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

Dreamforce 2...
Visit influitive.com to learn more
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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

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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