Category Archives: Positioning

How To Build a Marketing Machine, Presentation from a Balderton Capital Meetup

I hopped over to London a few weeks back to visit my friends at Balderton Capital (where I’m now working as an EIR) and during the visit we decided to host a meetup for portfolio company founders, CEOs, and CMOs to discuss the question of how to build a marketing machine.

We based the meetup on the presentation I recently delivered at SaaStock EMEA of the same title, but in a pretty compressed twenty-minute format.  This time, we took closer to 40 minutes and had some fun conversation and Q&A thereafter.

This is a hot topic today because in this era of high growth, flush funding, and rapid scaling, just about everyone I know is trying to turn their marketing into a machine so they can push the levers forward and grow, grow, grow.  This presentation talks about how to do that.

The slides from the presentation are embedded below.  You can find a video of a private recording of the presentation on the Balderton website.

Three People To Call When You Need Help with Positioning

Lately, I’ve received some consulting inquiries where companies are asking for help with positioning and messaging.  While that’s definitely an area of interest and passion, my business model is advice-as-a-service (AaaS) — I work with a smaller set of companies, on a broader set of issues, over a longer period of time.  So I’m not really looking for such consulting projects myself.

Thus the purpose of this post is to offer a little quick advice on the subject and then refer readers to three people I’d recommend to help with positioning and messaging in enterprise software.

Quick advice:

The three people I’d call for help with positioning would be:

  • Crispin Read, the single best positioning and messaging person with whom I’ve ever worked.  With a scalpel of a marketing mind, he’s not going to tell you what you want to hear, but he will cut through the junk in your thinking and distill your message to its essence.  I’m not sure how much consulting he’s doing these days because he’s trying to drive scale with his product marketing community (PMMHive) and Product Marketing Edge.  But I’d ping him.
  • Jeffrey Pease, who runs a NY-based consulting business, Message Mechanics.  Like Crispin, he was on the marketing team at Business Objects back in the day, and he is very, very good at messaging.  He popped up back in my life via Bluecore who was droning on about this messaging wizard they loved working with — only for me to discover that I’d worked with him in the past.  Testimonials on Jeffrey’s website include Bluecore, Coupa, Veeva, and well, Crispin (when he was at Microsoft).  So it’s really all just one big, happy positioning family.
  • April Dunford.  This one’s slightly premature — as I’ve not yet finished her book and haven’t worked with her yet.  But based on the part of the book I’ve read, her Twitter feed, and her work with related portfolio companies and PE sponsors, I am simply certain that we are kindred positioning spirits and that I’m going to love working with her — as we’re slated to do in upcoming months with one of my portfolio companies.

Good luck, happy positioning, and keep it simple out there.

Marketing Targeting: It’s Not Just Where You Fish, It’s What You Put on the Hook

Back in the day I was taught that marketers do three things, memorized via the acronym STP:  segment, target, position.

  • Divide the audience into different segments.  For example, dividing consumers by demographics or dividing businesses by size or industry.
  • Select the segments that the company wishes to target for its marketing.  For example, choosing small and medium businesses (SMB) as your target segment.
  • Position the product in the mind of the consumer, ideally in a unique way, providing differentiation and/or benefit [1].  For example, positioning your offering for the SMB segment as easy to deploy and inexpensive to own.

I’ve always thought of targeting as the answer to the question, “what list do I want to buy?”  Do I want buy a list of marketing directors at SMBs or a list of chief data officers (CDOs) at Fortune 1000 companies?

The list-buying metaphor extends nicely to events (what shows do these people attend), PR (what publications do they read), AR (to which influencers do they listen), some forms of digital advertising (e.g., LinkedIn where you have considerable targeting control), if not Google (where you don’t [2]).

For many people, that’s where the targeting discussion ends.  When most people think of targeting they think of where on the lake they want to fish.

While an angler would never forget this, marketers too often miss that what you put on the hook matters, too.  Fishing in the same part of the lake, an angler might put on crayfish for largemouth bass, worms for rainbow trout, or stinkbait for catfish.

It’s not just about who you’re speaking to; it’s about what you tell them — the bait, if you will, that you put on the hook.

Perhaps this is too metaphorical, so let’s take an example — imagine we sell financial planning and budgeting software to businesses and our target segment is small businesses between $0M to $50M in revenue.  Via some marketing channels we can communicate only to people in this segment, but through a lot of other important channels (e.g., Google Ads, SEO, content marketing), we cannot.  So we need to rely not only on our targeting, but our message, to control who we bring into the lead funnel.

Consider these two messages:

  • Plan faster and more efficiently with OurTool
  • End the misery and mistakes of planning on Excel

The first message pitches a generic benefit of a planning system and is likely to attract many different types of fish.  The second message specifically addresses the pains of planning on Excel.  Who plans on Excel?  Well, smaller businesses primarily [3].  So the message itself helps us filter for the kind of companies we want to attract.

Now, let’s pretend we’re targeting large enterprises, instead.  Consider these two messages.

  • End the misery and mistakes of planning on Excel
  • Integrate your sales and financial planning

The first message, as discussed above, is going to catch a lot of small fish.  The second message is about a problem that only larger organizations face — small companies are just trying to get a budget done, whereas larger ones are trying to get a more holistic view.  The second message far better attracts the enterprise target that you want.  As would, for example, a message about the pain and expense of budgeting on Hyperion.

I’ll close in noting that marketers who measure themselves by the number of fish they catch [4] — as opposed to the conversion of those fish into customers — will often resist the more focused message because you won’t set attendance records with the more selective bait.  So, as you perform your targeting, always remember three things:

  1. It’s about where you put the boat
  2. It’s also about the bait you put on the hook
  3. It’s not about the number of fish you catch, but the number of the right fish that you catch.

# # #

Notes

[1] The decision to emphasize differentiation or benefit is covered in The Two Archetypal Marketing Messages:  “Bags Fly Free” and “Soup is Good Food.”

[2] In a B2B sense, at least.

[3] Amazingly, a lot of large and very large businesses also plan on Excel, but let’s not confuse the exception for the rule or the point of the example — different messages attract different buyers.

[4] Either literally by putting KPIs on high-funnel metrics such as MQLs or, more subtly and more dangerously, by getting too much inner joy from high-funnel metrics (“look how many people came to our webinar!”)

The Next Chapter

This morning we announced that Vector Capital has closed the acquisition of Host Analytics.  As part of that transaction I have stepped down from my position of CEO at Host Analytics.  To borrow a line from The Lone Ranger, “my work is done here.”  I’ll consult a bit to help with the transition and will remain a friend of and investor in the company.

A Word of Thanks
Before talking about what’s next, let me again thank the folks who made it possible for us to quintuple Host during my tenure all while cutting customer acquisition costs in half, driving a significant increase in dollar retention rates, and making a dramatic increase in net promoter score (NPS).  Thanks to:

  • Our employees, who drove major productivity improvements in virtually all areas and were always committed to our core values of customer success, trust, and teamwork.
  • Our customers, who placed their faith in us, who entrusted us with their overall success and the secure handling of their enormously important data and who, in many cases, helped us develop the business through references and testimonials.
  • Our partners, who worked alongside us to develop the market and make customers successful – and often the most challenging ones at that.
  • Our board of directors, who consistently worked positively and constructively with the team, regardless of whether we were sailing in fair or foul weather.

We Laid the Groundwork for a Bright Future
When Vector’s very talented PR guy did his edits on the closing press release, he decided to conclude it with the following quote:

Mr. Kellogg added, “Host Analytics is a terrific company and it has been an honor lead this dynamic organization.  I firmly believe the company’s best days are ahead.”

When I first read it I thought, “what an odd thing for a departing CEO to say!”  But before jumping to change it, I thought for a bit.  In reality, I do believe it’s true.  Why do Host’s best days lie ahead?  Two reasons.

First, we did an enormous amount of groundwork during my tenure at Host.  The biggest slug of that was on product and specifically on non-functional requirements.  As a fan of Greek mythology, the technical debt I inherited felt like the fifth labor of Hercules, cleaning the Augean stables.  But, like Hercules, we got it done, and in so doing shored up the internals of a functionally excellent product and transformed our Hyderabad operation into a world-class product development center.  The rest of the groundwork was in areas like focusing the organization on the right metrics, building an amazing demand generation machine, creating our Customers for Life organization, running a world-class analyst relations program, creating a culture based on learning and development, and building a team of strong players, all curious about and focused on solving problems for customers.

Second, the market has moved in Host’s direction.  Since I have an affinity for numbers, I’ll explain the market with one single number:  three.  Anaplan’s average sales price is three times Host’s.  Host’s is three times Adaptive’s.  Despite considerable vendor marketing, posturing, positioning, haze, and confusion to the contrary, there are three clear segments in today’s EPM market.

  • Anaplan is expensive, up-market, and focused primarily on operational planning.
  • Adaptive is cheap, down-market, and focused primarily on financial planning.
  • Host is reasonably priced, mid-market, focused primarily on financial planning, with some operational modeling capabilities.

Host serves the vast middle where people don’t want (1) to pay $250K/year in subscription and build a $500K/year center of excellence to support the system or (2) to pay $25K/year only to be nickeled and dimed on downstream services and end up with a tool they outgrow in a few years.

Now, some people don’t like mid-layer strategies and would argue that Host risks getting caught in a squeeze between the other two competitors.  That never bothered me – I can name a dozen other successful SaaS vendors who grew off a mid-market base, including within the finance department where NetSuite created a hugely successful business that eventually sold for $9.3B.

But all that’s about the past.  What’s making things even better going forward?  Two things.

  • Host has significantly improved access to capital under Vector, including the ability to better fund both organic and inorganic growth. Funding?  Check.
  • If Workday is to succeed with its goals in acquiring Adaptive, all rhetoric notwithstanding, Adaptive will have to become a vendor able to deliver high-end, financial-focused EPM for Workday customers.  I believe Workday will succeed at that.  But you can’t be all things to all people; or, to paraphrase SNL, you can’t be a dessert topping and a floor wax.  Similarly, Adaptive can’t be what it will become and what it once was at the same time – the gap is too wide.  As Adaptive undergoes its Workday transformation, the market will switch from three to two layers, leaving both a fertile opening for Host in mid-market and a dramatically reduced risk of any squeeze play.  Relatively uncontested market space?  Check.

Don’t underestimate these developments.  Both these changes are huge.  I have a lot of respect for Vector in seeing them.  They say that Michelangelo could see the statue within the block of marble and unleash it.  I think Vector has clearly seen the potential within Host and will unleash it in the years to come.

What’s Next?
I don’t have any specific plans at this time.  I’m happily working on two fantastic boards already – data catalog pioneer Alation and next-generation content services platform Nuxeo.   I’ll finally have time to write literally scores of blog posts currently stalled on my to-do list.  Over the next few quarters I expect to meet a lot of interesting people, do some consulting, do some angel investing, and perhaps join another board or two.  I’ll surely do another CEO gig at some point.  But I’m not in a rush.

So, if you want to have a coffee at Coupa, a beer at the Old Pro, or – dare I date myself – breakfast at Buck’s, let me know.

Unicorn Tears, Beyond Ultimate, and the Silicon Valley Hype Mentality,

Back in the day we working on a press release and I was a CMO.

Me:  “Somebody, get Randy (the PR director) in here.”

Me:  “Randy, what is this press release calling our new offering the ultimate in business intelligence?”

Randy:  “Yes and the problem is?”

Me:  “The problem is it’s not the ultimate, it’s better than ultimate, it’s beyond ultimate … there must be a word for that … I don’t know, maybe penultimate.”

Randy:  “Chief,” he said sheepishly after waiting a minute, “penultimate means one less than ultimate.  Ultimate means ultimate.  There is no word for one more than ultimate.”

Me:  “Oh.  Well, God damn it, go make one up.”

It was at that moment that I realized I’d been fully sucked into the Silicon Valley hype machine.  Just as unique means unique and requires no modifier like “amazingly,” so does ultimate means ultimate.

Speaking of “amazing,” during my tenure at Salesforce, I used to count the number of amazing’s Marc Benioff would say during a speech.  You’d run out of fingers in minutes.  But somehow it worked.  He was a great — no, amazing — speaker and I never got tired of listening to him.

This is Silicon Valley.   The land where one of my competitors can still peddle a cock-and-bull story about how he, as an immigrant limo driver with $26 (and a master’s in computer science), sold a company (where he was neither founder nor CEO), worked as (a member in the office of the) CTO at SAP, and is growing stunningly — no, amazingly — fast (despite a rumored recent down-round and rough layoffs).  Fact-checking, smact-checking.  If it’s a Man Bites Dog story, people will eat it up.  Blog it, hit publish, and move onto the next one.

Maybe I should pitch the equivalent story about me:

Lifeguard and Self-Taught Programmer Who Arrived in California with Only $30, a Red Bandana, and a Box of Bootlegged Grateful Dead Tapes Becomes CEO of Host Analytics

“Dude, I was guarding by the pool one day and this wicked thunderstorm hit and, flash, like totally suddenly I realized the world needed cloud-based, enterprise planning, budgeting, modeling, consolidation, and analytics.”

And we could discuss how I “hacked” on paper tape back in high school:  “the greatest part about hacking on paper tape was you could roll bones with it when you were done and literally, like, smoke your program.”

It would be a roughly equivalent story.  I’m sure they’d eat it up.

Silicon Valley is a place, after all, where we can create a metaphor for something that doesn’t exist — a unicorn  — and then discover 133 of them.

Is our reaction “bad metaphor?”  No, of course not.  It’s “wow, we’re special, we’ve got 133 things that don’t exist.”

Unicorns (generally defined as startups with a $1B+ valuation) are mostly of a result of three things:

  • The cost and hassle of being a public company, post Sox.  Why go public if you don’t have to?
  • The ability to raise formerly IPO-sized rounds (e.g., $100M) in the private markets.
  • A general bubble in late-stage financing where valuations are high enough to create the IPO-as-down-round phenomena

As the late-stage financing bubble appears to be near popping, you increasingly hear new terms for unicorns.  For example, Good Technology, a “onceacorn,” sold earlier this month for $400M.  Since I love words, I’ve been tracking these new terms closely with some amusement:  formercorns, “just horses with birthday hats on,” usta-corns, dying unicorns, and unicorpses.

So, hopefully, as the financing fuel that’s stoking the fire starts to die down, the hype bubble will go with it.  Until then, enjoy this tweet, which captures the spirit of Silicon Valley today just perfectly:

vape