Category Archives: Strategy

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.

Product Power Breakfast with Chris McLaughlin on Big/Small, US/Euro, and Marketing/Product

This week’s episode of the SaaS Product Power Breakfast is Thursday, June 10th, at 8am Pacific and we welcome a special friend and unique guest, Chris McLaughlin, currently CMO at France-based powerhouse LumApps, a collaboration and communications platform backed by top European investors including Idinvest and Goldman Sachs.

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.

Appearance on the Metrics That Measure Up Podcast

“Measure or measure not.  There is no try.”

— My response to being called the Yoda of SaaS metrics.

Just a quick post to highlight my recent appearance on the Metrics That Measure Up podcast, hosted by Ray Rike, founder and CEO of RevOps^2, a firm focused on SaaS metrics and benchmarking.

Ray’s a great guy, passionate about metrics, unafraid of diving into the details, and the producer of a great metrics-focused podcast that has featured many quality guests including Bryon Deeter, Tom Reilly, David Appel, Elay Cohen, Mark Petruzzi / Paul Melchiorre, Sally Duby, Amy Volas, and M.R. Rangaswami.

In the episode, Ray and I discuss:

  • Top SaaS metrics — e.g., annual recurring revenue (ARR), ARR growth, net dollar retention (NDR), net promoter score (NPS), employee NPS, and customer acquisition cost (CAC) ratio
  • How metrics vary with scale
  • Avoiding survivor bias, both in calculating churn rates and in comparisons to public comparison benchmarks (comps) [1]
  • How different metrics impact the enterprise value to revenue (EV/R) multiple — and a quick place to examine those correlations (i.e., the Meritech comps microsite).
  • Win rates and milestone vs. cohort analysis
  • Segmenting metrics, such as CAC and LTV/CAC, and looking at sales CAC vs. marketing CAC.
  • Blind adherence to metrics and benchmarks
  • Consumption-based pricing (aka, usage-based pricing)
  • Career advice for would-be founders

If you enjoy this episode I’m sure you’ll enjoy Ray’s whole podcast, which you can find here.

# # #

Notes

[1] Perhaps more availability bias (or, as Ray calls it, selection bias) than survivor bias, but either way, a bias to understand.

Navel Gazing, Market Research, and the Hypothesis File

Ask most startups about their go-to-market (GTM) these days and they’ll give you lots of numbers.  Funnel metrics.  MQLs, SQLs, demos, and associated funnel conversion rates.  Seen over time, cut by segment.  Win/loss rates and close rates as well, similarly sliced.  Maybe an ABM scorecard, if applicable.

Or maybe more financial metrics like customer acquisition cost (CAC) ratio, lifetime value (LTV) or net dollar retention (NDR) rate.  Maybe a Rule of 40 score to show how they’re balancing growth and profitability.

And then you’ll have a growth strategy conversation and you’ll hear things like:

  • People don’t know who we are
  • But the people who know us love us
  • We’re just not seeing enough deals
  • Actually, we are seeing enough deals, but we’re not making the short list enough
  • Or, we’re making the short list enough, but not winning enough.

And there are always reasons offered:

  • We’re not showing enough value
  • We’re not speaking to the economic buyer
  • We’re a vitamin, not a pain killer
  • We’re not aligned with their business priorities
  • People don’t know you can solve problem X with our solution
  • Prospects can’t see any differentiation among the offerings; we all sound the same [3]
  • They don’t see us as a leader
  • They don’t know they need one
  • They know they need one but need to finish higher priorities first

It’s an odd situation.  We are literally drowning in funnel data, but when it comes to actually understanding what’s happening, we know almost nothing.  Every one of the above explanatory assertions are assumptions.   They’re aggregated anecdotes [4].  The CRM system can tell us a lot about what happens to prospects once they’re in our funnel, but

  1. We’re navel gazing.  We’re only looking at that portion of the market we engaged with.  It’s humbling to take those assertions and mentally preface them with:  “In that slice of the market who found us and engaged with us, we see XYZ.”  We’re assuming our slice is representative.  If you’re a early-stage or mid-stage startup, there’s no reason to assume that.  It’s probably not.
  2. Quantitative funnel analysis is far better at telling you what happened than why it happened.  If only 8% of our stage 2 opportunities close within 6 quarters, well, that’s a fact [5].  But companies don’t even attempt to address most of the above explanatory assertions in their CRM, and even those times when they do (e.g., reason codes for lost deals), the data is, in my experience, usually junk [6].  And even on the rare occasion when it’s not junk, it’s still the salesrep’s opinion as to what happened and the salesrep is not exactly an unbiased observer [7].

What’s the fix here?  We need to go old school.  Let’s complement that wonderful data we have from the CRM with custom market research, that costs maybe $30K to $50K, and that we run maybe 1-2x/year and ideally right before our strategic planning process starts [8].  Better yet, as we go about our business, every time someone says something that sounds like a fact but is really an assumption, let’s put it into a “hypothesis file” that becomes a list of a questions that we want answered headed into our strategic and growth planning.

After all, market research can tell us:

  • If people are aware of us, but perhaps don’t pick us for the long list because they have a negative opinion of us
  • How many deals are happening per quarter and what percent of those deals we are in
  • Who the economic buyer is and ergo if we are speaking to them
  • What the economic buyer’s priorities are and if we are aligning to them
  • When features are most important to customers shopping in the category
  • What problems-to-be-solved (or use-cases) they associate with the category
  • Perceived differences among offerings in the category
  • Satisfaction with various offerings with the category
  • If and when they intend to purchase in the category
  • And much more

Net — I think companies should:

  • Keep instilling rigor and discipline around their pipeline and funnel
  • Complement that information with custom market research, run maybe 1-2x/year
  • Drive that research from a list of questions, captured as they appear in real time and prompted by observing that many of these assertions are hypotheses, not facts — and that we can and should test them with market research.

 

# # #

Notes

[1] As many people use “demo” as a sales process stage.  Not one I’m particularly fond of [2], I might add, but I do see a lot of companies using demo as an intermediate checkpoint between sales-accepted opportunity and closed deal — e.g., “our demo-to-close rate is X%”

[2] I’m not fond of using demo as a stage for two reasons:  it’s vendor-out, not customer-in and it assumes demo (or worse yet, a labor-intensive custom demo) is what’s required as proof for the customer when many alternatives may be what they want — e.g., a deep dive, customer references, etc.  The stage, looking outside-in, is typically where the customer is trying to answer either (a) can this solve my problem or (b) of those that can solve my problem is this the one I want to use?

[3] This is likely true, by the way.  In most markets, the products effectively all look the same to the buyer!  Marketing tries to accentuate differentiation and sales tries to make that accentuated differentiation relevant to the problem at hand, but my guess is more often than not product differentiation is the explanation for the selection, but not the actual driver — which might rather be things like safety / mistake aversion, desire to work with a particular vendor / relationship, word of mouth recommendations, belief that success is more likely with vendor X than vendor Y even if vendor X may (perhaps, for now) have an inferior product)

[4] As the saying goes, the plural of anecdote is not data.

[5] And a potentially meaningless one if you don’t have good discipline around stages and pipeline.

[6] I don’t want to be defeatist here, but most startups barely have their act together on defining and enforcing / scrubbing basics like stages and close dates.  Few have well thought-out reason codes.

[7] If one is the loneliest number, salespersonship is the loneliest loss reason code.

[8] The biggest overlooked secret in making market research relevant to your organization — by acting on it — is strategically timing its arrival.  For example, win/loss reports that arrive just in time for a QBR are way more relevant than those that arrive off-operational-cycle.

The SaaS Product Power Breakfast, Thursdays at 8 AM Pacific on Clubhouse

Interested in all things product?

Then please join me and my friend and esteemed colleague Thomas Otter on Thursday mornings at 8 am pacific for a series we’re calling The SaaS Product Power Breakfast where Thomas and I will interview invited special guests and engage the audience in discussing all things product, including:

  • Product management
  • Product strategy
  • Product marketing
  • Product design
  • Product positioning
  • Product roadmaps
  • Product requirements (to generalize or not to generalize)
  • Application / platform dynamics
  • Product input and feedback processes
  • Pricing strategies
  • Product portfolios
  • Product-led growth
  • Managing new vs. existing products
  • The transition from 1 to N products
  • Product development processes (e.g., agile, scrum)
  • Minimum viable product
  • Managing product managers
  • The transition to general manager (GM)
  • And much more

For those on Clubhouse, here’s a link to the first event.  If you’ve not tried Clubhouse yet, well here’s a great reason to join — ask a friend (or us) for an invite if you need one.   Finally, we’ll be making recordings of the episodes available as a podcast (which took about four episodes to figure out).

My interest in product stems from my overall fascination with strategy and my experience in product marketing at Ingres (RDBMS), CMO at Versant (ODBMS) and Business Objects (BI/analytics), SVP/GM at Salesforce.com (Service Cloud), and CEO at MarkLogic (NoSQL) and Host Analytics (Planning).  That’s not to mention lesser involvement in strategy working in board and/or advisory mode at companies including Aster Data (NoSQL), Nuxeo (ECM/DAM), and Alation (data intelligence).

Thomas’ interest in product stems from his infinite curiosity about the intersection between technology and people.  Thomas was part of the leadership team that scaled SuccessFactors to over 50M end users, managing not only product but literally scores of product managers.  Prior to that Thomas was an analyst at Gartner where he drove the HRTECH research agenda that helped shape the industry.  Truly a multidisciplinary thinker, Thomas’ PhD dissertation “sits awkwardly at the intersection of IT, law, and business.”  He’s thus a heck of an interesting guy to talk to.

See you there!

An Epitaph for Intrapreneurship

About twenty years ago, before I ran two startups as CEO and served as product-line general manager, I went through an intrapreneurship phase, where I was convinced that big companies should try to act like startups.  It was a fairly popular concept at the time.

Heck, we even decided to try the idea at Business Objects, launching a new analytical applications division called Ithena, with a mission to build CRM analytical applications on top of our platform.  We made a lot of mistakes with Ithena, which was the beginning of the end of my infatuation with the concept:

  • We staffed it with the wrong people.  Instead of hiring experts in CRM, we staffed it largely with experts in BI platforms.  Applications businesses are first and foremost about domain expertise.
  • They built the wrong thing.  Lacking CRM knowledge, they invested in building platform extensions that would be useful if one day you wanted to build a CRM analytical app.  From a procrastination viewpoint, it felt like a middle school dance.  Later, in Ithena’s wreckage, I found one of the prouder moments of my marketing career  — when I simply repositioned the product to what it was (versus what we wanted it to be), sales took off.
  • We blew the model.  They were both too close and too far.  They were in the same building, staffed largely with former parent-company employees, and they kept stock options in both the parent the spin-out.  It didn’t end up a new, different company.  It ended up a cool kids area within the existing one.
  • We created channel conflict with ourselves.  Exacerbated by the the thinness of the app, customers had trouble telling the app from the platform.  We’d have platform salesreps saying “just build the app yourself” and apps salesreps saying that you couldn’t.
  • They didn’t act like entrepreneurs.  They ran the place like big-company, process-oriented people, not scrappy entrepreneurs fighting for food to get through the week.  Favorite example:  they had hired a full-time director of salesops before they had any customers.  Great from an MBO achievement perspective (“check”).  But a full-time employee without any orders to book or sales to analyze?  Say what you will, but that would never happen at a startup.

As somebody who started out pretty enthralled with intrapreneurship, I ended up pretty jaded on it.

I was talking to a vendor about these topics the other day, and all these memories came back.  So I did quick bit of Googling to find out what happened to that intrapreneurship wave.  The answer is not much.

Entrepreneurship crushes intrapreneurship in Google Trends.  Just for fun, I added SPACs to see their relatively popularity.

Here’s my brief epitaph for intrapreneurship.  It didn’t work because:

  • Intrapreneurs are basically entrepreneurs without commitment.  And commitment, that burn the ships attitude, is key part of willing a startup into success.
  • The entry barriers to entrepreneurship, particularly in technology, are low.  It’s not that hard (provided you can dodge Silicon Valley’s sexism, ageism, and other undesirable -isms) for someone in love with an idea to quit their job, raise capital, and start a company.
  • The intrapreneurial venture is unable to prioritize its needs over those of the parent.  “As long as you’re living in my house, you’ll do things my way,” might work for parenting (and it doesn’t) but it definitely does not work for startup businesses.
  • With entrepreneurship one “yes” enables an idea, with intrapreneurship, one “no” can kill it.  What’s more, the sheer inertia in moving a decision through the hierarchy could kill an idea or cause a missed opportunity.
  • In terms of the ability to attract talent and raise capital, entrepreneurship beats intrapreneurship hands down.  Particularly today, where the IPO class of 2020 raised a mean of $350M prior to going public.

As one friend put it, it’s easy with intrapreneurship to end up with all the downsides of both models.  Better to be “all in” and redefine the new initiative into your corporate self image, or “all out” and spin it out as an independent entity.

I’m all for general mangers (GMs) acting as mini-CEOs, running products as a portfolio of businesses.  But that job, and it’s a hard one, is simply not the same as what entrepreneurs do in creating new ventures.  It’s not even close.

The intrapreneur is dead, long live the GM.

Unlearning as you Scale: Recording of my Costanoa Ventures 2020 Summit Presentation

Last month I presented Unlearning As You Scale at Costanoa Ventures 2020 Costanoa CEO UnSummit.  In response to several requests for a live recording of the presentation, I sat down this weekend and recorded the following.

Key topics discussed:

  • How to properly apply the popular Silicon Valley adage, “the folks who got you here aren’t the ones to take you to the next level.”
  • How to generalize that adage to not only people, but systems, processes, and strategies.
  • If and when required, how to hire next-level executives while avoiding common pitfalls.
  • How to critically think about success with your team.

 

An audio-only version of the presentation is here:

 

My original post on the event is here.