filed for chapter 11 protection in Nov 2013 Source: Yahoo! Finance, Corporate filings, Analyst reports 18
  19. My definition of a category: For a distinct segment of the market, A Transformational Experience + A Revolutionary Business Model Driven By Disruptive Forces 19
  20. Salesforce.com: Cloud CRM, 1999-2004 High-growth, cash-strapped B2B companies largely in Bay Area Acquire and deploy good-enough CRM successfully in days instead of years • Monthly subscription by user • Continuous deployment of upgrades centrally for all customers Cloud / internet delivered software 20
  21. Tesla: Electric high-performance luxury cars, 2010-2013 Green-conscious, technophile early adopter car enthusiasts All-electric with equivalent/superior performance to BMW 7-series/Benz S-class • Custom car ordering online, direct • Supercharging/battery switching stations • Continuous deployment of upgrades • Lithium-ion battery innovation • Cloud computing 21
  22. Eloqua: Cloud marketing automation, 2005-2013 Process and lead-gen oriented (demand gen) B2B marketers Automatically nurture prospects, guided by their behavior, until sales-ready • Monthly subscription, scaled by usage • Continuous deployment of upgrades centrally for all customers • Cloud-delivered software • Automated filtering of phone and mail 22
  23. Influitive: Advocate marketing platform, 2012 – ?? Advocate marketers and the advocates they serve Advocate-centered, comprehensive and self-service experience • Monthly subscription, scaled by advocate activity • Continuous deployment of upgrades centrally for all customers • Pervasive social web 23
  24. Category creators have missionary zeal about their category vision, not just their company mission. Missionary VS Mercenary Attract not just customers, investors and employees, but competitors too. You need competitors! A category of one is not compelling. 24
  25. Category creators enjoy a valuation premium; grow revenue 4x and market cap 6x faster than category entrants Incremental market capitalization per $1.00 of revenue growth $6.00 $5.60 $5.00 Category creator premium $4.00 $3.00 $3.40 $2.00 $1.00 $1.20 $0.00 Overall (20) Category Creators (10) Non-Category Creators (10) CNN/Fortune top 20 fastest growing companies (2010) Source: Cambridge Partners in HBR Blog, 09/2011 25
  26. = ≠ 26
  27. = Hypothesis-driven, iterative approach Vertical niche market dominance Focus innovation on the emergent hero Drive leads to achieve profitable, efficient growth ≠ Iterated MVP is insufficient: emphasize design & quality Expand your productization and monetization models Drive the company on mission, vision and values Invest early in customer success Build for the billion 27
  28. = ≠ 28
  29. Use a hypothesis-driven, iterative approach to quickly find product-market fit 29
  30. Pick that niche you want to serve, document why, and test it The goal is to build a continuously evolving model of how you generate maximum value for users & customers. 30
  31. It’s OK if your hypothesis is wrong If your assumptions are documented, you know where the problem is and can fix it. 31
  32. Pivot quickly! Early on, CEO should be the Chief Experiment Officer. 32
  33. RE worked, F and I did not. So we found a new segment that had even more extreme economics than RE. Market Product Eloqua started with the wrong product in the wrong market 1.0 F.I.RE. (Financial, Insurance, Real Estate) Chat 2.0 B2B Tech Marketing automation 33
  34. Vertical niche market dominance 34
  35. The narrower the better Even the most horizontal companies today like Salesforce and Facebook started off in a narrow niche. 35
  36. Your first job as an entrepreneur is not to die Focus lets you economize on your learning and your product development. Plus you can charge for your expertise. I PROMISE I WILL NEVER DIE Eloqua was bootstrapped, profitable and high growth for over 3.5 years! 36
  37. Focus innovation on the emergent, under-served hero Your category is created by your users and customers, not by your marketers. Find the under-served hero who will benefit most from disruptive innovation. Elevate and celebrate the hero! 37
  38. Mission, Vision, Values Our Vision Advocates are our guiding light. We define and unlock the full Mission, Vision, Values potential of advocacy, for Our Mission for advocates, the organizationsCustomers they We world’s supportwill deliver the the bestcentral platform for and the world. possible experience advocacy, featuring Drive the company on mission, vision and values for all participants, especially the advocates themselves. 3 Mission, Vision, Values Our Mission for Team Members PERSONAL CHARACTER Influitive will be the best place for our people to Open, honest maximize their ability to learn and grow,and direct and with We are transparent and authentic with each that, their value toour customers and investors. other, the world. …from day one! The only road is the high road We sleep well at night and hold our 4heads high, as we live with integrity. We all inspire and lead We transfer confidence to everyone who works with us. 5  Salesforce: No Software  Google: Organizing world’s information 38
  39. Drive leads to achieve profitable, efficient growth 39
  40. Treat lead gen as a strategic imperative Startups win because they can choose the customers that will be most likely to advocate. Plus, generating early revenue is pretty strategic! 40
  41. CEO must help choose customers strategically Don’t delegate this. You need to figure out the message and offering that attracts the best customers and can scale. 41
  42. Ensure the lead flow is increasing in quality & quantity Once you figure out what works, you can add automation and then solve for the next segment of customers. 42
  43. Use a marketing mix of seeds, nets and spears Inbound – real thought leadership is a hallmark of category creators. Open minds = open wallets. Outbound – need to target the right customers that will become advocates. Advocate WOM – Your goal should be to generate as many referrals as possible. Source: Aaron Ross, Predictable Revenue 43
  44. Invest early in customer success 44
  45. Build happy customers: they scale really well 45
  46. If you have $1 to spend on marketing, instead consider spending $0.75 on customer success. BUILD ADVOCATES Need new pic AND MOBILIZE THEM! 46
  47. = ≠ 47
  48. Iterated MVP is insufficient: Emphasize experience, design & quality The goal is to get to the right experience, not the right product. We test designs, QA was dev hire 5, and we pair program all the time to maximize quality. 48
  49. Expand your productization and monetization models New, successful SaaS models emphasize monetizing the end users, delivering value-add like benchmarking, best practices and recommendations. 49
  50. Build for the billion 50
  51. More long-term focus: design a business with multi-billion potential. 51
  52. Raise money earlier, but use disruptive tools like AngelList for a higher shareholder count We have 44 shareholders. That’s 44 people to help us with lead generation, filling candidate reqs and expanding our network. 52
  53. Build a more ambitious product footprint Building network effects with our advocate users and integrating deeply into our customers’ businesses. 53
  54. Hire a stronger executive team early… Building the strongest, most talented team has never been a mistake as long as hires are experienced in the company stage. 54
  55. …but with room to grow! It’s good when there is a learning gap: it keeps things interesting. The best execs for category creators prize learning and growth over compensation. 55
  56. Enhanced and optimized for SlideShare HOW TO CREATE A BILLION $ CATEGORY Secrets from a serial entrepreneur Dreamforce 2013 Founders Forum Mark Organ, Founder and CEO, Influitive @markorgan @influitive
  57. Visit influitive.com to learn more

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