Echelon Asia Summit 2015: Build Your Multi-$B Category Outside of The Valley
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Mark Organ shares his journey building Eloqua and Influtive outside of the leading markets. Stay up to date on Asia's tech scene: Read the latest news: http://e27.co Sign up for our Weekly Digest that curates the Top news in Asia: http://bit.ly/subscribe-to-e27
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Echelon Asia Summit 2015: Build Your Multi-$B Category Outside of The Valley
- 15. $3.40 $5.60 $1.20$0 $2 $4 $6 Overall (20) Category Creators (10) Non-Category Creators (10) CNN/Fortune top 20 fastest growing companies Category creator premium Category creators: 5X valuation premium on revenue growth! Incremental market cap per $1 of additional revenue Source: Cambridge Partners in HBR Blog, 09/2011 Mark Organ @markorgan //
- 16. $1,630K $35K $33K $10K $9K $6K $0K $0K $200K $400K $600K $800K $1,000K $1,200K $1,400K $1,600K $1,800K Tesla BMW Group Daimler AG VW Ford GM * Fisker filed for chapter 11 protection in Nov 2013 Source: Yahoo! Finance, Corporate filings, Analyst reports; Market caps are USD & as at Fisker* Market capitalization / global 2013 unit sales Successful category creator >> ENTIRE VALUE of previous category! Mark Organ @markorgan //
- 21. a transformational experience + driven by disruptive forces MY DEFINITION OF A CATEGORY: For a distinct segment of the market, A revolutionary business model Mark Organ @markorgan //
- 22. Green-conscious, technophile early adopter car enthusiasts All-electric drive 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 TESLA: Electric high-performance luxury cars 2010-2013 Mark Organ @markorgan //
- 23. 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 SALESFORCE.COM: Cloud CRM, 1999-2004 Mark Organ @markorgan //
- 24. Process and lead-gen oriented (demand gen) B2B marketers Automatically nurture prospects, guided by their behavior, until sales-ready • Monthly subscription, scaled by user • Continuous deployment of upgrades centrally for all customers • Cloud-delivered software • Automated filtering of phone and mail ELOQUA: Cloud marketing automation 2005-2013 Mark Organ @markorgan //
- 25. 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 INFLUITIVE: Advocate marketing platform 2010-2??? Mark Organ @markorgan //
- 33. Dr. Venkataswamy
Editor's Notes
- Who believes in unicorns? Who has a unicorn or wants one? Here’s an urban legend about a unicorn. Once upon a time, there was this entrepreneur in his mid 20’s. He started his own marketing software company from nothing. And in 7 years, his company grew to a $20M ARR run rate with 165 employees around the world. The company would eventually go public and be bought for around $1B. Does that sound like a dream? It’s the dream of so many entrepreneurs. It was my dream. For me, this dream became a nightmare. And there is a Singapore twist to the story.
- January 17, 2007. It was a dark day. On the day I was going to sign the contract to hire our new GM in Singapore, I was informed by my board that my services would no longer be required.
- As a 33 year old founder/CEO, I gave everything I had to that company, Eloqua. I had not missed my quarterly forecast in 6 years, I built a company that ultimately went on to become a unicorn worth nearly $1B. But I was not there to ring the bell, and I didn’t profit from the acquisition in a way that would change my life forever.
- My life changed when I moved to Singapore in early 2009. One of the things that bothered me the most, is that I did not have that opportunity to realize my vision of a strong presence In Singapore. So when I had the opportunity to move to Singapore with my family, I jumped at the chance. To experience first‐hand how to build companies in Asia. I wanted to experience the real Singapore so I moved into the heartlands. They called me the Jew of Toa Payoh.
- I enjoyed living in Toa Payoh.
- Lots of interesting scenery and scents, and beautiful buildings that I spent too much time in. I’m actually one of the few ang moh that has developed a taste for Durian, which my asian wife cannot stand.
- I just went back to the Toa Payoh hub over the weekend and was happy to see that my favorite Laksa stall was still there. And dismayed that that chicken rice is now $2.80. Anyway I would come back here just for the Laksa!
- I had a great time here – invested in some companies, consulted to others in China, India, Malaysia and here in Singapore. But it did not take long before I wanted to build another SaaS giant. It was difficult to attract the right team though, being new to the region. Ultimately I decided to return to my native Toronto where I was able to attract the right people to start working on Influitive.
- Influitive is really taking off now and it looks like another huge category creator around advocate marketing. I think that advocate marketing will support a lot of great companies in the future, including a few unicorns.
- We all know what unicorns are now, right? Companies that are worth $1B. They are called unicorns because they are supposed to be rare, although they do seem to be proliferating lately!
- What about a dragon? A dragon is a single investment that returns an entire venture capital fund. Dragons are a lot more valuable than unicorns for investors.
- My friend and investor Dave McClure created a taxonomy of magical equine investments. The $1B unicorns, $100M centaurs, and $10M My Little Ponies.
- Behold, a new mythical creature! The Celestia! I think it’s a great way to discuss billion dollar category creating companies. You can tell by her flowing sparkly mane and tail, her wings and magic horn, that she is an entirely new category of horse. Leveraging multiple disruptive innovations. Eloqua was a Celestia, creator of the cloud-based marketing automation category that has spawned 3 unicorns, a dozen centaurs and countless My Little Ponies. Most likely, Celestias and dragons go hand in hand, because Celestias unlock massive value for entrepreneurs and investors alike.
- 80% of Category Growth is captured by ~1% of companies. Category Creators grow revenue 4x faster and market cap 6x faster
- Investors typically value the new category creator at more than the value of the entire previous category combined. On a unit basis, Tesla dwarfs all others combined.
- Eloqua had humble beginnings, starting as a proactive chat system, founded in the year 2000. Did you think that Zopim was the first one? You probably also think that Bukit Timah is the tallest mountain in the world too. This is a category that is nearly 20 years old. Anyway, we found that not a lot of people in the B2B space we targeted wanted to chat. So we bolted on an email system, to drive more traffic and get some more chatting going on. That still did not work. But, we did find that sales reps liked following up with people who visited the site. A web-trackable email system became our MVP.
- In 2004, we put an automation system on top of it to create the system that you’re likely familiar with today, and the rest is history. However, the success of this category flooded the inboxes of the world with email, and that created the conditions for the success of a new category in Advocate Marketing.
- The success of Eloqua is what has created the Influitive opportunity – which is currently a centaur. Buyers would much rather interact with their peers than emails and websites. You can see our current product, AdvocateHub, here. Leveraging the disruptive technology of the social web, we are enabling marketers to systematically surround their buyers with social proof, driving huge increases in referral leads, reference calls, 5-star online reviews, customer stories & videos, and lots of social buzz. This is the advocate experience. In the center panel, we have challenges – the asks and tasks. Around the outside, game mechanics. It’s a simple concept, but we have poured millions of dollars into understanding and delivering the optimal advocate experience.
- Icons: Orange slice Butterfly Venus flytrap Lightning bolt Text could be presented in a better way
- Update with icons used on slide 8
- Where do categories come from? Is it something your marketing leader dreams up, some three letter acronym nobody has claimed yet? No. My belief is that categories are unearthed, they are discovered. Whatever disruptive technology you gravitate to, seek to deeply understand the people that will benefit from its mass adoption. Today, these folks may be outcasts, nerds, forgotten. But you know better. Study these people. What they read, who influences them, how they get their work done. Be an anthropologist.
- Because tomorrow, those people will be powerful and numerous. This is the wave that you ride to building a Celestia, a billion dollar category. These categories are made up of people. The category exists in their minds, their actions and their attitudes.
- What about Influitive HQ’d in Singapore instead of Toronto? Well, the target market would have been different. There isn’t a critical mass of B2B SaaS companies here yet. My focus was going to be on Indonesian game developers, who also need social proof to gain distribution, there are a lot of them, and growing very quickly. My experience working with Game Ventures on the board gave me some proprietary insight about gaming companies. The business model would also have been different, likely pay for performance. I still think this is a viable opportunity so I’d welcome any entrepreneur who would rather divert a river rather than dig a well, to go after advocate marketing for game and app developers.
- While we are on the topic of geography, let’s talk about how to leverage the strengths of different regions. Eloqua and Influitive both have offices in Boston and the Bay Area, then Eloqua added locations in London and Singapore which we plan to do again. Boston is an amazing place to hire senior sales and marketing executive talent, from its heritage as an equal to Silicon Valley decades ago – their exec talent can’t or won’t move to the Valley, which is our opportunity. The Valley is indeed a magical place indeed, but also fraught with dangers. Full of mercenaries, which is not a good fit for Celestia companies, because they aren’t true believers that you need. My general rule in the Valley is to hire people who are intrinsically more loyal - ex-military and immigrants. What the Bay Area does have in abundance are some of the best business development and product management executives in the world. They are plentiful enough where you can hire the best. I didn’t just stop at global talent. In both companies I raised money locally, both coasts of the US, from Europe and Asia, and placed a priority on winning customers with global operations. One area where you can beat a Valley‐based company, which typically can’t see beyond the Sierra Nevada mountains, is by being more global than them.
- You here in Southeast Asia have an even bigger opportunity than I have in Toronto. Check out this map of Equestria. Here we are in Laksa City, with the highest rate of smartphone penetration, and a lot of malls. All around we have billions of people rapidly improving their standard of living through technology, in Satay-nesia, these Durian countries over here, Xiao Long Guo up there. We have some of the earliest adopters of B2B technology in Kangaroo Land. Smart financiers in the Land of Rising Sushi Sun. Rather than go straight to the US, I think there is a much bigger opportunity in leveraging the best of your region, developing a powerful and unique value proposition and a low cost structure before attacking the most competitive market in the world.
- How many people here know the story of Patsnap? This is a company that I think is a unicorn, and possibly a Celestia in the making, and I missed out on the opportunity to invest a valuation that is about 1% of where it is now! It’s an inspiring story. Patsnap is an ingenious system for analyzing patent filings, with clever clustering analytics and visualization. CEO Jeffrey Tiong’s first stop after developing the product was Suzhou, not San Francisco. There he was able to do two things: First, build a best-in-class system for analyzing Chinese patents and Second, develop a low-cost business where there were few alternatives. He was able to build his strength there. Now he has a global company with sales and marketing based in the UK and 70% of his business in the US, where he holds those critical advantages over the Thomson Reuters and Lexis Nexus dinosaurs. Watch this space!
- Xiaomi is a made-in-Asia story that few in North America have heard about. Starting in China and now doing a great job in the Indian market, they are leveraging a low cost base, smart designers and engineers to build a powerhouse here and will make their presence felt in my home market soon enough. You can put Alibaba in the same category, nailing the local use case with a completely original solution which is now coming over to the West in a big way – now helping American companies sell to Chinese consumers, not just leveraging Chinese manufacturers.
- This is an amazing story that I learned at TED India. What do Big Macs have to do with cataract surgery? Well, it turns out that Dr. V, as Dr. Venkataswamy was affectionately called, was obsessed with both: a system for creating a standard, reliable product and addressing the needs of the Indian poor while building an amazing business. Starting in India, Dr. V used his McDonalds system to treat cataracts for 1.6% of the cost in the UK, with 10% of the complication rate. His Aravind Eye Care System mints money. And that is while giving away 1/3 of his capacity for free, to serve the poor. Aravind and approaches like it are making major inroads in the west and I believe will be turbocharged by the disruptive innovation of robotic surgery, where expert eye surgeons in India will be able to serve the world.
- I arrived in Singapore in 2009 on a jet plane instead of my Celestia … she was hijacked, and I watched her soar from afar. But ultimately it was a valuable experience. I had time to think and explore. I had the opportunity to create a model of what it means to build a category. Start with a distinct niche category on the way up, because of disruptive technology. Create a transformational experience and revolutionary business model. Unearth the category by listening to the under-served heroes, and ride the wave as they grow strong and numerous. Leverage the best resources from your region and the world. Here, at Echelon, 2015, the seeds of multiple Celestias will be discussed, and several will be born. I look forward to celebrating some Celestia successes in the years ahead with the category creators here in this room. Thank you!