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Creating the billion$ SaaS category:
Zero to IPO secrets from a serial entrepreneur
February 18th, 2014
Mark Organ, Influitive, CEO
@markorgan
@influitive
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
• 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
• 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
• 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
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
Ideal

Reality

• Ideal buying experience:
confidence, education, comfo
rt

• Too often, reality:
pressure, confusion, and
drowning in vendor email

8
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 completely dependent
on knowledgeable peers
to make their decisions

50%

3.5X
increase
25%

0%
2006

2010

2014F

10
• 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
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%
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
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
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
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
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
My definition of a category:
For a distinct segment of the market,

A Transformational Experience

+

A Revolutionary Business Model
Driven By Disruptive Forces

19
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
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
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
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
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
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
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00

$5.60
$3.40

Category
creator
premium

$1.20

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
Similarities and
differences between the
category creation process
at Eloqua and Influitive

= ≠
26
=
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
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 generate maximum
value for users & customers.

30
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

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
Vertical niche market dominance

34
The narrower the better
Even the most horizontal companies
today like Salesforce and Facebook
started off in a narrow niche.

35
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
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
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
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 advocate.
Plus, generating early revenue
is pretty strategic!

40
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
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
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
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

AND
MOBILIZE THEM!

46
= ≠
47
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
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
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’s 44
people to help us with lead
generation, filling candidate reqs and
expanding our network.

52
Build a more ambitious
product footprint
Building network effects with our
advocate users and integrating
deeply into our customers’
businesses.

53
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
…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
Creating the billion$ SaaS category:
Zero to IPO secrets from a serial entrepreneur
February 18th, 2014
Mark Organ, Influitive, CEO
@markorgan
@influitive

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How to Build a Billion Dollar SaaS Category - Achievers Tech Talks Feb 2014

  • 1. Creating the billion$ SaaS category: Zero to IPO secrets from a serial entrepreneur February 18th, 2014 Mark Organ, Influitive, CEO @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. 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 knowledgeable 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 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 $5.60 $3.40 Category creator premium $1.20 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. Similarities and differences between the category creation process at Eloqua and Influitive = ≠ 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
  • 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 $0.75 on customer success. BUILD ADVOCATES Need new pic AND MOBILIZE THEM! 46
  • 48. Iterated MVP is insufficient: Emphasize experience, design & quality The goal is to get to the right experience, not the right product. We test designs, QA was dev hire 5, and we pair program all the time to maximize quality. 48
  • 49. Expand your productization and monetization models New, successful SaaS models emphasize monetizing the end users, delivering value-add like benchmarking, best practices and recommendations. 49
  • 50. Build for the billion 50
  • 51. More long-term focus: design a business with multi-billion potential. 51
  • 52. Raise money earlier, but use disruptive tools like AngelList for a higher shareholder count We have 44 shareholders. That’s 44 people to help us with lead generation, filling candidate reqs and expanding our network. 52
  • 53. Build a more ambitious product footprint Building network effects with our advocate users and integrating deeply into our customers’ businesses. 53
  • 54. Hire a stronger executive team early… Building the strongest, most talented team has never been a mistake as long as hires are experienced in the company stage. 54
  • 55. …but with room to grow! It’s good when there is a learning gap: it keeps things interesting. The best execs for category creators prize learning and growth over compensation. 55
  • 56. Creating the billion$ SaaS category: Zero to IPO secrets from a serial entrepreneur February 18th, 2014 Mark Organ, Influitive, CEO @markorgan @influitive

Editor's Notes

  1. Salesforce.com in cloud CRM, Tesla in luxury high-performance electric cars, and Keurig in single serve coffee capsules – what do they have in common? Besides creating huge amounts of wealth for their founders and shareholders, they created new categories of value. They literally changed the world. It’s my passion and I want to share with you today my ideas on how to create a category through the stories of my companies. Ready? Let’s go!
  2. The company I am most known for is Eloqua, which created the cloud-based marketing automation category, which was originally called automated demand gen. It is now a wholly-owned subsidiary of Oracle Corporation after going public in 2012, and worth around a billion dollars. How do you know it’s a category? Go down to the expo and count the number of companies participating in this space. My new company, Influitive, is creating a category around advocate marketing platforms. I think it is going to be a valuable category!
  3. Vision of Eloqua: To maximize sales productivity by generating qualified leads, using the internetFirst product (2000-2001): literally a implementation of that vision, connecting prospects to reps over chatThis product was not popular with users
  4. Email engine added to drive more chat activityChat product still largely a failure But reps enjoyed following up with prospects they web-tracked by phone or emailIntegrated web-email became our MVPEnabled us to be cash flow positive 20 months after founding.
  5. We hit product-market fit in mid- 2004 with an integrated suite:program automationemail marketingweb analyticsThis 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
  6. Eloqua becomes a platform in 2007-2012Both a marketingplatform, and a platform for other companies to build on
  7. The success of Eloqua and its category has created a whole new set of problems that I was inspired to work on. The world had changed and had created an opportunity to create a new category around advocate marketing.A burning platform. Now there are lots of competitors all blasting emails to people. Its not exactly what buyers want right now.
  8. Ideal buying experience: confidence, education, comfortToo often, reality: pressure, confusion, and drowning in vendor email
  9. The time, cost and risk to connect to a knowledgeable peer is trending rapidly to zero
  10. Increasingly, B2B buyers are completely dependent on knowledgeable peers to make their decisions
  11. The most successful marketing organizations of tomorrow will mobilize their advocates to surround buyers with social proofAt Influitive, we have developed powerful tools to do this, generating massive increases in: Referral leadsReference callsSuccess storiesOnline reviewsSocial media mentions.
  12. You do need to be both a breakthrough on business model and on product or experience;however, it’s rare to innovate dramatically on one dimension, without enabling or causing related enhancements to the other, so the case of hitting one but not both is uncommon.They don’t really have this for tech companies or venture backed, since a lot are private companies so it’s tough to value them accurately.Category Creators (CCs) have a lot of volatility with investors, markets, etc.; it’s a roller coaster rideOften CCs tie it back to what’s in the best interest of consumers; likewise, one test for CCs in whether consumers define it as such (i.e. to be a CC, consumers must see you that way…)The threshold to use to assess each dimension for true CC status is that each must deliver 2x the value of the previous versionSome companies that are close, but not quite there, are Lulu Lemon and ChipotleCCs typically see a lot of “super consumers”, who drive a lot of your business and are highly vocalCCs are often missionaries, while others are more likely to be mercenariesCCs typically expand the sector, rather than simply steal share: e.g. Keurig has meant that even as coffee unit consumption overall is declining, unit price is rising to sufficiently prop up the coffee industry and make it a growing marketOften, CCs disrupt multiple industries at once, rather than a single industry
  13. Missionary zeal attracts employees, customers, investors and – competitors. You need competitors, you can’t be a category of 1!Mission and purpose keeps you going on dark days. Eloqua employees went 9 months without pay.Category creators also create missionary customers who spread the gospel and convert the unbelievers.
  14. 80% of Category Growthis captured by ~1% of companiesCategory Creators growrevenue 4x faster and market cap 6x faster
  15. Hypothesis on who you are going to serve, the value that you are going to provide. What you expect to see if you are successful. Give the Eloqua hypothesis and story.
  16. You will be wrong, guaranteed. But it’s OK. As long as you have written out your hypothesis and assumptions – your expectations if things go right, then you can update your model of the world. Go through an example here.
  17. So what do you do when you discover where your assumptions are invalidated? You pivot. You run a new experiment. The CEO should be the experimenter-in-chief in the early going. Every week our early team would meet and discuss what we learned, and come up with new theories of how our world actually worked.
  18. Go through the pivot. Then discuss theinfluitive hypothesis, and indicate some signs that our market may be off – we’re getting huge traction in partner marketing because the reward model is working better – and that is updating our model of the world.
  19. This is super counter-intuitive for most entrepreneurs. They see amazing success stories like Salesforce, Facebook, Tesla and want to build a big horizontal solution. But even these mighty companies started out as focused players. SFDC focused on the under-resourced, inherently online, predominantly inside sales oriented Bay Area tech firms and provided a transformational experience for users and admins, in addition to a transformational business model and rolled out from there. I know because I was there! Zuckerberg had tremendous insight into social norms at Harvard, then rolled out to other Boston schools, then Ivy League, then all universities for quite a long time before rolling out. You should be an ant-eater, perfectly adapted to your niche. And do you know why you should be an ant-eater?
  20. Because your first job as an entrepreneur is not to die. If you are perfectly adapted to an under-served niche, you will survive, even without raising a dime. You will be able to grab the lions share of that market which means fat product margins. Your focus reduces your cost to serve. Every feature that a customer asks for is needed by others which minimizes product development waste. And your services are so unique and valuable that you can charge a fortune for them. Eloqua was bootstrapped and profitable for 3.5 years before raising venture money, because of our unique adaptations to B2B tech companies. Sometimes, if you can survive long enough, then you can build a huge company!So, how do you build a huge company if you are an ant-eater, perfectly adapted to your niche? Well, it helps to pick the right niche which has huge growth potential. How do you do that?
  21. This is what you build your category around – the under-served person that with your technology, you can make into a super-hero. You provide a transformational experience for the emergent hero and more importantly, you allow the emergent hero to provide a transformational experience for others. Story of the emergent hero at Eloqua. And the emergent hero at Influitive.Categories are not created by coming up with some 3-letter acronym and talking about it all day long. They come from the experiences of your users and your buyers. Think through how disruptive technologies are enabling new types of emergent heroes in companies, and empowering previously under-served consumer segments. Serve those people. Elevate them. Celebrate them. They will love you. They will be missionaries.Can you think of some people that are under-served, have a terrible experience, that with the right technology become heroic?
  22. Category creation is a lot about the mission. A larger sense of purpose. If you want to build a category, you need to get your mission, vision, and values set as early as possible. At both Eloqua and Influitive, we had these from day 1 and we continue to iterate on them to this date.Think about salesforce – No Software. Google – organizing the world’s information. At Eloqua, we wanted to make sales reps more productive by providing them with quality leads from the internet. That mission kept the company focused through the tech wreck of 2001-2004. At Influitive, we are the standard-bearers for the advocate – we provide them with the best possible experience, we elevate their importance, we celebrate them, we love them. We exist for them. People who believe what we believe are drawn to our message – they buy our software, they invest in us and work with us. As Paul Graham said to Brian Chesky, it is more important that 100 people love you madly than 1 million sort-of like you. It’s that sort of focus that drove him to ensure that every place was photographed professionally, to provide the best experience for amateur hoteliers and their guests. It starts with mission, a bold vision for the underserved niche.What about values? They should be defined as early as possible. What do you stand for? What kind of people do you want in your company? Write it down and make it a living document as your company grows. You can’t skimp on this stuff. If you want a great company, you need strong values and attract people who believe what you believe.
  23. Lead generation is the most important, strategic function for the young company. This may seem really tactical but I believe that the reason why startups have a hope of winning against huge, entrenched alternatives is that they can choose their customers and the manner that they want to engage with them. Lead generation is a direct manifestation of your mission and your strategy. It also is a critical factor in generating revenue. What did Eric Schmidt have to say about revenue? “Revenue solves all problems!”So make sure that your financial planning model is driven off of leads, and that someone important is accountable for generating them. That person could well be the CEO of the company. It is something that I spend hours a week doing. Your personal lead generation will probably save your company from certain death one day. [eloqua story on MTS]
  24. Lead generation is strategic because it is the first act of selecting a niche segment that you are going to innovate around. In the early days of the company, I do not delegate this task. Armed with my hypothesis I get out into the market to test my messages. I’m looking for people and companies that are going to get huge value for my service. I ask how we could add 10x more value than we are proposing. I’m looking for things that the people who respond best have in common, and updating our model of the world.And FIRE CUSTOMERS too. Dan Debow, a category creator, said that it is critical for a CEO to be able to “fire revenue”.
  25. After getting a few customers, you need to get that lead generation machine built.
  26. The modern lead gen triad – from Aaron Ross, a co-presenter in the Founders’ Series. You need all three of these when you’re building a category creator. Inbound Nets - You need to create terrific content that is going to attract the right kind of people to your service. You want the missionaries, not the mercenaries. I think that the blog is a crucial tool for showing your point of view, so that the right people resonate with your mission. Open minds and you open wallets. At Eloqua and Influitive, we map out what others are saying in the marketplace so that we have original content all the time.Outbound Spears – There are some prospective customers that are a perfect fit for your solution. They don’t always come to your content on their own, you need to target them. We use a combination of telesales, trackable email marketing, CRM retargeting to make sure that the best possible prospects are getting exposed to us all the time. Advocate WOM – These are the best possible leads, word of mouth leads created by your advocates.
  27. Quote from my first mentor at Eloqua, who encouraged me to go deep on making customers happy. VCs love to harp on the importance of scale, and it is really important. But happy customers scale really well, because they buy more from you and tell others about their experience. This is even more important if you have not raised a lot of money. No VC would invest in Eloqua in 2000-2001, and it looked like we were headed for certain bankruptcy. Luckily I had Bill as my mentor who showed me what to do. I raised prices, invested in massively overdelivering on our promises to customers, and went after competitor accounts where customer success was not a high priority. We got the company profitable in 6 months and grew it profitably for years. Then once we raised money, we focused on improving customer success operations to enable scale.
  28. If you have $1 to spend on marketing, I suggest you do as our patron saint of advocate marketing, Jeff Bezos, commands – spend 75 cents on customer success. You will get a far better return. Especially early. Build Advocates and Mobilize Them. I received a great email from one of our Australian customers a couple of weeks ago, which stated, “The best marketing we ever did is the marketing we never did.”
  29. So what is different about Influitive?
  30. A lot has changed in the past few years. One of the most important is design and experience. It’s not enough to just get your product out there and iterate fast. You need to think through the user and customer experience and test that early and often. I agree with Dave McClure that one of our founders or early management should be a designer. I wish that my designer co-founder at Influitive worked out, because if he did it would have saved us a lot of time. Quality is also something we are focusing a lot more on. At Eloqua, by the time we brought on QA, the product was already a big hairy ball of bandaids. There wasn’t much they could do but barely tread water. I got an earful whenever I went to meet customers. At Influitive, it’s the exact opposite situation, I can focus on business problems with customers and expand my accounts because the quality and experience are high. How do we do this? (1) Pair programming (2) Early investment in hiring the best QA leader (5th person in engineering after 4 devs), (3) big investment in automated testing. You can’t afford not to do this. If your dev guys are chasing down bugs they are not innovating, pushing your product forward. If they are building products that your customers do not want, they are not delivering future sales for you and are a drain on your company. The time to catch bugs is way before they ever get out in the wild. The cost is a lot lower. The time to test designs is early and often, when the cost to change is low and you have a lot more freedom in where to take the product.
  31. Remember the good old days when you could just automate a business process and then charge a per user per month fee, and get your SaaS company to scale? Well those days are OVER. The big boys and girls of SaaS that are succeeding now have a strong brand, balance sheet, customers, and partner lock-in. Most of you here in this room do not. As soon as you get your company to a 100 enterprise customers or 10K small business customers, there will be some free-ware in the marketplace and your growth rate will get hacked to pieces. You need to be smarter than that. You need to really think through the way you package and price so that you get a lot more leverage.At Influitive, we found out from our customers that what they really value is a large army of advocates that are consistently active, so that is how we price. Companies can have as many internal users as they want, as much usage as they can get. But we have not stopped there. This is our revolutionary Maven application, which is targeted at advocates so that they can advocate for any company they want. We are building, together with our customers, the best network of earlyvangelists in the world. When our customers in turn want more new customers, we have a great selection for them. Building maven allows us to keep the pricing for AdvocateHub low.Distribution needs to be wired in to your product strategy. In the future, it will be the only way to compete. No regular company can compete effectively against a player that has effective product-driven distribution. For example, Skype at $0.0001 per new customer versus Vonage at $400 per new customer.
  32. Some final notes. Influitive is designed from the beginning to be a billion dollar business. That means that more than just the product needs to be designed well. The whole business needs to be designed well. The product needs to help distribute itself. Everything from the way that we hire, to motivate, do board meetings – is better designed. We think through experience carefully, while still keeping a high tempo of iteration. In order to do this, we had to raise money, and we raised money early and often – but even here we innovated in a couple of important ways.
  33. There are some great tools out there to help raise money faster and from higher quality sources early on. My favorite is AngelList. I have 44 shareholders at Influitive which I sourced largely on AngelList. AngelList is a social network for raising money. I highly recommend the entrepreneurs here to learn more about this amazing network and other platforms like Funding Club and OurCrowd. 44 shareholders may sound like a pretty annoying and unmanageable group but we have thought through how to manage with regular conference calls and updates, and now I have 44 advocates out there helping us get new customers.
  34. Raising money earlier allow us to think through how we will be attacked in the future so we can prepare for it. As a category creator, once the category is established there is a rush of alternatives, some of them free. Every year we would prepare by asking our team how we would respond if everything we offered today was available free of charge in a year. You need to be ready for that, and provide immense value for the customer to withstand such an attack. Here is how we did it – our AdvocateAnywhere product integrates deeply with our customers’ software – we can do that because we are so focused on that niche – so we can generate advocacy immediately after a user is delighted. It’s a level of integration we don’t think our future competitors will be able to keep up. I mentioned our Maven app, which provides a much better experience for the advocate going across all of the companies and products he/she would want to advocate for.
  35. Every entrepreneur needs to focus on hiring the best team possible, you should want to surround yourself with people more capable than you. But that doesn’t mean hiring a bunch of all-stars that can do the job in their sleep. I think it’s better to hire people that are on the way up. Our head of marketing, Jim Williams, is a first time VP but has done every aspect of marketing in the past. Our head of BD, Chris Newton, was an all-star VP Marketing at Xactly, but a first-time VP of BD at Influitive. Our head of engineering was a team leader with enormous potential and now has the nod. Our head of product was the COO of EchoSign, so that breaks the pattern, except he is creating a category for the first time. There needs to be a lot of learning to attract the best people, because that is what they are in it for – to learn and grow. The comp and equity should always be secondary.
  36. Salesforce.com in cloud CRM, Tesla in luxury high-performance electric cars, and Keurig in single serve coffee capsules – what do they have in common? Besides creating huge amounts of wealth for their founders and shareholders, they created new categories of value. They literally changed the world. It’s my passion and I want to share with you today my ideas on how to create a category through the stories of my companies. Ready? Let’s go!