Jason Green, Emergence Capital Founder, and General Partner moderates a discussion with Janine Pelosi, Zoom Head of Marketing and Online Business and Tolithia Kornweibel, Gusto Head of Marketing.
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Jason Green | Founder and General Partner @ Emergence Capital
Tolithia Kornweibel | Head of Marketing @ Gusto
Janine Pelosi | Head of Marketing and Online Business @ Zoom
FULL TRANSCRIPT BELOW
Jason Green: Good afternoon. So I’m Jason Green, Founder, General Partner at Emergence. We are a venture fund that started focusing on SaaS 15 years ago. So we bleed SaaS and we’ve been very lucky to have backed some of the iconic companies in the space. Salesforce, Yammer, Box, Viva, Success Factors, and of course Gusto and Zoom, which are represented here today. I was lucky enough to also be an investor in Jason Lemkin’s company back in the day at Echo Sign. And super proud of what he’s done to take his learnings from that experience and build this incredible community, the SaaS community globally. So really proud to be here our fifth year at SaaStr. So first of all, thank you both for joining us. These are two amazing executives. Jason asked me to find the two best marketing executives that I could to talk about how to generate more leads for your company.
Jason Green: So who’s a founder in the room? Can I see a show of hands? Okay. Keep your hand up. No, keep your hands up if you want more leads for your business? Okay. Everybody else leave. So you’re in the right place. And we are super excited to have two leaders who have been at the helm of creating literally hundreds of millions of dollars of enterprise value, maybe billions in the last few years. It wasn’t that long ago when we invested in both companies. They were less than 10 million in ARR and they’re well north of 100 million today. So I think there’s a lot of lessons to be learned and hopefully you will today walk away with some very tangible takeaways of what you can do to accelerate your business.
Jason Green: Just to jump right in since we have limited time, I love to ask always one like get to know your question. So Janine, you have been in the web conferencing industry broadly for a long time. You started at WebEx and then Cisco and obviously with Zoom for the last four plus years. First of all, why web conferencing as an industry have you dedicated so much time to? And then why Zoom? What attracted you to that opportunity?
Janine Pelosi: Why web conferencing? I don’t think that was like planned. Like WebEx was a fun, cool brand at the time. So that’s obviously why I joined there. Why I stayed I think is … I talk a lot about like I think that the term is B2B and B2C are kind of silly. I just think you’re selling to people. And at Zoom I have the ability to sell to micro one person businesses all the way up into the Fortune 50. So knowing that you’re both selling into an IT, you know, traditional business audience. But then knowing that at the end of the day in SaaS, if end users aren’t using and loving the product, then they don’t renew. So you get to do a little bit of both.
Jason Green: Yeah. And how much do you think coming from the industry for so long has been a key to your success at Zoom? Just learning the lessons of that industry?
Janine Pelosi: You know, I think it goes back to some of the fundamentals of how we do marketing around … I take a very practical approach to what we do at Zoom and the way we market Zoom. So I think ensuring that you understand that people don’t wake up in the morning and think about your brand. I hate to break it to anyone in this room, but they’re not going to do that now and probably for a very long time. So frequency is a big play. So continuing to think about the whole cycle and the whole funnel or however you describe it, stays super important.
Jason Green: Cool. All right, Tolithia you joined Gusto recently, in the last few years. You spent quite a lot of time at consumer companies before you joined Gusto and kind of made the move to B2B, which we’re super happy about. We love B2B. So why did you make that move and how have you found those skills translate to Gusto?
Tolithia Kornweibel: I definitely was looking for a new challenge, but I also had a hypothesis, which I think has borne out to be true, which is there are some ways in which B2B is very far behind B2C marketing. So I agree completely with Janine that at the end of the day, you need to know what you’re selling to whom and why they would pick you. And you need to always think about sort of collapsing the time and space between the customer you want and your company. So those things definitely translated. I did need a pretty big decoder ring just for the lingo. And then also what was new to me that I’m still adapting to is the high touch sales process and how much institutional effort has to go into making that happen.
Jason Green: Yeah. And Gusto is selling to pretty small businesses, right? Five, 10 people. So it’s a lot more in some ways like consumer than enterprise. So today we’re going to talk about generating leads and I think we were going to break it into three sections. You know, marketing used to be about the four P’s. That’s what I learned when I went into business school, product, price, place and promotion, right? It was retail very oriented. Now I think we have what we call the three Cs, which is demand creation, demand capture and demand curation. So we’re going to talk about the three Cs today and we have lessons to really apply to each of those key buckets. I want to talk about tactics that are being used at scale like you are today, but I also kind of want to rewind the clock a little bit because many in the room are much earlier stage businesses.
Jason Green: Let’s talk a little bit about the demand creation piece of that equation. Janine, I love you to start maybe and talk a little bit about some of the lessons learned in the earlier days. And I know four years is dog years in Zoom time. But like if you can rewind yourself to what it was like when you first joined the company, what were some of the things that you did early on that really seem to work that kicked in that kind of lead gen engine?
Janine Pelosi: Yeah, I always thought the term demand generation was so silly. So yeah, we were talking about this, you know, you do stuff to create demand and you do stuff to capture it. And so as I think about like those first hires, I know I came in right on the heels of the series C funding from Emergence where we said “We’re going to kick off sales and marketing”, whatever that means. It means go put some attention and money behind it. And so when I think about those first hires, it’s what am I going to do to do both of those things? And when I think about kind of those key priorities that still hold true today, it’s about building preference for the brand and driving third party validation. And what I mean by that is we built relationships with the analyst community much earlier than I think most and that you might not think that you needed at that time, but sure has it paid off, right? When you have scaled and when you are in those enterprise conversations. So having those relationships is key.
Janine Pelosi: And then I describe our customers as like a cult following. When I came over to Zoom, I had so many folks that wanted to give me quotes and videos and what do you need? They wanted to scream it from the rooftop. And I’m like okay, well we’ve got something unique here, so let’s make sure that that always stays front and center to what we do. And so I think those key hires are around…
Jason Green: What key hires?
Janine Pelosi: Early on it was we did events. So we take, as I mentioned, a very practical approach. So getting in front of people is still incredibly important in this digital age. So events, it was digital, of course, he was my first phone call. I found the best person I knew thinking about it pragmatically. And then someone to do webinars and demos. So for us, we do have a very strong Freemium. It’s the same product that you use, whether you’re an SMB buyer or enterprise. So it really helps with that upsell motion. So people experiencing it. And then we have things like our Zoom room, so conference room solutions, you know, voice now. So being able to also ensure that you are talking to your current customers about what you’re bringing in because I think that’s something people forget about too, is your current customers need to know what you’re up to just as much as your prospects. So I wouldn’t forget that piece of it as well.
Jason Green: What’s some of the low hanging fruit, though? That you came in, you just saw immediately I could make this change and have an impact on leads?
Janine Pelosi: Immediate low hanging fruit was I went to our website and we didn’t have call to action buttons on any of the product pages. We had an all hands the first day I started and I said “Leads aren’t going to fall out of my pocket. So like hold tight.” We had a handful of reps at the time and then the next week, they literally did. So I’m like I don’t know if I can keep this up. We were able to luckily, but I think just in that week we went from 11 contact sales leads to 111. I’ll never forget that, overnight. So there is low hanging fruit and we run into those things today, right? In product messaging, you can find that at any stage of your business. But that was one of my early memories.
Jason Green: Got it. You know, we all see the Zoom billboards everywhere now in airports and everything. So can you talk a little bit about … Like if my early stage startup came to me and said “We’re going to be buying billboards”, I’d be like “Well, that’s not quite the spending that you talked about when we invested.” So why did you guys do that? How early did you do something like that and how did you know if it was effective? If it was worth it?
Janine Pelosi: Very early, actually. Even stepping back, I think it’s also important to note that Eric, our CEO, is a supporter of marketing. Like that’s really great. You know, I just saw a lot of founders in the rooms, like make sure you have really good relationships with the people that you’re asking to go and build your brand and drive leads because it is an art and a science and you kind of have to … If he didn’t believe that people don’t wake up in the morning and thinking about your brand, we might not have done this. But he also came to me and said “Hey, I found this billboard on the side of 101. Here’s the guy’s phone number.” I told him we would do a billboard. And I’m like okay. So we took that and built off of it. But it actually came around Dreamforce.
Janine Pelosi: I started in March and obviously we know the timeframe in the fall around Dreamforce. And I’m like, you know, to spend half a million or $1 million on one singular event was so, so much at that time. But I said “Well, we have, you know, a couple hundred thousand people coming to the city, so let’s surround the events.” We did things like Barton, SF … I think that’s when we got our first SFO ad. We did a Muni, like buses weren’t cool back then. They’re sure cool now. They have a waiting line there. And then like the Moscone parking garage. So we just really thought outside the box and guess what? Like that media doesn’t cost a lot of money. Right? And I could’ve gone and put that into a digital campaign. So making sure that we had both, I mean, obviously we were starting to invest in search and investing in digital, but we had a good balance.
Jason Green: Yeah. Well, being a Freemium product obviously helps a lot in terms of just you want people to try that product.
Janine Pelosi: Yeah. And then build a preference for it.
Jason Green: Build a preference. So Tolithia, you joined Gusto a couple of years ago. I’ve been amazed at the impact that you’ve had on that company and particularly around the organic inbound interest in that company. So tell us what you saw when you got there and tell us what you’ve done over the last few years to really move the needle.
Tolithia Kornweibel: Yeah, I saw lot of activities, a lot of motion, no progress is what an old CEO of mine used to say. And what we did in the organic, the content channel specifically is really instituted a product mindset, which many of these founders are probably product people, so they can probably relate to this, which is if you’re going to try to generate inbound demand, you should be creating content that actually provides value to the user, the reader when they get it. Sounds so simple, but I think a lot of people start instead with volume and technical SEO rather than the actual content itself being valuable to who you’re trying to speak to.
Jason Green: Meaning just trying to drive people to the website.
Tolithia Kornweibel: Exactly, yeah. Rather than just like the content itself should deliver something. This is a little bit like a Freemium model and that sort of democratizes our brand value proposition to the consumers of that content. And I hired an up and comer with Fyre at the sort of … I had to kind of go out on a limb. So other execs wanted us to look for someone who’d sort of been there, done that, HubSpot, Shopify, et cetera. We all know those stories, but I feel like organic strategies are all pretty custom to your business and the people that you’re trying to attract. So it was more important for me to hire somebody who just had incredible fire in her belly and was ready to rock.
Jason Green: So both of you have used the term authenticity, I think. Talk to us a little bit about what that means and where have you gone astray on authenticity that actually didn’t actually play out as you had hoped?
Janine Pelosi: Yeah. When I think about what didn’t work is we have great Zoom advocates out there organically. So in the spirit of Zoom, we try and double down on things when they’re working well. So we’re like okay, we’re going to programmatize it. We’re going to find a tool, we’re going to go and this is going to explode. And it completely fell flat I think because it just was not natural. And then I look and I’m like well, we don’t need this. Let’s just continue doing what we’re doing here.
Janine Pelosi: But in terms of like I think truly people can see straight through you if you’re not authentic. And I’m a firm believer whether you’re thinking about work, home, wherever in your life, that expectation setting is absolutely key. And so for us it’s like the more that we can under promise, over deliver, like you continue to build a really great authentic relationship with your customers and prospects.
Tolithia Kornweibel: Sort of relates to a conversation we’ve had. When I came to Gusto, we spent a lot of time talking with our customers and so truly customer centric company naturally and completely to figure out what to do next, where to find new customers, how to develop the product, all the things that are really important. But we weren’t talking to the external market. So we were in that siloed mindset of trying to understand the people that we’d already convinced to become our customers. And so bringing back the core discipline of market research to tech companies is something I’m pretty passionate about and had a lot of conversations with people about. And I think that…
Jason Green: Is it like focus groups? Or when you say that, what do you mean by that?
Tolithia Kornweibel: Oh, I don’t do focus groups. Like qual and quant. So still you’re having conversations to start to understand and tease out the emotional realities and the triggers behind somebody’s need for your product. And then from there you’ll do a quant survey typically. So the qual that I really prefer is ethnographies where you send your researcher into the environment of the customer, the potential customer. And they have deep conversations, but they’re not UX research conversations. They’re more what’s the general context that you live in and that you operate in on a daily basis. That would be the precursors for the needs that our company can fulfill. And then what are the emotional ramifications of how you sort of might make a decision? And in our business, especially for small businesses, there’s just not a lot of room for error in the purchase decisions they make.
Jason Green: So give us an example with Gusto. Like what is the emotional connection that you were trying to make for those.
Tolithia Kornweibel: Well, we worked with this great research firm and they were talking to our customers. So of course, wanting to build a brand that’s aspirational and positive, I send them on this mission to go and ask a bunch of small business owners and managers who run teams, you know, how do you think about helping your team thrive? Because we don’t just help our customers pay people. We help them with benefits and retirement savings and also HR tools and experiences. And the researchers looked at me funny because they already knew there’s so much pain and frustration and need in the community.
Tolithia Kornweibel: But they were cool about it. And they asked that question and almost every single one of the 12 interview subjects that we had was like shocked. Kind of like it was a moment of not delight but surprise that that question was even relevant to the conversation because they’re so reactive. And so, on the one hand, that gave me great input for driving more leads, which has speak to the pain, but on the other hand, that gave me a lot of hope that we can create a brand that talks about how your life will be better once you pick us.
Jason Green: I think that kind of obsessive customer focus is a consistent theme with all the iconic companies that we’ve backed. I think Josh, the founder and CEO went on a road trip in a van, right? Visiting how many States or whatever that he visited…
Tolithia Kornweibel: Well, on the way a lot, but I think it was a little bit more than a dozen of our customers that he visited to give them an award for going the extra mile with their businesses and the way that they empower their employees, which is really important to us. And it was a great exercise because it got, obviously Josh exposure to the environment of all of the customers. It also generated a bunch of content assets including photography and video, which is very expensive if you actually go out on a professional shoot. So it was a very high ROI project for us. And it also helped us test whether or not we could get local PR coverage because most of our PR coverage at that time was very tech press oriented and small businesses don’t really read TechCrunch. So it was a good experiment. Yeah.
Jason Green: Great. Well, let’s move a little bit more to the capturing the demand after the creation of the demand. And Janine, I mean, digital marketing obviously has been a core thing here, but talk a little bit about how you think about demand capture. What are the key processes and tools that you’ve used that have worked really well for Zoom?
Janine Pelosi: Yeah, you know, people use digital just gets thrown around like it’s this big bucket for every word, every conference in San Francisco. I mean, there’s just so much that can even be a distraction. And so like once again going back to think about the practicality of it is we use a lot of … You’re probably familiar with negative targeting or keywords and all that. We use that kind of across the board. We think about it if someone’s already gone in and signed up for an account, like I don’t want you to keep seeing paid ads for us, whether it’s signing up for the trial or whatnot. We’ll use it for cross sell and upsell of course. But we really take a diligent effort to make sure that we’re using that as a big net. Knowing that, you know, there’s a lot happening at the top of the funnel that’s driving people to that.
Janine Pelosi: So even the way I think about ROI is a little unconventional. If somebody just asked me “Well, what’s the CPL or CPA for that program?” I don’t know, I couldn’t tell you that. But what I can tell you is you give me a dollar and I’m going to give you back two in this time frame, three in the quarter and then I’m going to give you X amount within 12 months. Right? And so thinking about things holistically … Obviously the program managers that are running these things have their own KPIs, but you just have to be able to look and tell the broader story of how your different channels are working together to drive.
Jason Green: So what’s been the most effective channel for you guys so far?
Janine Pelosi: From a digital standpoint?
Jason Green: Yeah.
Janine Pelosi: Probably a lot of the retargeting. I mean, because of the nature of our Freemium business, that look like modeling, prospecting in that realm I think is really important because we want to continue to kind of bring them down the funnel. But we’re in a unique position where we’re typically not going to be their digital first touch, right? Everyone has that in their attribution models. We developed ours home grown and we can talk about first and last touch and mid points and all the rest of it. But like that first touch, like just understand, you better take that look like a grain of salt. Like there’s a lot of caveats that go around anything that is digital first touch.
Jason Green: And how do you know when it’s time to push the pedal down on something? Like what’s the metrics that you think about?
Janine Pelosi: Yeah, I try and take it until I start to see diminishing returns. I think we look at …
Jason Green: So keep spending more until you see the ratio going down of productivity.
Janine Pelosi: Yeah, I mean, if you’re in the position where you can do that and you’re investing. Like I’m a big, big believer in frequency, like don’t do a little bit because you may as well do nothing, right? It’s just you have to commit, you have to look at your key KPIs, whether it’s people searching for your brand. Don’t forget to look at people searching for the category. I’ve talked to people that are like “Well, my brand isn’t going up.” And it’s like “Well, is your category?” And they’re like “Yeah.” It’s like “Well, then keep doing that.” Right? And then think about what else you could add into that mix.
Jason Green: So Tolithia, how about you guys? What do you think about in terms of capturing? You created the demand, how do you capture it now? Especially going after small businesses that, you know, five and a half million small businesses in the US. How do you even think about targeting there?
Tolithia Kornweibel: Yeah. Well, how do we think about targeting? So like from the first day I started at Gusto, everyone wanted me to roll out a vertical based strategy, which I resisted now effectively for two years. So the reason is it relates absolutely to the concept of frequency. So you want to find a way to go deep in a particular population. For many businesses, vertical makes a ton of sense, especially where you have sort of like fit for your product and that’s highly competitive. But for our business, small businesses are very heterogeneous. So if you’re trying to sell to a very broad audience where there’s going to have … They’re going to have lots of different ways they decide and lots of different needs, then my recommendation would be to use a different way to narrow the target. So retargeting is one way, geography is the way that we picked to do that. And the other nice thing about geographic targeting, and Janine sort of demonstrated this too, is you can put a surround sound effect in a geography in a non $10 million way.
Jason Green: So how big a geography…
Janine Pelosi: I am, yeah. I don’t know. I would take a city. I started with the Bay Area. We’re like if we can win here, we can win anywhere. And then, we moved on from there.
Tolithia Kornweibel: Scale it from there.
Jason Green: Yeah. I mean, actually you talk about, Janine, kind of not going into a region cold, I think was the term you used. What does that mean?
Janine Pelosi: What does that mean? Yeah. So for us, you can look at any of the indicators, whether it’s search, whether it’s visitors, new, returning, you know, frees, people signing on your contact sales requested demo forms, look at all those metrics that make sense for your business and then see what that story tells you. Like I also don’t want to over architect it. Like I think that’s where kind of you can really determine where you’re making an impact and then when you should add more and move on.
Jason Green: Cool. All right. Let’s talk a little bit about curating the demand. Both of you are very, very analytical in the way you approach the business. Talk a little bit about how you prioritize these leads. What kind of engineering talent or data science talent did you bring on board to really give you an edge on that?
Janine Pelosi: We have a data science team, so we use that in terms of scale. So you know, they’re providing insights and also scaling our analytics is the way we use those teams today, right? So thinking about where those triggers are within Freemium…
Jason Green: How early on did you bring a data science person in?
Janine Pelosi: Oh, I’d say it was probably about two years ago.
Jason Green: Two years ago.
Janine Pelosi: Yeah.
Jason Green: Okay. How about you, Tolithia?
Tolithia Kornweibel: Yeah, I think our data science team or our first data scientist came on board between two and three years ago. And I can’t stress this enough. So both in terms of velocity, of lead, creation and capture and ultimately curation, conversion and value. The most unlocking thing that we did in the last two years was build our own lead scoring model, lead prioritization model that immediately predicts conversion probability and then lifetime revenue. And almost everyone here probably uses something like that, but I think we tend to use that for prioritization with sales. But what you really want to use it for is daily optimization of your lead generation campaigns.
Jason Green: Yeah, you said daily optimization for prediction of future value.
Tolithia Kornweibel: Yeah, exactly.
Jason Green: A mouthful, but what does that mean exactly?
Tolithia Kornweibel: It means that every day the performance team predominantly, but also the organic team can compute the future revenue of their activities from the day previously. So in fast, we always kind of are governed or mostly governed by CAC payback. But in addition to that, we’re trying to build subscription businesses that have compounding value factors. And so if you limit yourself to whatever it is, 12 month payback, you’re going to leave on the table growth strategies that are going to make you a vastly more valuable company three, four, five years down the line. So being able to convince the business to give me a little leeway and have my team really making decisions on a daily basis about that future value really helped us pick up the speed and pick up the volume in terms of the leads.
Jason Green: The thing I was struck with was how much you focus on learning and iterating every day on that process. And I think a lot of this thinking, you know, quarters or months, but you know, daily is a whole new level.
Tolithia Kornweibel: I think of daily in three years,
Jason Green: Daily in three years.
Tolithia Kornweibel: Yeah.
Jason Green: How about you, Janine? How do you think about…
Janine Pelosi: Daily in three years.
Jason Green: How do you think about prioritizing all of those leads?
Janine Pelosi: I think for us it’s really going to depend on the segment. Like what we do up market with our majors and enterprise teams is going to be very different than what do downmarket with our SMB. We hold back a lot. I’m a big believer that words matter. We don’t use terms like MQL and SQL, like that sends a message to your sales team that marketing thinks something’s important and sales … And I know there’s lots of rationale for those things from a practical term.
Jason Green: So what do you use?
Janine Pelosi: We just send over leads and we hold them back until we’ve all agreed that this is something that somebody in that site … And there’ll be different rules by segment and we’ll continue to nurture them, send them to webinars, demos, etc., until they’re scored high enough to come through, right? So spending 20 minutes on one of your product pages, you know, obviously adds to that score. And we’ll then bump that up and it’ll knock on a sales rep and say “Hey, I’m a lead that’s doing something right now. Focus on me.”
Jason Green: Yeah. The relationship also between marketing and sales is so critical in these companies. Maybe just talk for a minute about that relationship. What’d you do to really maximize the ability to communicate effectively? And that’s another good topic of metrics like, for instance, that you guys share to communicate success or not?
Janine Pelosi: Yeah. I mean, Greg, our head of sales and I am have shared metrics. Like I have revenue targets. I’m thinking about what is the MRR? What is our year over year revenue growth going to look like? And sure, we have leads and we track those and we also agree together what those lead goals are going to be by segment. How many leads per rep makes sense. And I think you have to do that collectively because if you just kind of go and say … It’s one of those early lessons you learned, right? Bring people in the beginning and they’re going to want to be a part of that success. So I think whether we’re thinking about FY20 planning or a lead goal for a segment for a quarter, we’re working together early, but that relationship is key. I had the benefit, I knew Greg from WebEx years ago and so, we had a trust that we could build on.
Jason Green: And Tolithia, you came in new to the team. How did you build that relationship?
Tolithia Kornweibel: Getting more leads. I mean…
Jason Green: Getting more leads, okay.
Tolithia Kornweibel: But really honestly, yeah, definitely passionate about iteration and learning and constant optimization. But one of the things I observed that was low hanging fruit to be cleared was not enough communication between marketing and sales. But then also when we weren’t delivering good lead volume or quality to sales, we would fall back on the defense of we’re just learning. And that was not the right way to partner with the sales team. And so, instead we said “Leads before learning.” Still learning, but leads before learning, which became like a little bit of a catch phrase that caught fire.
Jason Green: That’s awesome. Well, I’m sure we could talk about this stuff for hours. One thing I wanted to recognize is these two folks are not just great marketing executives. They are great business leaders, and when you’re looking to hire that great marketing executive, have somebody come in that thinks about owning the whole business and making the business successful. That to me is the biggest differentiator that I’ve seen that you guys have made in the companies so far. And I thank you for everything you’ve done and thank you for sharing some of those lessons with the audience.
Tolithia Kornweibel: Thank you.
Janine Pelosi: Thank you.
Tolithia Kornweibel: Thanks.