Free Download of the Gartner 2015 Magic Quadrant for Corporate Performance Management Suites

Just a quick post to let you know that my company, Host Analytics, is offering a free copy / free download of the Gartner 2015 Magic Quadrant (MQ) for Corporate Performance Management (CPM) Suites.

You need to give about six fields of basic contact information to get the report, which can be downloaded here.  CPM is also known as enterprise performance management (EPM) and financial performance management (FPM) and includes corporate financial planning, scenario planning, budgeting, consolidations, financial reporting, profit modeling and optimization, and analytics.

Joining the Granular Board of Directors

I’m very happy to say that I’ve joined the Board of Directors of Granular.  In this post, I’ll provide some commentary that goes beyond the formal announcement.

I think all CEOs should sit on boards because it makes you a better CEO.  You get take remove the blinders that come from your own (generally all-consuming) company, you build the network of people you can rely upon for answering typical CEO questions, and most importantly, you get to turn the tables and better understand how things might look when seen from the board perspective of your own company.

Let’s share a bit about Granular.

  • Granular is a cloud computing company, specifically a vertical SaaS company, aimed at improving the efficiency of farms.
  • They have a world-class team with the usual assortment of highly intelligent overachievers and with an unusual number of physicists on the executive team, which is always a good thing in a big data company.  (While you might think data scientists are computer science or stats majors, a large number of them seem to come from physics.)

To get a sense of the team’s DNA, here’s a word cloud of the leadership page.

wordle 2

Finally, let’s share a bit about why I decided to join the board.

  • As mentioned, they have a world-class team and I love working with supersmart people.
  • I like vertical strategies.  At MarkLogic, we built the company using a highly vertical strategy.  At Versant, a decade earlier, we turned the company around with a vertical strategy.  At BusinessObjects, while we grew to $1B largely horizontally, as we began to hit scale we used verticals as “+1″ kickers to sustain growth.  As a marketeer by trade, I love getting into the mind of and focusing on the needs of the customer, and verticals are a great way to do that.
  • I love the transformational power of the cloud. (Wait, do I sound like too much like @Benioff?)  While cloud computing has many benefits, one of my favorites is that the cloud can bring software to markets and businesses where the technology was previously inaccessible.  This is particularly true with farming, which is a remote, fragmented, and “non-sexy” industry by Silicon Valley standards.
  • I like their angle.  While a lot of farming technology thus far has been focused on precision ag, Granular is taking more of financial and operations platform approach that is a layer up the stack.  Granular helps farmers make better operational decisions (e.g., which field to harvest when), tracks those decisions, and then as a by-product produces a bevy of data that can be used for big data analysis.
  • I love their opportunity.  Not only is this a huge, untapped market, but there is a two-fer opportunity:  [1] a software service that helps automate operations and [2] an information service opportunity derived from the collected big data.
  • Social good.  The best part is that all these amazing people and great technology comes packaged with a built-in social good.  Helping farmers be more productive not only helps feed the world but helps us maximize planetary resource efficiency in so doing.

I thank the Granular team for taking me on the board, and look forward to a bright, transformational future.

Thoughts on the Gartner Magic Quadrant for Corporate Performance Management Suites 2015

“Mirror mirror on the wall, who’s the fairest EPM vendor of them all?”

It’s that time of the year again.  Gartner just released their Magic Quadrant for Corporate Performance Management (CPM) Suites 2015.  At Host Analytics, we call the category Enterprise Performance Management (EPM), so I’ll refer to the market henceforth as EPM.

In this post, I’ll share some of my commentary on the most recent Gartner Magic Quadrant (MQ) for EPM.

  • Get the big picture — and that picture is cloud.  All four cloud EPM vendors are in the Visionaries quadrant.  The first two trends in the market overview are about cloud.  The word “cloud” appears 113 times in the document, more than twice as much as the word “performance” at 46.   Cloud EPM is a huge trend in the market.
  • Use their critical capabilities research for short lists.   The MQ is a lot of fun to look at, but remember that Gartner analysts generally don’t recommend using the MQ for making vendor short lists.  Because markets are broad (and suite markets particularly so), they generally recommend using their critical capabilities documents to create a short list of which vendors are most likely to meet your specific needs.
  • Avoid dot-vector analysis.  Remember that Gartner analysts view the quadrant as re-created from scratch every year.  Vendors tend to obsess with dot-movement vectors, but when I ask the Gartner team about this issue, they tell me that the CPM MQ is effectively recreated from scratch each year and thus all about positions, not movements.  I know it’s hard to resist the temptation (heck one year at Business Objects I made an animated GIF of the MQ where the Brio dot even exploded in the end), but the folks there tell me it’s not meaningful, so I won’t do it.
  • Analyze via the football.  If you look at one-hundred Gartner MQs, you’ll see the pattern that the MQ placement algorithm generally lays out the vendors in a football shaped way.  I believe that inside the football you find the standard leaders, visionaries, challengers, etc.  Since most vendors are in the football, it’s more interesting to me to look who’s outside it and understand why.

football

  • Beware the impacts of the customer satisfaction survey.  I’ve seen and conducted customer satisfaction research on EPM vendors and what I see generally doesn’t jibe with the results that Gartner uses as an important data source in making the MQ.  By analogy, if you were trying to decide where to have dinner and I gave you the choice of two surveys, which would you pick?  Survey 1 — a random sample of diners leaving the restaurant.  Survey 2 — ask each restaurant to provide 10 customers.  You can argue that Survey 2 is “fair” because every restaurant had the same opportunity to prime, coach, offer free meals, etc., to the respondents.  But for my dinner investment, I’d pick survey 1.  The Gartner MQ survey is more like Survey 2.
  • Factor in degree of difficultly.  Another factor that influences the Gartner customer satisfaction survey is more subtle:  low-end vendors trying to solve easier problems should generally get better marks than high-end vendors trying to solve harder ones:  imagine a diving contest where we scored dives on execution but forgot to multiply by degree of difficulty.  Note that I do believe that the analysts understand this issue and try to mentally correct for it.  But the point is should I care how much QuickBooks users like QuickBooks if I’m in the league where only Oracle or SAP can solve my problem?
  • Read the text.   I sometimes think Gartner MQs are like old Playboy magazines, full of good journalism but where nobody actually reads the articles.  The MQ document is 1/35th pictures and 34/35th text.  Read the text. There’s a lot of great insight in there — where they even touch on some of the issues I’m raising above.
  • My favorite quote:  “Although the base of cloud CPM applications is still larger for small and mid-market organizations, the number of larger organizations (more than $1 billion in annual revenue) turning to the cloud for CPM continues to increase.”  This is why I joined Host Analytics 2.5 years ago.  EPM is an amazing market.  The cloud is still only scratching the surface of the market.  We are the leader in taking up-market EPM applications to the cloud.  And cloud EPM is increasingly coming up-market.

You can download a free copy of the Gartner Magic Quadrant for Corporate Performance Management Suites 2015 via Host Analytics, here.

A Disney Parking Lot Attendant Gets More Training than Your Typical $250K Enterprise Sales Rep: Thoughts on Bootcamps

At Disney — a company that is truly focused on customer experience — every “cast member” (i.e., employee) gets six weeks of training before they see a “guest” (i.e., customer). “Face characters” (e.g., Snow White walking through the park) spend an additional 40 hours just watching and re-watching the movie to ensure they get every nuance right.

Oh, and how much training does your company give your $250K enterprise salesreps?

Anecdotally, I think the typical answer is a one-week bootcamp. Two weeks is on the long side. Once in a blue moon, you’ll hear 4 to 6 weeks, but that’s typically one to two weeks of corporate training followed by two to four weeks of deep technical training.

This is genuinely strange because a typical enterprise software or SaaS company freely spends between 40% and 100% of revenue on sales. Sales is typically the single biggest expense line in the firm. Sales runs 2-5x cost of goods sold.  It runs 2-5x R&D expense.  So, if we’re going to spend all this money on salespeople, then why don’t we want to train them?

I think there are a number of rationalizations:

  • “We hire experienced people so we don’t need to.” This is dangerous because your new people are experienced at someone else’s company and may have learned norms quite different from those you desire at yours.
  • “We train them on the job.” Either by throwing them in the pool and seeing if they sink or by building a conveyor-belt model where we hire folks as in-bound call-takers who we promote into outbound call-makers then into SMB reps then into mid-market reps. While there is nothing wrong with these models and they do very much help develop reps, it still doesn’t answer why we don’t give them deep training at the start.
  • “We never really developed it as a competency.” When you only have three reps you’re not going to create a six-week training program because — among other reasons — you don’t know what to teach. But as you scale your business that quickly becomes more excuse than reason.

I think the root answer is simple: most senior executives just don’t believe in training. (Think: “those who can, do; those who can’t, teach; and those who can’t teach do marketing.”)

Having competed against the output of some great internal training programs at Oracle and MicroStrategy, having created and run Business Objects University for several years, and then having gone through the outstanding on-boarding program at Salesforce, I’d like to share some perspective.

First, given my experience I would argue that by far the #1 key success criteria for these programs is a dictum from the CEO that they are important, they will be funded, and the organization will support them. Barring that, they get launched to lots of hype and then slowly erode into a self-fulfilling prophecy of mediocrity.

Here are some thoughts on how to run a great bootcamp.

  • Make it mandatory. Everybody goes. No one is too important to skip it from the new accountant to the new COO.
  • Make it long. Shoot for two weeks, minimum. Three is better. A double-dip is probably best of all (2 weeks initially followed by 3 months on the job followed by 2 weeks of reinforcement.)
  • Do it live. Some virtual pre-work and post-work is fine, but the core of your program should be live and in person. It shows commitment. It helps people build relationships. It enables better progress tracking and assessment.
  • Engage practitioners. Don’t learn how to sell from only a bootcamp trainer; hear from one of your top 5 reps on a rotating basis. (And pulling those top reps out of the field is an example of just one thing requires top-level support for the program.
  • Teach culture. Hit values. Train in how you define “The Your-Company Way.”
  • Be operational. Teach how the company wants deals entered in the pipeline, what your stage definitions are, and how to value deals. (These are critical items to maintaining a comparable set of pipeline metrics over time.)
  • Mix up the format. Have lectures, panels, individual exercises, group projects, videos, homework, reading, and team building exercises. Where applicable, do a volunteering session. (If volunteering is a key part of your culture, do some right from the get-go in the bootcamp – as Salesforce does.)
  • Keep it applied. Don’t just teach facts or theory (“Competitor A uses a proprietary, non-Excel formula language.”) Show them how to apply that fact in everyday life (e.g., suggest prospects to build some models to get a taste of what that feels like versus good-old Excel).
  • Everyone’s in sales. Teach everyone how the company sells, what problems it solves, and why customers buy from it.
  • Fire people who don’t take it seriously. The University head should be able to fire any employee during the training period. If you’re skipping sessions, not paying attention, late, disrupting, etc., then boom, you’re gone. It sends a message that won’t soon be forgotten.
  • Send home a report card. Build a culture where managers are embarrassed when their new hire gets a B- and the put people immediately on a performance plan when they get a C. List specific student strengths and development areas. Build the University program into the management process right from the start. Train managers on how work with fresh bootcamp graduates.
  • Try to use it for prediction. Give granular objective grades in different areas (e.g., delivery of corporate message, fluency in finance, consultative selling) along with an instructor success prediction and do regressions over time to see what really drives sales success as opposed to what you might think does. Try to answer the question: do people who do better in the University do better in real life?
  • Hire a consultant. My colleague Elay Cohen is a sales productivity expert, the author of Saleshood (Kellblog review here), and ran the outstanding program at Salesforce — I’m pretty sure he’d be happy to help you setup yours. You don’t have to invent this stuff anymore. Plenty of people know how to do it.

Finally, don’t stop with bootcamp. Build ongoing training programs that take care of your existing hires as much as your new ones. But that’s the subject of a different post.

Career Development:  What It Really Means to be a Manager, Director, or VP

It’s no secret that I’m not a fan of big company HR practices.  I’m more of the First Break all the Rules type.  Despite my general skepticism of many standard practices, we still do annual performance reviews at my company, though I’m thinking seriously of dropping them.  (See Get Rid of the Performance Review.)

Another practice I’m not hugely fond of is “leveling” which is the creation of a set of granular levels to classify jobs across the organization.  Leveling typically looks like this

level

While I am a huge fan of compensation benchmarking (i.e., figuring out what someone is worth in the market before they do by getting another job) for employee fairness and retention, I think classical leveling has a number of problems.

  • It is futile to level across functions. Yes, you might discover that a senior FPA analyst II earns the same as a product marketing director I, but why does that matter?  It’s a coincidence.  It’s like saying with $3.65 I can buy either a grande non-fat latte or a head of organic lettuce.  What matters is the fair price for each of those goods in the market, not they that happen to have the same price.  So I object to the whole notion of levels across the organization.  It’s not canonical; it’s coincidence.
  • Most leveling systems are too granular, with the levels separately by arbitrary characterizations. It’s makework.  It’s fake science.  It’s bureaucratic and encourages a non-thinking “climb the ladder” approach to career development.  (“Hey, let’s develop you to go from somewhat independent to rather independent this year.”)
  • It conflates career development and salary negotiation. It encourages a mindset of saying “what do I need to do make L10” when you want to say “I want a $10K raise.”  I can’t tell you the number of times I’ve had people ask for “development” or “leveling” conversations where I get excited and start talking about learning, skills gaps, and such and it’s clear all they wanted to talk about was salary.  #disappointing

That said, I do believe there are three meaningful levels in management and it’s important to understand the differences among them.  I can’t tell you the number of times someone has sincerely asked me “what does it take to be a director” or “how can I develop myself into a VP.”

It’s a hard question.  You can turn to the leveling system for an answer, but it’s not in there.  For years, in fact, I’ve struggled to deliver what I consider to be a good answer to the question.

I’m not talking about senior VP vs. executive VP or director vs. senior director.  I view such adjectives as window dressing or stripes:  important recognition along the way, but nothing that fundamentally changes one’s level.

I’m not talking about how many people you manage.  In call centers, a director might manage 500 people.  In startups, a VP might manage 0.

I’m talking about one of three levels at which people operate:  manager, director, and vice president.  Here are my definitions:

  • Managers are paid to drive results with some support. They have experience in the function, can take responsibility, but are still learning the job and will have questions and need support.  They can execute the tactical plan for a project, but typically can’t make it.
  • Directors are paid to drive results with little or no supervision (“set and forget”). Directors know how to do the job.  They can make a project’s tactical plan in their sleep.  They can work across the organization to get it done.  I love strong directors.  They get shit done.
  • VPs are paid to make the plan. Say you run marketing.  Your job is to understand the company’s business situation, make a plan to address it, build consensus and get approval of that plan, then go execute it.

The biggest single development issue I’ve seen over the years is that many VPs still think like directors. [1]

Say the plan didn’t work.   “But, we executed the plan we agreed to,” they might say, hoping to play a get-out-of-jail-free card with the CEO (which is about to boomerang on them).

Of course, the VP got approval to execute then plan.  Otherwise, you’d be having a different conversation, one about termination for insubordination.

But the plan didn’t work.  Because directors are primarily execution engines, they can successfully play this card.  Fair enough.  Good directors challenge their plans to make them better.  But they can still play the approval card successfully because their primary duty is to execute the plan, not make it.

VP’s, however, cannot play the approval card.  The VP’s job is to get the right answer.  They are the functional expert.  No one on the team knows their function better than they do.  And even if someone did, he or still is still playing the VP of function role and, as such, it’s their job – and no one else’s — to get the right answer.

Now, you might be thinking “glad I don’t work for Dave” right now — he’s putting failure for a plan he and the team agreed to on the back of the VP.  And I am.

But it’s the same standard to which the CEO is held.  If the CEO makes a plan, gets it approved by the board, and executes it well, but it doesn’t work, he/she cannot tell the board “but, but, it’s the plan we agreed to.”  Most CEOs wouldn’t even dream of saying that.  It’s because CEOs understand they are held accountable not for effort or activity, but results.

Part of truly operating at the VP level is to internalize this fact.  You are accountable for results.  Make a plan that you believe in.  Because if the plan doesn’t work, you can’t hide behind approval.  Your job was to make a plan that worked.  If the risk of dying on a hill is inevitable, you may as well die on your own hill, and not someone else’s.

Paraphrasing the ancient Fram oil filter commercial, I call this “you can fire me now, or fire me later” principle.  That is, an executive should never make or sign up for a plan they don’t believe in.  They should risk being fired now for refusing to sign up for the plan (e.g., challenging assumptions, delivering bad news) as opposed to halfheartedly executing a plan they don’t believe in, and almost certainly getting fired later for poor execution.  The former is a far better way to go than the latter.

This is important not only because it prepares the VP to be  CEO one day, but also because it empowers the VP in marking his/her plan.  If this my plan, if I am to be judged on its success or failure, if I am not able to use approval as a get-out-of-jail-free card, then is it the right plan?

That’s the thinking I want to stimulate.  That’s how great VP’s think.

# # #

Footnotes:

[1] Since big companies throw around the VP title pretty casually, this post is arguing that many of those VPs are actually directors in thinking and accountability.  This may be one reason why big company VPs have trouble adapting to the e-staff of startups.

Why Can’t PR People Do Math?

I think in today’s world that we need to ask PR people to be not just literate, but numerate.  What does that mean?

  • They need to do basic math correctly.  Most PR people think that going from size $100K to size $700K is 700% growth.  It’s 600%.  I cannot tell you the number of times I have caught this error.  Growth % = ((year N+1 / year N) -1).  2.4x is 140% growth.  1.3x is 30% growth.
  • They need to understand the law of small numbers as well understanding the scale of large ones.  It’s not hard to grow 1000% off a tiny base.  And the typical reader response to mega-growth claims is not “wow, look how big you are this year,” it’s “oh, I didn’t know how small you were last year.”  In addition, PR needs to understand the scale of large numbers — i.e., that 10% growth off $1B is $100M.  Technically speaking whenever company A is growing faster than company B, company B is losing relative market share.  However, remember that if you compare a $10M startup that doubled to a $1B that grew 10%, the latter company still had 10x the new sales of the former.  So you need to be careful making claims in that light.
  • They need to understand how people will react to the numbers.  There is tendency in PR to throw out any numbers you can because, sadly, much of the Silicon Valley trade press will consume them wholesale.  But PR needs to be careful.  Some analysts (e.g., the 451 group) are famous for detailed note-taking and cross-checking and will challenge you if your own figures are inconsistent over time.  In addition, there are fairly normal ratios for, e.g., sales/salesperson or revenue/employee so saying one thing definitely implies another.  Savvy readers will try to triangulate things like revenue, bookings, or cashflow based on the tidbits you hand out.  And if the triangulation produces inconsistent results, it’s going to be a headache for your company and drive credibility questions about the figures and your claims.
  • They need to understand what metrics mean.  One favorite PR trick is talk about undefined metrics like sales (e.g., “company reported that sales grew 57% last year”).  It sounds good.  But wait a minute — what’s “sales”?  Do you mean revenue (and if so, why not say it) or bookings (and if so, how you define it).  Another is to discuss poorly defined product-line growth rates, where companies try to classify anything they can as related to the BNI (big new initiative — e.g., cloud at most mega-vendors).  What do those numbers actually mean?  If a purchase order has products 1, 2, and 3 on it and has $100K at the bottom, how does the company allocate the sales across product lines and does it do so consistently over time.  Product line sales figures might sound meaningful but they are often not.  Another favorite is three-division company growing 10% where each division says they’re growing 30%.  Hey, wait a minute — that’s not possible.

If you net all this out, the best advice is that PR needs to become more like IR (investor relations).  IR people know their numbers.  They’re consistent about what they release over time.  They understand how people will triangulate and the implications of so doing.  And they ensure consistency of the message as told by both the English and the math.

[Rewritten and decomposed from a prior interim version, focusing the content to better align with the title.  I removed the “beware of SaaS Companies talking bookings” meme as, while it remains a great topic that raises interesting yellow/red flags, it’s not one you can reasonably expect a PR person to understand or control.]

Summary of the 4Q14 Fenwick & West VC Survey

Because I was reading it and had a minute, I thought I’d do a quick post summarizing the 4Q14 Fenwick & West Silicon Valley Venture Capital Survey (PDF).  As the name indicates, this is an ongoing quarterly survey  on the state of venture capital that pulls from many sources, integrating lots of data into a single picture.

Some highlights (glossary here):

  • Up rounds exceeded down rounds 79% to 6%, with 15% of rounds flat.
  • Average price up 115% in 4Q14, compared to 79% in 3Q14, and the highest value they’ve recorded since they started measuring this in 2005.  (Yes Virginia, prices are good.)
  • 50% of deals were in software companies
  • $14 B was invested in US VC-backed companies in 4Q14, the highest post-bubble amount yet.  (However, remember that during Bubble 1.0, the peak ran around $25B+/quarter.)
  • $49B was invested on the year.  (And you wonder why traffic so bad on 101.)
  • There were 21 VC-backed IPOs in 4Q14 which raised $3B, and 105 on the year.
  • There were 102 acquisitions of VC-backed companies for a total price of $32B in 4Q14 and 531 such deals on the year.
  • $33B was raised by VC funds in 2014, hitting 2005-2007 levels, but not coming close to the $106B raised in 2000.
  • China passed Europe in terms of VC funding raised, tripling from less than $5B in 2013 to more than $15B in 2014.  India more than doubled going from $2B to $5B.
  • Corporate venture capitalists invested $5B in 2014, the highest amount since 2000 (where it was $15B).
  • There are currently 225 accelerators worldwide which have assisted 4264 companies.  AngelList reported over $100M was raised in 2014 across 243 startups.  (This all contributes to a system imbalance where it’s relatively too easy to get angel money, resulting in a fairly large die-off rate between angel round and series A.)
  • When classifying VC deals by the university the CEO attended and then grouping by athletic conferences, the rankings go:  Pac 12, Ivy League, Big Ten, ACC, Big Tweleve, and SEC.  (I did my part for the Pac 12 in 4Q14 — Go Bears!)
  • The Silicon Valley Venture Capitalist Confidence Index published by USF reported confidence of 3.93 in 4Q14, up from 3.89 in 3Q14, and above the (eleven-year) average of 3.72.  Full report here.
  • 19% of rounds had a senior liquidation preference (to existing preferred, not just the common).  Reminder:  glossary here.
  • Only 5% of rounds had senior multiple liquidation preference.
  • 20% of rounds had participation in liquidation, down from a recent high of 34% in 2Q13.  53% of those that had participation, had it uncapped.
  • 5% of rounds had pay-to-play provisions.
  • 13% had redemption rights.

Managing the Fundamental Tension in Marketing

Say you’ve got a new product release.  You’re super excited about your app’s new Feature X.  It’s very innovative.  Product marketing sees it as long-needed differentiator.   Sales sees it as a silver bullet:  “with Feature X, our competition is screwed.”  Everyone’s excited.

Then it happens.  A regional sales VP says, “Hey, marketing, we’ve got a do a webinar on Feature X.”  Part of you is tempted to do it because “sales is the customer,” but deep down you also know that no one will come.  While highly differentiating, Feature X drives real benefits only indirectly and is fairly complex to understand.

Herein lies what I call the fundamental tension in marketing:

What we want to say vs. what they want to hear

I love to make physical analogies for marketing problems because I think it makes them visceral.  Most of marketing, in my opinion, can be modeled off a tradeshow booth.  “Hey, should we gate this white paper on the web?”  Well, what would you do if you were in a tradeshow booth and a student doing a research paper walked up and asked for a copy?  Would you say no (generating ill will and not spreading the message), would you say yes but not run his card (sharing the information, but not generating a fake lead), or would you say yes and run his card (strictly following procedure, but generating a “lead” that will might get $100 worth of processing before your organization figures out it’s worthless.)

The right answer:  give him the white paper – but don’t run the card.

At the risk of over-extending my metaphor, let’s say we’re working with a big tradeshow booth this time; one big enough that it has a little theater inside where we run shows (i.e., movies) every hour.  We have control over two things:  the poster we put up to advertise the shows and the content of the movie that we run.  (If you prefer, you can just use a real movie theater as the metaphor and still stick with the poster vs. the movie concept, which is the real point.)

So when thinking about the fundamental tension:

  • The poster represents what they want to hear. After all, if we want to get people to come into the theater we’re going to need to make a poster that is compelling to them.
  • The movie represents what we want to say. This might be our overall story, our view of the market, or why our new features belong on the industry agenda.

Now some marketers might say put “Free Beer Here” on the poster and if we did, we would most certainly pack the theater.  The problem is most people would leave during the movie, few prospective actual buyers would hear our message, and we’d have spent a lot of money on free beer.

A bad CMO declares victory in this scenario, “We packed the house!”  A good one declares failure, “We generated no real opportunities for sales.”  Take a moment to think ponder which type of marketer you really are.  Deep down, are you more excited about leads than opportunities?  If so, you’re going to need to rewire your brain in order to be successful.

No CEO wants a bunch of deadbeats drinking his/her beer if they have no choice of buying his/her technology.

The magic in resolving the fundamental tension is two-fold:

  1. First, recognize that it exists.  The topics we want to talk about are not typically those about which the world wants to hear about.  If you fail to recognize this, you condemn yourself to running company-centric, product-oriented marketing that attracts fewer leads.  If there’s one thing to remember from this post, it’s this:  simplify and clarify the discussion with sales by talking about the poster and the movie.  Typically sales blurs them all up.
  1. Second, learn how to build bridges. This is the art – it’s not easy to figure out which poster attracts the maximum number of potentially qualified buyers who will stay and watch the movie so that you get your chance to “set the agenda” and talk about what you want say.

.When it comes to building bridges, there are three things to consider:

  • Start with the customer. Find or execute surveys of hot topics or key priorities among your target buyers.  These will help you determine “what’s on their mind” and thus “what they want to hear.”
  • Find your angle. Find a few pre- or post-sales consultants knowledgeable in the space to help you determine if your company has a story, or angle, in addressing those top priorities.  In a perfect world, there’s a straight line between the priority and your product.  Sometimes you need to connect a few dots.  Beware, however, building “a bridge too far” where the linkage is too subtle or indirect.
  • A/B test. The great thing about today’s environment is that, with a little creativity and some discipline, you can run 3-5 different posters for the same movie.  This will enable you to see which posters (e.g., PPC ads, web banners) in which locations (sites, networks, audience slices) most cost-effectively attract not only movie-goers, but more importantly people who watch the movie, take the next-step, and eventually become sales opportunities.  helps you determine the top priorities in the mind of your audience.

Kellblog Ten Predictions for 2015

As we move into the third week of January, I figured it was “now or never” in terms of getting a set of predictions out for 2015.  Before jumping into that, let’s take a quick review of how I did with my 2014 predictions and do some self-grading.

  1. 2014 to be a good year in Silicon Valley.  Correct.
  2. Cloud computing will continue to explode.  Correct.
  3. Big data hype will peak. Gartner seems to agree, placing it in August midway past peak on the way to trough of disillusionment. Correct.
  4. The market will be unable to supply enough data science talent. Mashable is now calling data scientist 2015’s hottest professionPer McKinsey, this is a problem that’s going to continue for the next several years. Correct.
  5. Privacy will remain center stage.  Correct.
  6. Mobile will continue to drive both consumer and (select) enterprise. I got the spirit correct on this one, but I think the core problem is probably better thought of as multi-device access to cloud data than mobile per se.  That is, it’s not about using Evernote on my phone, but instead about uniform access to my cloud-based notes from all my mobile (and non-mobile) devices. Basically, correct.
  7. Social becomes a feature, not an app. Correct again.  The struggles of companies like Jive only validate that (enterprise) social should be a feature of virtually all apps, and not a category unto itself.
  8. SAP’s HANA strategy actually works. Well SAP didn’t seem to agree with this one, when Hasso Plattner wrote a post blasting customers for not understanding its business benefits.  But my angle was more – the merits of the strategy aside – when a company the size of SAP shows total commitment to a strategy it’s going to get results.  And it has.  And SAP continues to drive it.  Mostly correct.
  9. Good Data goes public. While this didn’t happen, I continue to believe that Good Data has a smart strategy and a solid product.  They raised $25M in September.  Maybe this year they will make me an honest man.
  10. Adaptive Planning (now, Adaptive Insights) gets acquired by NetSuite. This didn’t happen, either.  The prediction was based on the fairly well known play of OEM-ing something before acquiring it.  Time may well prove me right on this one, but a swing-and-a-miss for 2014.

Our “bonus” prediction last year was that my company, Host Analytics, would have a great year and indeed we did.  We grew new subscriptions well in excess of 100%, making us, I believe, the fastest growing company in the category.  We launched a new sales planning solution as part of our vision to unite financial and operational planning.  We hired scores of great new people to join us on our mission to create a great EPM company, one that transforms how enterprises manage their financial performance.  And we raised $25M in venture capital to boot.

So, all in all, for the 2014 predictions, let’s call it 8.5 out of 11.

Here are my predictions for 2015.

  1. The good times continue to roll in Silicon Valley. If you feel “bubble,” remember that unlike in the dot-com days that most companies experiencing great success today have real, often recurring, revenue and real customers.   From a cycle perspective, to the extent there is a bubble coming, I’d say we’re in 1999 not 2001.
  1. The IPO as a down-round trend continues. One of the odder things about this time period is that I’m repeatedly hearing that successful IPO companies are pricing at down-rounds relative to their last private financings.  This doesn’t spell danger in general – because the public market valuations are both healthy and supportable – it just suggests a highly competitive later-stage private financing market is overbidding prices.  I suspect that will calm down in 2015 but down-round IPOs will continue in 2015.
  1. The curse of the megaround will strike many companies and CEOs. As part of the prior bullet companies are now often able to raise unprecedented amounts of capital at high valuations.  While those companies today may celebrate their $100M, $150M or $200M+ financing rounds, tomorrow they will wake up with a hangover that looks like:  huge pressure to invest that money for growth, even in dubious growth opportunities; anxious board members who need a 3x return in three years atop already stratospheric valuations; companies missing plan when the dubious growth opportunities don’t deliver; and CEOs who get replaced for missing plans that were unrealistic in the first place.  Before you take a megaround, be careful what you wish for — you sometimes get it.
  1. Cloud disruption continues. Megavendors will continue to wrestle cloud disruption and their cloud strategies.    They will continue to talk about success and high growth in the 10% or less of their business that is cloud, while asking investors to ignore the lack of health in the 90% that is non-cloud.  As part of a general Innovator’s Dilemma problem, they will be forced to explain and defend cloud strategies that will hopefully help them long term but depress results in the short term (as SAP had to do last week.)
  1. Privacy becomes a huge issue. People who were once too busy to care when Facebook changed their security setting are now asking who can access what and how.  The Internet of Things will only exacerbate this focus as more data than ever will be available.  In the past, you could see my pictures and status updates.  Now you can know where I am, when, how many hours I sleep at night, when I exercised, what temperature I set my thermostat to, and when I’m home.  The more data that becomes available, and the more readily you can be de-anonymized, the more you will start monitoring your privacy settings and previously unread site terms and conditions.
  1. Next-generation apps continue to explode. Apps like Slack and Zenefits will continue to redefine enterprise software.  While Slack is a technology, design, and integration play in the collaboration space, Zenefits is more of a business-model disruption play (i.e., give us the rather large commissions you rather invisibly paid your health insurance broker and we’ll give you free, high-quality HR software).  Either way, consumerization, design, and the search for new business models / revenue opportunities will continue.
  1. IBM software rebounds. IBM used to be a stronger player in software than it is today (e.g., recall that they invented the relational database). Watson aside, things have been pretty quiet on the IBM software front. Cloud-wise, while they claim to have a $7B business, it’s pretty invisible to me, and it does seem that Amazon has beaten them in low-level categories like IaaS.  While I’m not sure what happened – I don’t track them that closely – they do seem to have just faded away.  Once thing’s for sure – it can’t continue.  While there are contradicting stories in recent press, IBM does appear to be in the midst of a large re-organization, and I’m going to bet that, as a result, they come to market with a stronger software and cloud story.
  1. Angel investing slows. Much has been written about the financing chokepoint where tens of thousands of angels are funding companies that then need to get in line to get funded by the approximately 100 or so VCs who do A rounds.  The first-order result is that many companies think “wow this is easy” on raising a angel round only to die 12-18 month later when they fail to raise VC.  The second-order result, which I think will start kicking in this year, is that angel money will be harder to come by as the system corrects back to a balanced state.
  1. The data scientist shortage continues. With more “big data” and a huge supply of analytic tools and computing power, the limiting factor on analysis-driven business is neither data nor technology.  It’s our ability to find people who can correctly leverage it.  Tell every college kid you know to take lots of stats, analytics, and computing classes.  Or better yet, to go get a degree in data science.
  1. The unification of planning becomes the top meme in enterprise performance management (EPM). EPM has a long history of helping finance departments prepare annual operating budgets and financial reports, but increasingly—in recent years – planning has quietly decentralized to the various departments and divisions within the enterprise.  For example, sales ops increasingly builds the sales plan, marketing ops the marketing plan, and services ops the consulting and professional services plan.   (This is why I sometimes call this trend the “rise of the ops person” as they are increasingly acting as stealth FP&A.)  What’s needed is to unite all these plans and put them on a common planning framework so the CFO and CEO can do what-if analysis and scenario planning holistically across the organization.

Some High-Tech Career Counseling Tips

I get a fair number of emails and calls from former colleagues and friends asking for career advice.  I’m always happy to provide it and the process of doing so is both thought-provoking and fun.  I have a learned a lot from having these conversations and have noticed a few patterns and principles in that process.

I’ll share them in this post.

  • You are responsible for your career development.   Some folks, particularly at larger companies, seems to think the onus is on the company to provide career development for you.  While I’d say it is indeed smart for larger companies to do this as a retention incentive, it does not change the simple fact that you and you alone are responsible for your career development.  You can use company-provided mentors, coaches, courses, rotations as help, but in the end — at the risk of sounding existentialist — you and you alone will have to live the results and ergo you and you alone are responsible for your career development.  Don’t confuse assistance with responsibility.
  • Brands matter.  People are going to look first at where you worked and then second at what you did.  So if you have an MIT MBA, then worked at Salesforce for 5 years, and then did 3 two-year stints at failed startups, it’s time to go to NewRelic or Zendesk or some other hot brand to polish up the resume.  You need to actively manage the brands on your resume.  It’s fine to take risks and if they work out well, then great.   A failed startup or two is a red badge of courage in Silicon Valley.  Just don’t get too many of them in a row.
  • Patterns matter.  To the prior point, everyone is looking for a pattern of success.  Success ideally meaning you had a growing and successful career at a growing and successful company.  Rising up a shrinking organization at a dying startup doesn’t do much for your CV.  Growing through an organization as a company goes from $10M to $100M does a lot.  Why?   Because companies want to hire people on upward trajectories who have experienced growth.  (Why?  Because invariably they are planning to grow and want you to help them do so.)
  • Do new things at your current employer.  Beware any employer willing to hire you to do something you haven’t done before, because in theory they shouldn’t be willing to.  If you look at the matrix below, companies will periodically give new opportunities to known performers in order to help develop and retain them.  But why would you ever hire a total stranger and pay them to learn on-the-job in doing something they haven’t done before.  When you move across companies you should plan on doing things you know how to do, and thus when you are at a company and performing well, you should be pushing to learn new things.

  • Don’t take job B and hope to switch into job A.  Because brands matter, people are sometimes tempted to join a great organization in a bad job.  “I’m really a product marketing director, but the only job they had open was competitive analyst, so I’ll take that and switch.”  There are two problems with this logic:  (1) the second you join the company as competitive analyst you are a competitive analyst (you’ll be the only person thinking you’re a slumming product marketing director), and (2) if you are not great at job B then you probably won’t be offered job A.  Sometimes people do this strategy and pull it off.  But at least understand the risk:  it’s a Hail Mary play if there ever was one.
  • Categories matter.  In addition, you need to manage the categories in which you work.  You might see yourself as a general software marketer, but if you’ve worked at BEA, Oracle, VMware, and Cloudera, the world is going to see you as a middleware / database / infrastructure person and you will have trouble finding, for example, jobs at SaaS applications companies.  Be mindful of the positioning you are creating by virtue of the categories you work in.  The world does not see you as a generalist.
  • Boxes matter.  Like it or not and for better and for worse, Silicon Valley — the valley of innovation — is incredibly “in the box” when it comes to hiring.  Companies want to hire experienced people in known roles.  This means you need to be careful in managing your career because sometimes companies create unusual roles (e.g., chief of staff, certain CTO roles, certain VP individual contributor roles, various special project roles) that might leverage your strengths and meet your interests but end up damaging your resume.  While it can be fun to spend some time out of the box, be careful that you end up on no headhunters to-call list.  Put in reverse, how many people are going to to call a headhunter and say “get me a senior product manager out of Salesforce” vs. “get me a interdepartmental facilitator at Unicornia.”  Some new roles (e.g., sales productivity) get institutionalized and become “normal” over time.  Most don’t.
  • Take the time to network, but with the intent to do your job better (e.g., best practice sharing), not with the intent to find your next job.  If there’s no obvious “club” at which to do so, then make your own.  One of my CMOs called our board members for referrals and created a portfolio-company CMO club that met once/month to share best practices.   You’ll get both better connected and, more importantly, better at your job.
  • Don’t be too busy to learn.  Read books, attend webinars, and ask to attend executive executive programs.  (If you can get your company to pony up, the executive education programs offered by the Stanford Graduate School of Business are excellent.)
  • Make VCs money or go to Stanford.  To the extent you want work at and/or found startups, remember my (only half-joking) view of how VCs view people, below.  The moral is that one of the best opportunity-creators you can have is a VC for whom you’ve made money.  So get to know the VCs on your board if you can — and yes, don’t forget to make them money (and yourself some in the process).  Either that or go to Stanford.  Ideally, both.  :-)

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