Gold's Rules: Hard Earned Lessons from a 25-Year Career as a Tech Marketing Leader

• Marketing efforts succeed or fail based on alignment or lack thereof, with the market, the CEO, the CRO, and the available resources.

• As a CMO, you’re not the top marketing executor.  You’re a go-to-market leader. It’s easy to get lost in the day-to-day of managing the function, but it’s your job to have a broader view of the business including market trends, competitors, partners, and metrics. This is the only way to keep a seat at the table. 

• Know your numbers. Not the “little” numbers associated with every program or channel (though that’s good too.  But focus on the big numbers that matter:  Sales & Marketing efficiency, pipeline coverage, marketing contribution to pipeline.

• You don’t own the whole funnel, but you better understand it, including conversion rate trends so you can identify bottlenecks and opportunities for improvement.  Partner wih Sales Ops or do it yourself, but ensure the entire G2M leadership team has access to dashboards showing the entire funnel.  CRO

• It’s better to have a team that’s slightly too small than too big. This forces prioritization. 

• Sometimes, the answer is to do more, but mostly it’s to do less but do it better.

•  There’s a ton of marketing technology out there. Virtually all of it is useless without a program to operationalize it and a specific person to own it.

• It all starts with product marketing -- the ICP,  your target personas, the specific problems you solve, and your competitive differentiation.  More marketing program dollars have been wasted with a poor articulation of the fundamentals than any other cause.

• It doesn’t matter how good your marketing program is if you don’t have timely lead follow-up with clear, concise, pointed messaging.

• Marketing’s job is to generate sales-qualified opportunities. The SQL should be your north star because it’s a shared metric with sales and can’t be fudged with marketing mumbo jumbo. CRO.

• The health of your full funnel is the lifeblood of your business.  The G2M leadership team -- Marketing and Sales -- should meet and take the pulse every single week.  No sacred cows, just a common understanding of metrics and processes.  Even with long sales cycles in enterprise businesses, the discipline of working together to understand the funnel each week helps identify gaps and bring teams closer together. 

• Your business model may be SaaS, but your customers determine whether it’s a subscription.  They choose whether to renew or not.  The renewal process starts the day they sign and marketing needs to support this. 

• Most CEOs don’t understand what marketing does.  This leads to frustration on both sides. It’s the marketing leaders job to drive alignment and understanding. CEO

• Build and maintain a ‘reverse waterfall’ with realistic assumptions about your lead generation, funnel conversion rates at every stage, ASP, and sales cycle length. There is no better tool to ground discussions around efficiency, effectiveness, and projections.

• Aggregate funnel analysis is important, but to diagnose problems, cut by key dimensions such as territory and product line.  This is where the real insights and actions can be surfaced. 

• In enterprise businesses, attribution battles are a waste of time. No one wins and it doesn’t help the business grow.  Agree on your attribution rules and make sure the system measures it accurately, but don’t over-rotate.  At best attribution gives directional guidance. 

• Control the controllables. A lot the things that impact your business are beyond your direct control -- it’s your job to understand the situation as best you can and then take action on the most important things that are within your control.  No use worrying about things you can’t control.

• The foundation of demand generation is marketing ops. To be efficient, marketing must be technology-leveraged and analytically driven.  Your head of demand must be ops-focused.  Hire a strong head of marketing ops early.

12 Things Tech Founders & CEOs Need to Know About Marketing

12 Things Founders Need to Know About Marketing June 2019 Charles Gold charles@cgold.marketing 202.827.6270

Marketing Effectiveness is in the Details

I talk to my teams a lot about the 95% and the 5%. You can do 95% of the work, and the program can utterly fail because you didn’t do the final 5%.

Here’s an example:

Your team plans and executes a “perfect” webinar program.  Lots of people register and attend from your target market. The content is stellar.   You’re feeling great.

But….your team didn’t properly roll the program out to Sales.  They don’t know the first thing about the content or how to follow up. Worse yet, you held the event at the end of the quarter when reps are trying to close deals.  The leads linger. By the time you get everything sorted, they’ve gone cold.

Did the program fail? Should you do it again?

The the truth is, you don’t know. Even though the marketing team worked very hard on the program, it failed because they didn’t close the loop. All that work ended in frustration and didn’t move the business forward.

I see this type of thing happen everywhere in virtually every type of program.

Marketing execution must be crisp and complete.   Demand no less. As I’ve shared before, some programs won’t work. That’s ok. But it shouldn’t be because of an execution failure.

To help ensure effective execution, I recommend two specific actions:

• Look for marketing executors that are neurotic about details. You typically won’t find this at the CMO level, but someone has to be responsible for making sure the details are in focus. This person is worth their weight in gold.

• Where possible, create reusable checklists for different types of programs. This keeps everyone on the same page and ensure that details won’t be forgotten in the fog of marketing war.

Agencies Can Play an Important Role, but Be Careful

Agencies/contractors can be a tremendous help as you’re scaling your business. They allow you to “rent” expertise and to move quickly. And some functions are often best done externally forever. I have had some AMAZING agency and contractor relationships over the years.

But beware of the siren song of “agency as your marketing solution” — it rarely is. A few things to bear in mind:

• Agency incentives are different than yours.  They’re running THEIR business, not yours. Their motivation is to sell more services, which may or may not be the right answer for your business.

• Agencies/contractors don’t have the urgency or commitment of full-time employees. Why would they? Their level of commitment to your mission is understandably less.

• If you can’t spend a lot, you’ll often get the B team. This is what you would do in their shoes, so you can’t blame them. But you should know this going in.

• Some skills are best left internal (product marketing, for instance).

• When you meet an agency, ask WHO will do the work.  After the sales process, you may never see the partner who sold the work.

• Agencies must be managed. Without your regular input and partnership, how can you expect them to do their best work? They’re not mind readers or magicians.

• Many agencies are spread very thin across multiple clients. Make sure you manage their work carefully to ensure you’re getting the best possible work product. The squeaky wheel really does get the grease here.

All of this said, If you find an agency/contractor you love, commit to them and treat them as an extension of the team. This is the best way to maximize alignment and get the very best work.

Leave Room for Marketing Failure

Anyone who tells you that they know exactly what type of marketing is going to work for your company is not telling you the truth.

Strategies and tactics are highly situational and every situation is a bit unique. The only way to learn what will truly work for your business is to try various tactics and measure carefully. That means you must leave room for failure; it’s going to happen.

Your marketing team must have an experimental mindset. They should be excited to try new things and be religious about tracking, measurement, and learning. My teams usually keep a Google Slides presentation with the various tests we’ve run and their results. This type of journal gives us an invaluable resource for learning and getting new team members up to speed. When you get to scale with digital programs, your journal should include statistical analysis to ensure the validity of your tests.

As the founder, it’s your job to encourage this. Don’t get upset if a well executed program doesn’t achieve the desired results (if it’s poorly executed, this is another story). Push for continuous learning -- which leads to continuous improvement.  Push for excellence in execution, but be forgiving if a test fails.

When something fails, ask the three whats?

• What? What exactly happened in the program and the execution?

• So what? What does this mean for future efforts?

• Now what? --What are you going to do next?

You and your marketing leader should demand crisp answers. This reinforces the importance of both transparency and learning.

As your company matures, your marketing mix will have a balance of “tried and true” programs and experimental ones. In the beginning, of course, most everything is experimental. The important thing along this path is be rigorous about execution and learning, but encourage risk taking and experimentation.

Let the "Why" Determine Your Metrics

A founder friend recently texted me asking, “how do you measure ROI on an event?”

My response, “Call me.”

When we spoke, I asked him to describe the the event and to tell me why they decided to do it. After a long conversation, it was clear that they did the event to build their brand. OK. Fair enough.

But the problem was that their Board had completely different expectation and was pressing the founder on qualified lead and opportunity numbers for the event. There was a mismatch in expectations.

I share this story to highlight how important it is for all key stakeholders to understand precisely why you’re investing in a particular marketing program before you do it. That way you can align on expectations and how you’ll measure success.

While the example above is about a founder and his board, this happens every single day within marketing groups, between marketing & sales leaders and staff, and across organizations.

If you’re a marketing leader, it’s your job to make sure everyone is clear. If you’re a CEO or founder, it’s your job to hold your marketing leader responsible for getting and sharing this clarity.

Get clear. Up front.

Today's Marketing Looks Nothing Like Yesterday's

That marketing has changed radically over the past ten years should come as a shock to precisely no one. Much has been written about this topic, so I won’t waste anyone’s time with laundry list of changes.

Instead, let’s focus on the top 5 things founders who need high performance marketing organizations need to know.

1. A large part of the buying cycle happens before your sales team engages.   What’s the first thing anyone does when they need to solve a problem? They search for solutions online and do their own research.

   Your solution needs to be easy to find, easy to understand, and clearly map to the buyer’s pain points. Clarity and brevity matter. Then make it easy for the prospect to engage.

2. Especially in crowded markets (like security), top-down selling is increasingly hard to do. The average C level exec is inundated with vendor requests and (usually bad) pitches. They don’t want one more. Be sure you’re prepared to enter the organization at lower levels with targeted offers (trials, free software). And look for marketing strategies that run counter to the herd.

3. Increasingly Product led growth, where the product IS the marketing, is a big part of the product mix.   Marketing leaders must be able to align with product (also, product leaders need to understand and embrace this).

4. Marketing technology/automation is increasingly critical. And effective marketing organization heavily leverages technology to increase efficiency and reach. Expect to spend money ensure that your team knows how to assess the value of these investments.

5. A related point — You need to have a developer on your marketing team. This is one of the highest ROI hires you’ll make, because it allows your team to move fast and do things that they wouldn’t otherwise be able to do.

Your marketing leader (and team) needs to embrace all of this. This can be tough for people who spent most of their careers doing marketing the “old” way. It’s a struggle to stay current.

But the most effective CMOs and marketing leaders spend the time to get experience with the new world order.

A word of caution here — experience can be a double edged sword for founders looking for a CMOs or other senior marketing leaders. You want the benefit of experience and domain expertise, but you also need to be sure you’re hiring someone who can work fluidly in the new world of marketing. Take note of the experiences they tell you about, and ask how they stay current.

Match Marketing Hires to Your Product/Market

For years I’ve heard people say things to the effect of, “marketing is marketing — the product doesn’t matter.  I’m here to say that this is pure bullshit from folks who don’t get it.

To be effective marketers need to understand the context of their market and product. If the product is technical, make make sure your marketers can understand the tech and the customer problem. You marketers don’t need to be engineers -- and probably shouldn’t be. But they must understand.    

This. Is. Critical.

A big part of marketing is translating from Product --- > Sales. Marketers must truly understand to play this role. For this reason, I favor marketing leaders with product management and/or product marketing backgrounds.

Beyond the technical side, look to match match marketing leaders with your go-to-market strategy. If you’ve got a high velocity, inside-sales driven business, there is a good chance that an enterprise marketer will struggle. And vice versa.

If you haven’t yet achieved go-to-market fit, find a senior marketing leader with a variety of experiences and the flexibility to adapt.

Overall, look for leaders with transferrable skills, market knowledge, relationships, and experience with your G2M approach. They don’t need to have done exactly what you’re trying to do --- but their experience, skills, and network should transfer. This is worthy of substantial probing in the interview process.

Domain knowledge, while helpful, is not critical for execution-level marketers.

CMOs Must Operate on Multiple Time Horizons

As the top marketing strategist, the CMO must be able to think and plan for this quarter, for this year, and for the next 18-36 months.

In the short term, the CMO must be closely aligned with the head of sales to ensure that demand and enablement programs are in place to meet revenue numbers.

In the medium term, he or she needs the strategies, programs, and plans to support growth in the out quarters. This includes planning for product launches, new market expansions, partner launches and other long lead items. Unless these plans are framed out with resources earmarked, each quarter will start with a scramble.

In the long term, the CMO must work with the CEO and product team to build category and market leadership. This only comes from an understanding of the operating environment and a good sense of where the company and the market are going. This will be a combination of strategic planning, market research, evangelism, and PR.

A strong CMO operates fluidly across these horizons and calibrates investment of time and resources. He or she communicates clearly to the executive how each market investment maps to the company’s overall strategy over time.

It’s the CEO’s job to help ensure that this balance and provide support for initiatives that have a longer term return on investment. The CEO’s support is especially important in ensuring alignment between Sales (who often wants 100% of investment for the current quarter) and Marketing (which must operate in all three horizons).

Don't Confuse Marketing Roles

There are three primary marketing functions:

• Strategy -- Formulating the G2M plan in partnership with founders & the head of sales.  Then developing the marketing strategy to support.

• Planning -- Taking the strategy and determining the marketing mix and tactical plan to execute.    This role also sets and measures metrics and keeps the trains running on time.

• Execution — Running and measuring individual campaigns / programs
  

Founders often confused these roles, hire the wrong person for their needs, then wind up frustrated because they’ve now lost time and money. Worse yet, sometimes these founders conclude “marketing doesn’t work for my business.”

Since a vanishingly small number of marketers are great at all three functions, it’s critical that you determine what’s most important for your company right now. Most great marketers are truly great at one and pretty good at a second.

Hire for the function that’s most important to your organization in the near term. Make a secondary priority of figuring out how good they are are the other things you need.  Then figure out, with the candidate, how to compensate for the areas he/she isn’t ideal for.

Like all humans, they may not be self-aware enough to know which functions they’re great at versus just ok. In the interview and reference process, it’s your job to suss this out.

As a side note, founders generally underestimate the value of someone who is great at marketing strategy -- until it’s too late. Unless you feel like you’ve nailed product and G2M fit, err on the side of getting a great strategist.

Achieving Go-to-Market Fit is a Critical Milestone

At this point, everyone has heard about product-market fit, the critical point where you’ve got sufficient evidence that your product meets a market needs and you’re ready to scale up. Simple enough.

But product-market fit is only one piece of the puzzle.

With due credit to Bob Tinker, founder of Mobile Iron, I would argue that an equally important milestone is go-to-market fit. This is the point where you know what message, delivered by which channels, and sold in which packaging, at what price, will allow you to truly scale.

There are a myriad of variables here that bear thoughtful consideration including target markets, messaging, pricing, marketing channels, routes to market, sales rep profiles. Where companies often go wrong is by attempting to do too many things.

Take routes to market. Your company’s customer acquisition strategy can be sales-led, marketing-led, product-led, or channel-led. You can aim to be high velocity (low average contract value, high number of customers) or enterprise (high average contract value, low number of customers). Your sales team can be inside sales, field sales, or channel account management driven.

In the early days, many founders want to believe you can be all of these things. Allow me to save you some time — you can’t. And you may not figure it out perfectly the first time. Experimentation is likely necessary and you’d be well served to be structured in the way you approach this. Your available capital, the size of the market, and the competitive environment will inform how aggressive you want to be in testing various G2M theses in the early days.

Your company’s G2M Fit will inform who you hire, where you spend money, and ultimately how quickly you can grow. Scaling before you have have G2M fit can be disastrous. In the best case, this type of premature scaling will waste time and money. In the worst case, it can stifle your company’s potential.

Your Sales VP and CMO are your thought partners in figuring this out. Be sure that these individuals have the flexibility and experience to help you arrive at G2M fit.

Hey Founders! Only You Can Own Your Early Customer Relationships

The most dear thing you have as a startup founder is your initial customer relationships.  

They teach you about their needs, influence your product and your message, provide references to investors and to other customers, and sometimes even evangelize for you. They even teach you how to sell to similar accounts.

Why would you ever delegate these relationships?

And yet many times I see busy founders do just that. They allow some other person in the company to run with these relationships, and, in so doing, lose touch with their most valuable stakeholders. They rationalize that they’re too busy with some other “important” task or that it’s really the sales or marketing leader’s job to manage these customers.

When early customer relationships are managed most effectively, the founder is the primary relationship owner. Other execs and staffers play supporting roles, are there to listen and learn, and can take action items. But when the customer needs to call someone, it’s the founder.

And when the company needs something from the customer (advice, a reference, whatever), it’s the founder who calls.

When it’s done this way, everyone benefits. Don’t let busy-ness or some other siren song convince you otherwise.

Categories Matter -- Deeply.

To understand the world, people need organizing principles. Categories do this for products.

Categories give your prospective customers, your team, your investors, industry analysts, potential employees, and others a common way to understand where you fit.

In every category there is well known leader, or category king. This player claims the majority of value in the category. If one considers the category “taxi alternatives” two points emerge immediately. First, almost everyone immediately identifies Uber as the category king. The second is that Uber has, at the time of this post, 8.5x the market capitalization of the number 2 player in the market, Lyft. Since the financial returns in any given category go disproportionately to the leader, it’s critical to be extremely thoughtful about your category strategy from the start.

Your category strategy includes several strategic decisions:

• Will we disrupt an existing category or create a new one?

• Who do we see as our competitors in this category? If we’re creating a new category, this question is extremely important — you cannot be a category of one.

• What is our unique perspective on this category?

• What sort of innovations are required to win? Product? Business model? Channel?

Your category strategy provides direction to every part of your company and drives your execution plan. As founders and marketing leaders, our job is to define a category strategy, determine a defensible position within the chosen category, and align the entire company around winning in this context.

For an excellent perspective on the importance of categories and how to execute a category strategy, I strongly recommend Play Bigger, which is the definitive book on the subject.

You Can't Spell "Marketing" Without "Market"

“How do I generate more qualified leads?”

This is often the very first question I hear from founders and their investors. And often marketers are all too happy to oblige with lots of ways to generate demand (and spend money).

Don’t get me wrong — qualified leads are hella important when you’re building your business. But when you ask this question before you’ve really done your homework, you’ve got the makings of sadness, frustration, and wasted dollars.

To build demand, first you need to really (really really) understand your market. Sounds obvious, right? But too many organizations skip their vegetables and go right to dessert. It’s temporarily satisfying (Look! We’re “doing* marketing now!”), but ultimately it’s empty calories.

Before putting in place your demand generation plan, you’ve gotta have a very strong thesis on three things.

Customer Pain — What specifically is the problem your prospect wants to solve? Who in the organization is affected? What are the consequences of not solving it? Are they annoying? Or intolerable? Are there financial consequences? Whose budget do those hit? Who is responsible for solving it? Who will be a hero when it’s solved? And so on.

Competitive Alternatives — If they don’t go with your solution, what will they do? Nothing? Adjust to a manual process? Buy another solution? What are the honest pros and cons of these alternatives? You must be clear-eyed here. And don’t be the guy who says, “we’re the only ones doing what we do; there are no alternatives.” There are always alternatives.

Unique Differentiation — What makes your solution so special? How important is your specialness in their world? Are you truly unique? How sustainable is your advantage? What would your competitors say about your advantage.

Clear, data-backed answers to the above questions will have a massive impact on your the ROI of your marketing investments. Without them, you’re shooting your arrows (dollars) at the target blindfolded.

Customers Buy. They're Not Sold.

I recently bought some marketing software.   After extensive research, we narrowed our choice down to two vendors.   While the products generally do the same thing, the sales cycles could not have been more different.  

Let's compare: 

Vendor 1

• Discussed pricing and potential discounts on the first call.
• Didn't come prepared to calls.  Couldn't answer technical questions about their product.
• Ignored the fact we  we had to resolve internal issues before we could purchase, and instead called, emailed, and texted (!) to remind us that it was their end of month.
• Chased my colleague and I for 6 weeks.

Vendor 2

• First sought to understand our needs and environment.
• Came to our first call with a knowledgeable Sale Engineer.  Answered questions immediately.  Responded quickly and precisely on follow up items.
• Asked about our timeframe and respected our needs.
• Negotiated hard on price, but only after a technical fit was established.

Of course product features and capabilities were integral to our decision.  But we were actively trying to get Vendor 2's solution to work.  

Why Marketers Should Love Open Source

Note: This post was originally published on December 13th 2011.  

Why would I suggest that marketers should love something which is generally free, widely available, and highly disruptive?

It's simple.  Open source simplifies commercialization.   Here's why:

1.  Open Source Validates a Need   -- Open source answers the ginormousquestion that keeps us marketers up at night:  who cares?   As in --- it seems like a good idea, but who really cares?  Open source businesses are built around a community of users.  Rational users only use products that solve their problems.    So by definition, someone cares.  Of course, lots of questions remain in terms of a business model and commercialization strategy -- butthe most fundamental question is off the table.  Here is the typical commercial open source route to market:

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There is a significant gestation period before a business venture is attempted.  Ideas are refined, product are polished.  A need is validated.   In the wild.  By the actual people who will use the finished product.

Contrast this with the more traditional commercialization process.  Note that the product never really gets stress tested until the prototype phase.  And it doesn't get a real workout until the launch.  At this point, you've got a ton of sunk costs -- and more than likely, a ton wasted effort.

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2.  Open Source Defines a Route to Market -- I've argued recently that a modern go-to-market strategy engages users early and by offering them limited, but meaningful value before attempting to sell them anything.  It then let's them buy small increments of functionality and then 'step-up' their purchases over time as their needs dictate.  For convenience, here's the diagram from my earlier post:

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In this case, the 'free or trial' version is the open source version.  It's incumbent upon us as product developers to create enough added value in our commercial versions to encourage a meaningful percentage of open source users to step up.   Or to encourage their organizations to do so.

3.  Open Source Stimulates Commercial Demand -- Provided you've got a large community AND provided you've built a commercial product with sufficient (and truly valuable) differentiation from your open source version, you have two key (and non-trivial) ingredients for commercialization.     But in any market, you still need to know who to target.  A massive amount of resources are wasted trying to figure out the who.   Open source gives marketers a huge leg up in the who department.  You already have users.  

By providing easy ways for users to see/try/understand value-added commercial functionality, some numbers of users will raise their hands.  They'll try it.  If it meets their needs, they'll get their companies to pay for it.   They'll make suggestions.  They will tell you the type of functionality that they need to justify a purchase.

To make things even more interesting, open source almost always grows organically within a buying organization.  A few people start using a technology, then more, then more, then it becomes a candidate for to become an organizational standard.  This all stimulates demand for commercial versions.  This creates a phenomenon some people call BFM, or black f#@ng magic.  This is where out of the blue, you get an email or a phone call from someone to the effect of:  "we love your open source product and we'd like to buy 1,000 seats of your commercial product."    It doesn't happen every day, or even every week, but it does happen.   And when it does, it's pretty cool.

It's Not Perfect.  It Doesn't Work All the Time.   But It's Pretty Compelling.

Don't get me wrong -- there are tons of challenges and pitfalls with commercial open source businesses.  Leaving aside the gargantuan hurdle of creating a popular OSS project (just look at the number of dying or deadprojects on SourceForge), commercialization takes a ton of creativity, hard work, and more than a little luck.  Your commercial product has to be well differentiated.  Your users most likely aren't buyers, so you have to turn them into advocates.  You can't market too aggressively.  And so on.  And on.

But the market efficiency benefits trumps all the challenges. By a long shot.

PS:   This isn't some new-found found fascination based on my current gig at Sonatype.  I've worked with several open source companies.  I'm currently the CMO at Sonatype,  which makes open source management products and plays an active role in huge projects like Apache Maven, Hudson, Nexus, and Eclipse.   I worked for Akopia, an open source e-commerce software vendor, later acquired by Red Hat.  I stuck around there after the acquisition and and ran product marketing for them.  I currently serve as an advisor to Zenoss, an open source systems management company.

Enterprise Sales is Dead. Long Live Enterprise Sales.

Note:  This post was originally published October 24th, 2011.  And it's even more true today than it was then.

The demise of the traditional enterprise software sales model is widely reported. And widely, and joyously, celebrated.  

And for good reason.  The model has bugs.  Lots of them.  It's expensive (personnel, travel).  It's time consuming.  Picking good reps is hard; many fail.  Finding good sales engineers is incredibly hard -- often even good reps fail if they have bad SEs.

But this biggest bug is this -- it takes too long to achieve uncertain results.  Typically it looks like this.

You invest a lot of time (and money) up front in hopes of a big payoff down the road.  You're solving a big problem, building consensus, evangelizing your approach, de-positioning competitors, meeting with executives and on and on.  It all takes time.

The problem isn't that this approach doesn't work.  It does.  Ask any big software company.

The problem is that it's inefficient.  All that convincing takes time, skill, and a ton of hard work.  Much has been written (Solution Selling, Customer Centric Selling, etc.) about how to make this process more efficient and its outcomes more predictable.  But these books, as good as they are (and they are great) are about improving an existing, and fundamentally flawed, process.

But the real game changer is a new approach.  What if the timeline looked more like this:

In other words, what if you could deliver bite-size chunks of value and get paid along the way?  How would this change things?

• You could sell at lower levels in your target organization
• Customers could convince themselves of the value of your offering
• When you go to sell a larger deal, you would already have proved your value
• You would have user advocates within your customer base
• Your sales reps would not just get leads from Marketing, they would get customers with whom they could build relationships (and sell more).
• You'd have many more (albeit smaller) customers.
• And so on...

In short, the whole machine is more efficient.  Sounds great, right?  Probably don't even need any sales reps, right?

Wrong.  At least wrong in some cases.

If your product solves an enterprise level problem, you're going to need elements of a traditional enterprise go-to-market plan.  You're going to need to be able to meet with senior executives, on their turf, and convince them that your approach solves a problem they care about.  You're going to need SEs.  You're going to need to build consensus.  All that enterprise sales stuff.  And the enterprise marketing stuff to grease the skids.

But wouldn't it be easier if the people you were talking to were already customers?  Wouldn't the conversations be smoother if you already had internal advocates?  Don't you think you might close big deals faster if you already had a commercial relationship?

And wouldn't it be nice to get paid along the way?

In part fueled by the consumerization of b2b software, this is where the world is going.  Companies that can deliver incremental value for incremental dollars will have real and sustainable business model advantages over those in the the 'all or nothing' camp.

All of this has real impact on how you design your products.   In part, your product must become an integral part of your sales and marketing machine.  For thisto work, you products must be flat simple to use.  They must be set up to deliver incremental value.  Ideally, they'll have a social or viral aspect to them.

Below is a (very) simple diagram describing how this might work product wise.

At each step, the product is proving its worth and adoption is expanding in the organization.

This type of product design enables a far simpler
initial engagement with the customer -- many times this first
transaction can be closed online with no human contact.  In other cases,
an inside sales function (less expensive, no travel costs) can drive
early and secondary sales.  From a go-to-market standpoint, this might look more like this:

In short, the old model isn't dead.  It's just becoming (much) more leveraged.  And this benefits both vendors and customers.

As a vendor, the the imperative is clear: Find ways to efficiently deliver incremental value and collect incremental dollars.  In the process, you'll transform your sales process by adding tremendous leverage.

5 Things I Learned About Business from My Dad

(This was originally posted April 17th, 2012.  Still true today).

My Dad would have been 83 today.  He died eight years ago and I still think about him frequently.

My father and I chose very different paths career-wise.  He was an accomplished academic who stayed in school into his 30s.  I went to work right after college, returned for an an MBA, then went back to work.  My Dad worked almost exclusively for the federal government as an economist, researcher, and urban planner.    I, on the other hand, have been fascinated with private enterprise since I can remember.  Working for the government never occurred to me.

And yet I learned a lot about business from my Dad.  Here's a few nuggets:

If You Don't Communicate Well, the Rest is Moot

From the time I was in high school, my Dad beat me up about my writing.  He would brutally edit my papers and critique my word choice.  At the time, I hated it.  Now, I'm incredibly grateful.   His point was simple:  No matter how strong your position, if you can't communicate it clearly you're dead in the water.  My Dad didn't know about Powerpoint, but I'm sure he'd have strong opinions if he sat through many of the presentations I've seen.

Be Loyal

Before he died, I went to my Dad to ask for some advice when I was working at some start-up or another.    I had been at the company since the beginning, but things were going sideways.  I had other opportunities and was considering bailing out.  His position was clear:  You were a part of getting this thing going, you need to stick it out until the end.    He was right.  I stuck it out and things worked out for the best.

Just Solve the Problem

Like many of us, I can get wrapped about the axle stressing about some work problem or another.   Whenever this happened, my Dad's advice was always the same:  don't worry about all the things that you can't do anything about, just focus on the root problem.  He was right -- wasting energy on stressing about a wild series of what-ifs does nothing to move the ball.

Study the Matter

My Dad never made decisions quickly.  It was maddening when I was a kid.  The answer always seemed obvious to my naive mind.  But he was always thoughtful.  He took the time to research and understand, and to let his mind wash over the options before deciding.  While I didn't always agree with his answer, it was always well-reasoned and deliberative.

When a Man Knows He is to be Hanged in a Fortnight, it Concentrates His Mind Wonderfully

A sign with this saying hung in his office for years.   In other words:  deadlines and consequences matter.  Some amount of time pressure constrains the task and focuses efforts. I've found this works for myself and for my teams.

I miss you, Dad.   Some days I really could use some advice.

Mistakes. I've made a few. (aka: dumb stuff I've done and what I learned)

When I was the youngest guy in the room, I didn't want to admit when I screwed up.  In my mind, I must have thought by admitting my mistakes, I was at risk for exposing myself for what I (obviously) was --   the most inexperienced guy in the room.

Now that I'm, well, not the youngest guy in the room, I'm a lot more comfortable with my mistakes.   Here area few of the lessons I've learned the hard way.

Success is Situational -- Because someone was successful at one thing (company, product, role, whatever) does not necessarily mean that they'll knock it out of the park somewhere else.   Markets, resources, politics, and a myriad of other factors make every challenge unique.

The Answer Isn't Inside -- Early in my career, I just knew we could figure it all out with a whiteboard and a spreadsheet.  The story makes sense, yes?  The model looks great, right?  Yup.  Butprospectsdidn't care.  So guess what?  The product didn't work.

If Sales Doesn't Buy, No One Will  -- No matter what you do, if your Sales team doesn't believe, you're facing an uphill battle.  I used to think we could show up at a sales meeting with a slickPowerpoint and they'd run off and make my product a winner.  Nope.   Your first sale has to be to Sales.  When they believe, then the magic can happen.

Group-think is Real -- and it Kills -- Many times I've followed the siren-song of hiring people who don't challenge the status quo.  Or ignoring people who with an inconvenient view.  I've learned differences of opinion, when constructive and open, lead to polish.

Sometimes Convincing Takes Time -- I used to think that the power of my idea, combined with well crafted words or slides, would let me turn the tide of an organizations.  Nope.  Especially in larger organizations, but even in smaller ones, acceptance takes time.   I've learned to invest the time to "sell" my ideas (and be open to differences of opinion).  I figured out that if I discussed my ideas openly and frequently, that they became "our" ideas -- and things worked much better.

Sometimes the Good Stuff is Badly Packaged -- It's often been easy for me to dismiss someone's view if I didn't like the way they said it.  Or, quite honestly, if I didn't like the person very much.  But sometimes the kernel of something great is in there.   I'm learning to try to parse the words, separate the emotion, and see if there is something I can learn.

My Opinion, While Mildly Interesting, Doesn't Matter -- I've learned it's always better to describe facts and market feedback than to express my opinion.  In the end, my opinion is only a hypothesis in an experiment.  Prospects are ultimately the arbiters of the results.

Politics Matter -- I used to think that ideas could categorically overcome organizational politics.  Turns out organizations are made of humans and humans have agendas.   When I take the time to understand others' true motivations -- including those under the surface,  things generally go more smoothly.

Turns Out, I Have a "Gut" --  Not the kind I'm trying to work off by running, the intuition kind.   Early in my career I droveback from a big meeting about a big deal with my boss.  He asked me what my gut told me about the deal.  I hemmed and hawed about internal rate of return and cash flow and a bunch of other MBA bullshit.  What I was (poorly) attempting to mask is that I didn't have a "gut."   Now that I've seen a lot more successes, failures, and just plain odd things in business, I definitely have a gut.  Generally, when I trust it, things go reasonably well. When I don't, I later find out why I had a bad feeling to begin with.

When You Screw Up, Don't Bury It -- Man, it's tempting to hide that misstep.  Or to paper over it.  Turns out, mistakes are human.   I've learned it's much better to admit it, figure out what I learned from it, and move on.

Why I hate tradeshows

(Originally posted September 25, 2010)

I just returned from the better part of a week in San Francisco at Java One.   It was a good week in many ways; I met many of the Sonatype team for the first time, connected some voices and emails with faces, spoke to many potential customers, got great product feedback, and caught up with old friends and co-workers.

 I was also reminded how much I hate tradeshows.  It’s not that I hate the experience (though at times I do), it’s that I really hate their inefficiency as a marketing vehicle.

• They’re expensive.  By the time you add exhibition fees, the costs of having a booth (and of getting it there), signage, electricity, Internet, and the myriad of incidental costs, your average show looks pretty expensive.
• They’re more expensive than you think.  When you add the cost of travel, and the opportunity cost of having key people out of the office, you can easily add 40% to the cost of a show.
• They don’t generate nearly the number of leads that you’d hoped.  I’ve often seen marketers return from a show with 400 “leads” and feel really great about the event.  In reality, most of these are badge scans that will never materialize as an opportunity.
• The real leads you get are less real than you think.  Time after time, I’ve seen really hot leads from a tradeshow inexplicably go cold as soon as a sales rep calls.  Somehow the product they desperately needed at your booth isn’t so important.

Once you do the math, the inefficiency becomes painfully obvious.  When compared to other vehicles, the cost per lead is way out of bounds.

When you take it to the next level and examine lead/opportunity conversion, the math gets worse.  If you’re normally converting 10% of qualified leads to benefited opportunities (which would be a very good rate), then you’re paying $9,066 per opportunity.    Anyway, you get the point.

I am, of course, overstating the case against tradeshows.  They have a place in the marketing mix because they are a great way to get face-to-face with prospects, to see firsthand how competitors are positioning, and to establish thought leadership position for your company.