Monthly Archives: February 2019

The Three Marketing Books All Founder/CEOs Should Read

Posted on February 28, 2019 | 6 comments

Few founder/CEOs come from a marketing background; most come from product, many from engineering, and some from sales, service, or consulting.  But few — ironically even in martech companies — grew up in the marketing department and consider marketing home.

When you combine this lack of experience with the the tendency that some marketing leaders and agencies have to deliberately obfuscate marketing, it’s no wonder that most founder/CEOs are somewhat uncomfortable with it.

But what’s a founder/CEO to do about this critical blind spot?  Do you let your CMO and his/her hench-agencies box you out of the marketing department?  No, you can’t.  “Marketing,” as David Packard once famously said, “is too important to be left to the marketing department.”

I recommend solving this problem in two ways:

  • One part hiring:  only hire marketing leaders who are transparent and educational, not those who try to hide behind a dark curtain of agencies, wizardry, and obfuscation.  Remember the Einstein quote:  “if you truly understand something you can explain it to a six-year old.”
  • One part self-education.  Don’t fear marketing, learn about it.  A little bit of fundamental knowledge will take you a long way and build your confidence in marketing conversations.

The problem is where to begin?  Marketing is a broad discipline and there are tens of thousands of books — most of them crap — written about it.  In this post, I’m going to list the three books that every founder/CEO should read about marketing.

I have a bias for classics here because I think founder/CEO types want foundational knowledge on which to build.  Here they are:

  • Positioning by Al Ries and Jack Trout.  Marketers frequently use the word “positioning” and after reading this classic, you’ll know exactly what they mean [1]. While it was originally published in 1981, it still reads well today.  This is all about the battle for the mind, which is the book’s subtitle.
  • Ogilvy on Advertising by David Ogilvy.  Ogilvy was the founder of marketing powerhouse agency Ogilvy and Mather and was the king of Madison Avenue back in the era of Mad Men.  Published in 1963, this book definitely shows signs of age, but the core content is timeless.  It covers everything from research to copy-writing and is probably, all in, my single favorite book on marketing. [2]
  • Crossing the Chasm by Geoffrey Moore.  The textbook classic Silicon Valley book on strategy.  Many people refer to the chasm without evidently having even read the book, so please don’t be one of them.  Published in 1991, it’s the newest of the books on my list, and happily Moore has revised it to keep the examples fresh along the way.

If I had to pick only one book, rather than suggesting original classics I’d revert to a summary, Kotler on Marketing, an overview written by Philip Kotler [3], author of one of the most popular marketing college textbooks, Marketing Management. [4]

If reading any of the above three books leaves you hungry for more (and if I were permitted to recommend just a few follow-up books), I’d offer:

  • As a follow-up to Positioning, I’d recommend The 22 Immutable Laws of Marketing also by Al Ries and Jack Trout and also written in the same accessible style.  This book would place second in the “if I only had one book to recommend” category and while less comprehensive than Kotler it is certainly far more accessible.
  • As a follow-up to Ogilvy on Advertising, and for those who want to get closer to marketing execution (e.g., reviewing content), I’d recommend The Copywriter’s Handbook by Robert Bly.  Most founder/CEOs are clear and logical writers who can get somewhat bamboozled by their marketing teams into approving gibberish copy.  This book will give you a firmer footing in having conversations about web copy, press releases, and marketing campaigns.
  • As a follow-up to Crossing the Chasm, I’d recommend Good Strategy, Bad Strategy, an excellent primer on strategy with case studies of great successes and failures and Blue Ocean Strategy, a great book on how to create uncontested market space and not simply compete in endless slug-fests against numerous competitors — which is particularly relevant in the current era of over-populated and over-funded startups. [5]

As founder/CEO you run the whole company.  But, for good reason, you might sometimes be hesitant to dive into marketing.  Moreover, some marketeers like it that way and may try to box you out of the marketing department.  Read these three books and you’ll have the tools you need to confidently engage in, and add value to, important marketing conversations at your company.

# # #

Notes

[1]  The Wikipedia entry on positioning isn’t a bad start for those in a hurry.

[2] Right from the second sentence, Ogilvy gets to the point:  “When I write an advertisement, I don’t want you to tell me that you find it ‘creative.’   I want you to find it so interesting that you buy the product.”  Love that guy.

[3] Of 4 P’s fame.  Kotler’s 4 P’s defined the marketing mix:  product, place, price, and promotion.

[4] Kotler on Marketing is deliberately not a summarized version of his classic, 700-page textbook, but alas it’s still written by someone who has produced numerous textbooks and nevertheless has a textbook feel.  It’s comprehensive but dry — especially by comparison to the others on this list.

[5] I can’t conclude any post on marketing thoughts and thinkers without a reference to one of the great marketing essays of all time, Marketing Myopia, by Theodore Levitt.  It’s old (published in 1963) and somewhat academic, but very well written and contains many pithy nuggets expressed as only Levitt could.

6 Comments

Posted in CEO, Marketing, Startups, Strategy, Uncategorized, VC

Video of my SaaStr 2019 Presentation: The Five Questions Startup CEOs Worry About

Posted on February 26, 2019 | 1 comment

A few days ago, Jason Lemkin from SaaStr sent me a link to the video of my SaaStr Annual 2019 conference presentation, The Five Questions Startup CEOs Worry About. Those questions, by the way, are:

  1. When do I next raise money?
  2. Do I have the right team?
  3. How can I better manage the board?
  4. To what extent should I worry about competition?
  5. Are we focused enough?

Below is the video of the thirty-minute presentation.  The slides are available on Slideshare.

As mentioned in the presentation, I love to know what’s resonating out there, so if you ever have a moment where you think –“Hey, I just used something from Dave’s presentation!” — please let me know via Twitter or email.

1 Comment

Posted in CEO, Competition, Leadership, Management, SaaS, SaaStr, Strategy, VC

Hiring Profiles: Step 0 of a Successful Onboarding Program

Posted on February 21, 2019 | 1 comment

Happily, in the past several years startups are increasingly recognizing the value of strong sales enablement and sales productivity teams.  So it’s no surprise that I hear a lot about high-growth companies building onboarding programs to enable successfully scaling their sales organizations and sustain their growth.  What’s disappointing, however, is how little I hear about the hiring profiles of the people that we want to put into these programs.

Everyone loves to talk about onboarding, but everybody hates to talk about hiring profiles.  It doesn’t make sense.  It’s like talking about a machine — how it works and what it produces — without ever talking about what you feed into it.  Obviously, when you step back and think about it, the success of any onboarding program is going to be a function of both the program and people you feed into it.  So we are we so eager to talk about the former and so unwilling to talk about the latter?

Talking about the program is fairly easy.  It’s a constructive exercise in building something that many folks have built before — so it’s about content structuring, best practice sharing, and the like.  Talking about hiring profiles — i.e., the kind of people we want to feed into it — is harder because:

  • It’s constraining.  “Well, an ideal new hire might look like X, but we’re not always going to find that.  If that one profile was all I could hire, I could never build the sales team fast enough.”
  • It’s a matter of opinion.  “Success around here comes in many shapes and sizes.  There is not just one profile.”
  • It’s unscientific.  “I can just tell who has the sales gene and who doesn’t.  That’s the hardest thing to hire for.  And I just know when they have it.”
  • It’s controversial.  “Turns out none of my six first-line sales managers really agree on what it takes — e.g., we have an endless debate on whether domain-knowledge actually hurts or helps.”
  • It’s early days.  “Frankly, we just don’t know what the key success criteria are, and we’re working off a pretty small sample.”
  • You have conflicting data.  “Most of the ex-Oracle veterans we’ve hired have been fish out of water, but two of them did really well.”
  • There are invariably outliers.  “Look at Joe, we’d never hire him today — he looks nothing like the proposed profile — but he’s one of our top people.”

That’s why most sales managers would probably prefer discussing revenue recognition rules to hiring profiles.  “I’ll just hire great sales athletes and the rest will take care of itself.”  But will it?

In fact, the nonsensicality of the fairly typical approach to building a startup sales force becomes most clear when viewed through the onboarding lens.

Imagine you’re the VP of sales enablement:

“Wait a minute. I suppose it’s OK if you want to let every sales manager hire to their own criteria because we’re small and don’t really know for sure what the formula is.  But how am I supposed to build a training program that has a mix of people with completely different backgrounds:

  • Some have <5 years, some have 5-10 years, and some have 15+ years of enterprise sales experience?
  • Some know the domain cold and have sold in the category for years whereas others have never sold in our category before?
  • Some have experience selling platforms (which we do) but some have only sold applications?
  • Some are transactional closers, some are relationship builders, and some are challenger-type solution sellers?”

I understand that your company may have different sales roles (e.g., inside sales, enterprise sales) [1] and that you will have different hiring profiles per role.  But you if you want to scale your sales force — and a big part of scaling is onboarding — then you’re going to need to recruit cohorts that are sufficiently homogeneous that you can actually build an effective training program.   I’d argue there are many other great reasons to define and enforce hiring profiles [2], but the clearest and simplest one is:  if you’re going to hire a completely heterogeneous group of sales folks, how in the heck are you going to train them?

# # #

Notes

[1] Though I’d argue that many startups over-diversify these roles too early.  Concretely put, if you have less than 25 quota-carrying reps, you should have no more than two roles.

[2] Which can include conscious, deliberate experiments outside them.

 

 

1 Comment

Posted in Recruiting, Sales, Sales Model, Salesops, Scaling, Startups, Uncategorized, VC

Let’s Take the Cult out of Silicon Valley Culture

Posted on February 13, 2019 | 1 comment

I am big believer in strong corporate cultures.  Culture can be used to set powerful norms.  Culture can bind people in an organization to a common set of values bigger than their quarterly objectives and key results (OKRs).  Culture helps attracts the right people to your organization – and can drive out the wrong ones when they get swarmed with corporate antibodies for showing the wrong values and behaviors.

Culture, to paraphrase Henry Ford’s thoughts on quality, is what happens when no one is watching.

But never forget the first four letters of culture spell “cult” and too often, in Silicon Valley at least, corporate cultures become corporate cults:

For many Silicon Valley companies, culture is a point of pride and is meticulously captured in long slide presentations, such as the Netflix or HubSpot culture decks. [2]

When culture turns to cult in Silicon Valley, it’s often arguably benevolent – a strong leader espousing a visionary worldview combined with positive incentives for employees to spend as much time as possible with each other and/or at work.  The company provideth all:  free transportation, interesting work, fun recreation, great food, social events, perhaps (indirectly) even a significant other.  So why not spend all your time with the company? [3]

But sometimes Silicon Valley cults are not benevolent – Theranos being the best recent example.  Continuing to work in such environments, prioritizing the needs of the cult over common sense and business ethics can do lasting damage to your personal relationships, to your health,  and to your career.

cultsI first started studying corporate cults when Business Objects was competing with MicroStrategy back in the 1990s.  I found this book, Corporate Cults:  The Insidious Lure of the All-Consuming Organization, and had a few conversations with its author, Dave Arnott.

The first thing I learned from Dave was that, if you’re competing against a cult, that you should not attack it.  Attacking it, per Dave, only makes the cult stronger as the attack drives member together to defend the cult.

Consider some of the following similarities between cults and startups:

  • Charismatic leadership. Startups are often led by charismatic people, passionate about their beliefs and persuasive that the company is on a broader mission. [4]
  • Isolation from friends and family. This happens naturally at startups with long work hours, but is often exacerbated by the culture committee’s active social and events calendar.
  • Homogeneous recruiting. MicroStrategy supposedly preferred recruiting in its early days not just out of MIT, but out of one specific fraternity.  Many startups recruit similar people, all from the top programs across the country.
  • Hazing and rites of passage. Many startups have rigorous bootcamps where only the best get through.  Trilogy’s three-month bootcamp was the intense I’ve heard of.
  • Elitism.  Once recruited and having passed bootcamp, members are reminded of how much better they are than anybody else.  For example, HubSpot loved to tell recruits (based on specious logic) that it was harder to get into HubSpot than Harvard.
  • Specialized vocabulary.  At HubSpot, you’re not an employee, but a “HubSpotter.”  You don’t delight your customers, you give them “delightion.”  No one ever “quits” or is “fired,” former employees “graduate.”  How pleasant.
  • Demands for absolute loyalty.  Theranos did this frequently: “if anyone here believes you are not working on the best things humans have ever built, of if you’re cynical, you should leave.”
  • Excommunication of former members.  Former employees are more “dead to us” than “working somewhere else.”  Theranos was particular brutal in this regard, not only frowning on continuing relationships with former employees but subjecting them to constant surveillance and stunning legal harassment.

I’m not saying long work hours, free lunch, and and ping pong tables are bad.  I am saying that many Silicon Valley cultures border on cults.  Leaders should pay attention to this and try to avoid falling into common cult patterns, for example, by ensuring diverse recruiting programs, by building on-boarding programs that are more training than brainwashing, and by creating a culture that values dissenting opinions.  [5]

Employees should keep an eye out for lines getting crossed.  As they say with authoritarian leadership, it’s a boiled-frog problem — it happens slowly, you don’t notice any changes, and then wake up one day in an authoritarian regime.  Don’t let that happen to you, waking up one day to discover that you’re working at a malevolent corporate cult.

# # #

Notes

[1] Hint:  if everything is too secret, if management is routinely caught lying to customers and investors, if anyone who challenges management is summarily fired, and if you hear things like “if you don’t believe [our new product] is the most important thing humanity has ever built, you should quit now” – then you should probably go find a new job.

[2] Which nevertheless didn’t stop HubSpot from getting a good mocking in Disrupted: My Misadventure in the Startup Bubble.

[3] Some would certainly argue that even this is unhealthy.  Dave Arnott would argue there should be a line between “who are we” and “what we do.”  Even benevolent cults somewhat dissolve this line.

[4]  Which was so marvelously parodied in HBO’s Silicon Valley in a minute-long montage of founders pledging “to make the world a better place through Paxos algorithms” or “make the world a better place through canonical data models to communicate between endpoints.”

[5] Which is particularly important in a culture led by a strong leader.

 

 

1 Comment

Posted in Culture, Leadership, Management, Uncategorized

Price Qualification: The Tiffany Way

Posted on February 10, 2019 | 1 comment

Most salespeople are familiar with so-called BANT qualification:  does the prospect have Budget, Authority, Need, and Timeframe in order to make a purchase?  While Solution Selling purists dislike BANT (arguing that it’s great way to find existing deals that have been already rigged for the competition), most sales organizations today use BANT, or some form of it, for lead qualification and scoring.  Typically, in an enterprise SaaS company, a sales development rep (SDR) will not pass an opportunity to sales unless some form of BANT qualification has been performed.

The purpose of this post is to drill into how you should do price (i.e., budget) qualification, which I believe is far more subtle than it appears:

  • People can sometimes spend far more than they are spending (and/or imagine they can spend) once they realize the total cost of owning their current system and/or the total benefits of owning a superior one.  Great salespeople, by the way, help them do precisely that.
  • SDRs barking average configuration prices or, worse yet, price list items (e.g., “enterprise edition has a base fee of $100K/year plus $2.5K per admin user/year”) can either scare away or anchor bias prospects to given price points.

For example, let’s say that your company sells a high-end planning/budgeting system (average cost $250K/year) and you find a prospect who is spending $50K/year for their existing planning/budgeting system, which isn’t delivering very good results.

  1. It’s inflexible and doesn’t allow the VP of Finance to make the reports the CFO repeatedly requests.
  2. It’s arcane and requires highly paid consultants to come several weeks/quarter in order to make changes and performance maintenance on the basic setup.
  3. It’s slow, so users are frustrated trying to load their budgets, and instead mail them to Finance via spreadsheets, asking Finance to do the loads, creating a significant amount of incremental work for the finance team.

How are we supposed to price qualify this opportunity?  Ask the prospect:

  • How much they want to spend?  Answer:  as little as possible.
  • How much budget they have?  Answer:  $50K.
  • How much they are paying for the existing system?  Answer:  $50K.

As an SDR, are you supposed to pass this ostensibly $50K opportunity to a salesrep who normally does $250K deals [1]?  If you’re smart, you know they have the money — those consultants in problem 2 might run $100K/year, they probably have to hire an extra analyst or two to solve problem 3 at $80K/year each, and problem 1 — which is career threatening for the VP of Finance — is, as Mastercard likes to say, “priceless.”

What’s more, what do you say if the prospect tries to price qualify you?

You know, we don’t have a lot of money for this project so I need to know the typical price of your system?

What do you say then?  $50K and jeopardize the deal downstream when the salesrep proposes $250K?  $250K and possibly scare them off at the start — even though you know the total cost of their existing system might be bigger than that today?

Capture

I’ve always liked Tiffany’s as a reference point for this.  As you may know, most Tiffany’s stores are divided in two.  On one side — typically the smaller, more crowded one — you can buy jewelry from $200 to $2,000.  Then there’s the other side, where the security guard hangs out, that’s bigger and less crowded, and where the jewelry costs from $10K to $200K+.

The thing I find funny about Tiffany’s is that somehow, magically, most people seem to figure out what side they belong on.  And when they don’t, the staff don’t ask you how much money you have — they tell you broad price ranges on each side of the store.

The keywords, in an enterprise software context, being “broad” and “ranges.”  So, in our scenario, I think the best initial answer to the pricing question is:

That’s a hard question to answer at this point.  Each customer and every situation is different.  Our systems scale across a broad range of needs and, as a result, prices typically range from $50K on the low end to $500K+ on the high-end.  Based upon what I know about your situation, I’d recommend that you have a conversation with one of our account managers so we can better understand your challenges, our ability to meet them, and establish a clearer price point for so doing.

Your goal is to neither scare them off nor anchor bias them to a lower price (“sure we can do that for $50K”) that later results in disappointment or, worse yet, a feeling your company can’t be trusted.

Finally, the great part about the Tiffany analogy is that most enterprise software companies actually do have both sides of the store — corporate sales and enterprise sales, often each selling different and appropriately priced editions of the software. While few SaaS companies actually segment between the two based on deal size, they typically use other variables that are intended to act as direct proxies for it.

# # #

Notes

[1] The answer in most SDR models would be “yes, just pass it” so the hard part isn’t the decision to pass it, but how to do so without anchor biasing the prospect to a $50K price.  (“Whoa, the SDR told me you could do this for $50K; he asked how much budget I had and I told him precisely that.”)

 

1 Comment

Posted in SaaS, Sales, Uncategorized

Tagged