In this fast-paced episode we move through topical discussions of the major SaaS metrics followed by investors and operators alike, and look at the size-segmented benchmarks presented in Ray’s 2020 B2B SaaS Metrics report.
I think the episode is suitable both for the SaaS metrics beginner because we review the basics for most metrics as well as for the grizzled professional because we dive into topical (and sometimes fairly non-obvious) discussions for many of them.
Please join us for tomorrow’s SaaS Product Power Breakfast with entrepreneur and venture capitalist Paul Jozefak, CEO of Receeve (an all-in-one platform for collections and recovery), on how to use SaaS as a layer atop legacy systems to prove return on investment (ROI) and smooth the customer’s transition before setting out to rip and replace them.
This is an interesting strategy that I’ve seen numerous times in SaaS and it cuts to core product strategy issues, most notably, to what extent and in what timeframe do you “design in” versus “design out” the underlying technology.
In addition to both impromptu and (hopefully some) audience questions, we’ll be asking Paul:
Why layer on top in your target segment?
Are there any risks to layering?
What are your customers trying to accomplish when it comes to working with Receeve?
Where is technology in the segment headed?
What hurdles do you hit with decision makers?
Thomas has not been feeling well so, while he’s slated to be our lead interviewer tomorrow, I may end up taking the lead on this episode.
I sometimes get asked about how to structure an enterprise software marketing organization and the relative roles of product marketing vs. competitive analysis. In this post, I’ll share my (somewhat contrarian) thoughts on this topic.
My first job in marketing, which served as my bridge from a technical to a sales-and-marketing career, was as a competitive analyst. Specifically, I was the dedicated Sybase competitive analyst at Ingres in the late 1980s, in a corporate job, but working out of the New York City sales office. Because, at the time, Sybase was a strong new entrant with a beachhead strategy in financial services, this was rough equivalent of working for the Wehrmacht on Omaha Beach on D-Day. I learned not only by watching Sybase’s market invasion, but more importantly by watching how the local reps  and corporate  responded to it.
I’m a huge believer in competitive analysis, which probably started when I first heard this quote watching Patton as an adolescent:
“Rommel, you magnificent bastard, I read your book!” 
While Gekko doesn’t use my favorite quote for these purposes , his reference to the book was very much in vogue at the time, and probably why I first read it. My favorite quote from The Art of War is this one:
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
Regular readers know I believe the mission of marketing is to make sales easier. So the question becomes: in enterprise software, how do we structure product marketing and competitive in the best way to do just that?
First, let’s review some common mistakes:
Not specializing competitive, instead declaring that each product marketing manager (PMM) will cover their respective competitors. Too much scope, too little focus.
Understaffing competitive. Even in organizations where competitive exists as its own team, it’s not uncommon to see a ratio of 5-10 PMMs per competitive analyst in terms of staffing. This is too unbalanced.
Chartering competitive as strategic. While I often euphemize the competitive team as “strategic marketing” or “market intelligence,” that’s not supposed to actually change their mission into some think tank. They exist to help sales win deals. Don’t let your competitive team get so lofty that they view deal support as pedestrian.
Putting competitive under product marketing. This both blurs the focus and, more importantly, eliminates a healthy tension . If your messaging doesn’t work in the field, the CMO should want to hear about it early (e.g., in their own staff meeting) and have a chance to fix it before it escalates to the corporate QBR and a potential sales attack on marketing in front of the CEO.
Putting competitive in the field. This happens when marketing abdicates responsibility for producing sales-ready competitive materials and someone else picks up the ball, usually the sales productivity team, but sometimes field marketing . This disconnects corporate product marketing from the realities of the field, which is not healthy.
Now, let’s tell you how I think structuring these departments.
Product marketing exists to build messaging and content  that describe the features and benefits of the product . The job is to articulate. They are experts in products.
Competitive analysis exists to research competitors, devise plays, and build tools to help sales win deals. The job is to win. They are experts in the competitors.
As long as we’re in movie quote mode, here’s one of my favorite quotes from James Mason’s character in The Verdict :
I’d prepared a case and old man White said to me, “How did you do?” And, uh, I said, “Did my best.” And he said, “You’re not paid to do your best. You’re paid to win.”
While he was speaking to about lawyers, he might as well have been speaking to competitive: you’re paid to win.
That’s why I believe competitive needs to be holistic and play-oriented. Simply put, take everything you know about a competitor — e.g., products, leadership, history, tactics — and devise plays that will help you win against them. Then train sales on how to run those plays and supp0rt them in so doing.
If you adopt this mindset you end up with an organization where:
Product marketing and competitive are separate functions, both reporting directly to the CMO
Product marketing is product-oriented, focused on articulation of features and benefits
Competitive is competitor-oriented, focused on using all available information to create plays that win deals and support sales in executing them
Product marketing staffing is driven by the number of products you’re covering
Competitive staffing is driven by the number of competitors you’re covering (and at what depth level or tier).
You end up with a ratio of more like 3:1 than 10:1 when it comes to the relative staffing of product marketing and competitive
You think of these organizations as a matrix:
# # #
 In the case of the reps, their response was to walk away from financial services deals because they knew they were likely to lose. This, of course, had the effect of making it easier for Sybase to enter the market. The smart reps went to Westchester and Long Island and sold in other verticals. The dumb ones battled Sybase on Wall Street, lost deals, missed mortgage payments, broke marriages, and got fired — all for doing what the c0mpany strategically should have wanted them to do: to slow down the invasion. A classic case of micro and macro non-alignment of interests.
 The corporate response was to blame sales management. Rather than seeing the situation as a strategic problem where an enemy was breaking through lines with an integrated strategy (e.g., partners), they chose to see it as an operational or execution problem. Think: we’re hiring bad reps in NYC and losing a lot deals — fire the sales manager and get some new talent in there.
 Good Strategy, Bad Strategy tells the presumably more common inverse tale, where during the Gulf War in 1991 General Schwarzkopf was widely credited with a left-hook strategy described as “surprise,” “secret,” and “brilliant,” that was clearly published in the US Army Field Manual 100-5 saying the following, complete with an illustration of a left hook.
Envelopment avoids the enemy’s front, where its forces are most protected and his fires most easily concentrated. Instead, while fixing the defender’s attention forward by supporting or diversionary attacks, the attacker maneuvers his main effort around or over the enemy’s defenses to strike at his flanks and rear.
 Gekko refers to: “Every battle is won before it’s ever fought.”
 Organization design is all about creating and managing healthy tensions. Such tensions are a key reason why I like marketing reporting to the CEO (and not sales), customer success reporting to the CEO (and not the CRO/sales), and engineering reporting to the CEO (and not product), for a few examples.
 At one point, way back, Oracle had a huge market intelligence organization, but housed within Americas Marketing, a field marketing organization.
 Content being collateral (e.g., web content, white papers, e-books), presentations (internal and external), and demonstrations — all built around communicating the key messages in their messaging blueprint.
 It’s not lost on me that the character was morally bankrupt and was implicitly saying to win at any and all costs. But I nevertheless still love the quote. (And yes, win within normal legal and societal constraints! But win.)
Andy started his career building web applications at EDS (so he presumably has lots of old white shirts somewhere in his closet), was VP of product marketing at content management vendor Stellent, was acquired into Oracle where he spent nearly 5 years in product management before serving as COO of Products at Salesforce (where we crossed trails), then CEO of marketing automation system Act-On, and now CEO at UserTesting, a human insight platform that helps companies get feedback on user experiences — so he’s definitely at the right place at the right time as the whole world starts to value design, user experience, and product-led growth strategies.
Net: Andy’s got a great background, some real product chops, and can simultaneously give us both the Product and the CEO perspective on product issues. Our topic is Andy’s framework for hiring product managers and product management teams. My five key questions for this episode will be:
Why do I need a framework for hiring PM teams?
What is your framework for hiring PM teams?
What goes wrong in hiring PM teams?
What do you think of the PM as GM or mini-CEO concept?
When should an early-stage company start using such a hiring framework?
Our theme for tomorrow’s episode is how to manage the transition from traditional open source to true cloud native, something relatively few companies have done, and a transition that Evan has overseen at Influx Data.
We’ll cover questions including:
A primer on the traditional open source model
What it means to be true cloud native
How to approach the transition to true cloud native
Perils and pitfalls in the transition
Organizational (and people) change in the transition
Licensing implications, including protecting the open source from cloud hyperscalers and while trying not to alienate the traditional open source community
Influx Data is a category leader that has raised about $120M from top-tier investors. Evan has a spectacular background, having been founder/CEO of Aventail for about a decade, CEO of iPass for half a decade, the member of numerous boards, and having serving 5+ years at Influx Data. I’m super excited to have him on the show. See you there!
I got to know Chris by working together in his prior gig as joint CMO and CPO at Nuxeo, a France-based content services platform that had a great exit earlier this year to Thoma Bravo / Hyland Software, and where I sat on the board of directors for the past 4 years.
Chris has a unique background because of its dualities, working:
As a senior executive for both US-based and European-based companies.
At both growth startups and large megavendors (e.g., EMC/Documentum, IBM/FileNet)
In leadership roles on both the Product and the Marketing side.
In this week’s episode we — and the audience — will ask Chris many questions, including:
How to get product and marketing working together, especially when they aren’t under a common boss.
How European startups should organize their go-to-market functions to enter and grow in the US market
The role of both the product and marketing leaders in startups with either a technical founder or business founder
When is the right time to hire your first CPO and/or CMO
How to align product, marketing, and sales around a strategy — and dealing with the normal challenges in focusing that strategy
See you there, Thursday 6/10 at 8 am Pacific — and bring a friend.
As always, the room will be recorded and posted. We think of the show as a podcast recorded in front of a live, studio audience.
I’m Dave Kellogg, advisor, director, consultant, angel investor, and blogger focused on enterprise software startups.
I bring an uncommon perspective to startup challenges having 10 years’ experience at each of the CEO, CMO, and independent director levels across 10+ companies ranging in size from zero to over $1B in revenues.
From 2012 to 2018, I was CEO of cloud EPM vendor Host Analytics, where we quintupled ARR while halving customer acquisition costs in a competitive market, ultimately selling the company in a private equity transaction.
Previously, I was SVP/GM of the $500M Service Cloud business at Salesforce; CEO of NoSQL database provider MarkLogic, which we grew from zero to $80M over 6 years; and CMO at Business Objects for nearly a decade as we grew from $30M to over $1B in revenues. I started my career in technical and product marketing positions at Ingres and Versant.
I love disruption, startups, and Silicon Valley and have had the pleasure of working in varied capacities with companies including Bluecore, Cyral, FloQast, GainSight, MongoDB, Recorded Future, and Tableau.