Video

Marketo’s Phil Fernandez: Winning, IPOing, and Going Upmarket (Video + Transcript)

gretchende@gmail.com'

Gretchen DeKnikker

We were super excited to have Phil Fernandez, CEO and co-founder of Marketo, sit down and talk to us about the triumphs (and struggles) leading Marketo from inception to IPO. Phil shares his insights on topics, “How do you react to and engage with your competitors in a highly competitive market?”, “What kind of CFO should I be hiring and when?”, “What’s the difference between the management team you need at $10m ARR vs $500m ARR? And how do you know who you need when?” and more.

Watch the video or read the full transcript below.

If you want to see more sessions from 2016, we’re releasing a new one each week. Subscribe here to be notified. And be sure to grab your tickets to the 2017 Annual NOW.

 

 

 

Video Transcript

[background music]

Jason Lemkin: All right, let’s welcome Phil. Thanks for coming, man.

Phil Fernandez: Glad to be here.

Jason: I know you couldn’t see the video, but we almost aren’t going to be able to recognize the new Phil. You’re lean and mean now this year.

Phil: Marketo has one third less CEOs than it was last year. I don’t know. Probably good. We’ll see.

Jason: Maybe there’s a few folks that are happy about that. You never know. It’s all good.

Phil: Exactly.

Jason: Thanks for coming.

Phil: They haven’t cut my pay by a third though at least yet. We’ll find out next week.

Jason: It’s good. There’s about a million things I want to chat about, but I want to start with one thing, because through all the great sessions we’ve had this week that I have been a part of we haven’t dug into which is I want to talk a little about going up-market.

I think I was one of the first like 10 or 15 Marketo customers. I don’t know. Bill Binch came by your office.

Phil: Yeah, he was in the top 20, or something…

[crosstalk]

Jason: …early. My BPM marketer comes to me. She’s like, “We got to buy this thing, this Marketo thing. It’s $20,000 a year,” and I’m like, “Man, that’s a lot of money.”

[laughter]

Jason: That’s an SMB account today. That’s a trainee account that you let the new kids start, but clearly you made a decision, and you’re a second-time founder to target more the mid-market, and up. Why did you do that, and what are the learnings here for other founders?

Phil: It’s situational sometimes in some situation, but a couple of things we saw. Number one, you just made your $20,000 a month to mention. That’s life at low end SaaS I think, is that there’s a very hard to much value to price I think. We saw in a very competitive market where five, and six, and seven companies had entered our space at about the same time we did.

It was this huge race to the bottom that embedded in the market a price expectation at the low end that it was like $1,000 a month product. Even if it was producing outsized growth, it was tying New Relic to an IPO, or was powering year to year outcomes, there was no coupling with value, and it’s very hard to have a value coupling at that low end.

You either have to have something that just has incredible ability to move itself, or you have to have some other ability to get out of that price war, and I couldn’t figure out how to do it down at the low end.

I come up to the high end, and it’s just vast money sitting out in the enterprise to go after.

The second thing, that’s completely separate from that, is I’m an innovator, I’m a product guy, we’re a product company, we’re innovators, so the product keeps getting richer, the product getting more sophisticated.

The match of that kind of a culture to simplicity to a low-end product wasn’t good because, how do you keep making the product simpler, and at the same time adding global enterprise capabilities and things? It was clear that our innovation trajectory had to go to a pallet where it could actually deliver value, rather than unnecessary complexity.

Jason: I got it. Let’s think about that a little bit more. We’ll fast forward a little bit into the future. You’re launching. The space seems crowded. We think it’s crowded today. If we define marketing automation broadly, how many vendors are there today? You can’t even count. A thousand? You don’t even know. Someone new pops every day you’ve never heard of, but even back then you felt like — and I’m trying to remember — but six or seven real competitors.

Phil: Manacor, Marketo, Weave, Genius, there’s a whole bunch of them.

[crosstalk]

Jason: All of them well-funded, and all that. Correct me if I’m wrong, you still tried to carve out, Eloqua aside, this space that’s maybe just sub-Eloqua, but still up-market even from the beginning, right? Am I wrong on that part, or were you trying to do peer market positioning?

Phil: No, we were trying to do peer market. We saw Eloqua as this interesting company caught at the juncture between Tom Siebel and Mark Benninghoff in some sense. They were neither fish nor fowl as an old school company, or as a modern SaaS company, so we saw that as the target to take down.

From that perspective, they were the company we love to hate, but they weren’t the primary competitor of the market fit that we were going after first.

Jason: In the beginning, there’s six or seven competitors that are sort of in the same price point, sort of with similar marketing messages. How did you focus? What let you break out? What was the secret sauce to scaling there?

Phil: The secret sauce was we came to market, and it’s like from the day one, I do that at Marketo, follow the north star. It was, we were doing our thing, we’re thinking our thoughts, we’re going to be immersed in the market. My co-founder would bring in focus groups of our target buyers and stuff, and we’d talk to them, but we just refused to engage in what are they saying, what are they doing.

What happened is we came in, we just didn’t play the same game everybody else was playing. Everybody turned their guns on us in the first year, and we just kept doing our thing. What happened was they started to make themselves look small. We just tried to ride above it, and it worked. It was strategy that I could just see that, that was a market place and time where could just get above it, and it worked. playthegame

Jason: Were you able — because this is tough for all us founders — back then, did you just decide strategically to worry less about competition then, and worry more about yourself? Would you give that advice to other founders?

Phil: Absolutely. It’s so easy. Somebody says something that gets under your skin.

Jason: It’s so visceral.

Phil: You just feel it.

Jason: You could see a press release. [laughs]

Phil: We find the same thing in management people that are defensive, where you give feedback to, and you have to figure out…Those same things happen as companies relate to each other. The ability for one company to hijack another company, I remember…this is the day that I talked to the lead person at Gardner Group at the time.

She said, “Your friends from Eloqua were in here yesterday, and they showed me the thing they called their Marketo killer.” I’m hi-fiving around the organization. They literally walked into Gartner and said they showed me the Marketo killer.

I had hijacked their brains at that point. That’s exactly what we were able to do in the market is hijack everybody else by not engaging with them, doing our thing.

Jason: I wake up in the morning, and I get my Crunchbase, or my StrictlyVC, and my competitor raised 30 million dollars, and I’m feeling good. What’s your advice to founders in that experience? We just feel it so viscerally, don’t we? Competition is so palatable. What do you say to folks when they have that experience?

Phil: The competition comes to invention. The competition comes to innovation. The competition comes from creating something in the world that isn’t there, not responding to somebody else. Competition is good. You want to foster that. You just don’t want it to be responding.

The biggest thing, my head of sales, when he started, it was probably our first day, Bill Binch, he started with me eight years ago. He said, “Let’s keep the offense on the field.” That was the metaphor. Keep your offense on the field.preview-upload_card-competition2

That was the metaphor for how do you continue to hold the agenda? How do you own the message? How do you drive your own? That became the early metaphor. As long as we had the offense on the field nobody…

Jason: Let me raise the question. I hadn’t thought of it until now, but since we’re on zen day, Marketo was one of the first companies, I think of it as SaaS of second generation. The growth was faster than the prior generation. It was faster than I had. It was faster than Box. The Marketos and the Yammers start growing faster.

Then we have these new kids like Slack, they grow even faster. More power to them. If I’m doing well. Pick a number, 5 million in revenue, 10 million, and I have a competitor that is growing faster, should I worry about that? Do I need to worry about relative velocity? SaaS compounds. How big is Marketo, rough and tough? I should know from ARR.

Phil: We just announced a $60 million quarter.

Jason: We’re a $250 million runaway company. If I’m tiny, but I’m exploding, it’s last year, Stuart Butterfield and Slack, I don’t care about competition. When they’re outgrowing me, how do I deal with that as a founder? You’re on the opposite side in some sense, but how do I think about that?

Phil: It all has to do with whether you have a real strategic thesis about what you’re doing. There’s a sense that you’re going after a bigger TAM, or you’re going after creating an opportunity down the road, the it could very well be rational.

If what you’re doing is locked into a two-way competitive battle for a relatively small TAM, and your competitor is growing faster than you, that’s a losing game. Because SaaS does compound, and there’s no way those economics ever work. Ultimately, the first mover takes the largest share of created value. It remains every bit as true in that scenario as everything else.

Jason: One related question. You can obviously segment your market much better than I can, but at the lay level, I’m going to say for a certain, enterprise-y, web-centric segment of the market, you have the dominant market share. Did I oversimplify that?

Phil: No. I would say absolutely.

Jason: We could define some enormous market, and then it’s a little bit different. We read all the stuff about power law, and the winner captures 99.99 percent of the value. You’ve both done that and not done that. You’ve done it in that you won a huge segment, and you have to continue to struggle, but then there’s a broader market, where there’s multiple players.

How do I think about market dominance? What are your learnings one of the most competitive, dynamic spaces there is?

Phil: One of my learnings is if I define success as winning the market…there’s a little bit of this culture of, Larry Ellison, you have to win and all else must lose. I think we’re playing in a massive TAM. I look at a market out there that looks to me a lot like the ERP market.

We have Intacct here, all the way up to SAP. It’s a massive market with many many players. I believe that the market I’m in is going to play out that way. In some sense, the success becomes internal. Am I growing, am I producing value, am I taking share. Am I able to look out over the horizon and understand how I’m going to get the next $100 million, or the next $500 million.

Is there a plan for that? At that point, as long as I can continue growing, in a very large TAM, the number gets to a billion. The number gets to $1.5 billion. To me then, my role is what is that next play that’s going to enable us to continue to scale the business. I feel like as long as I can articulate a strategy that at least holds water with the board, with my management team, with the market.

I know I can define success in terms of continued growth, in some sense. That’s a little hard to inspire everybody, ra-ra grow. It is the recipe of what we’re trying to do. I don’t need to find a new TAM. I don’t need to pivot. I just need to grow. That’s what I’m…

Jason: Don’t need a TAM, yeah. How has that evolved over time? What’s the average deal size today? If it’s not disclosed, I don’t mean to ask.

Phil: It’s a barbell between our enterprise and our SMB but that average fall’s about 50k.

Jason: 50k and then you’ve got seven-figure folks at the high end.

Phil: Absolutely.

Jason: Probably you’re putting more and more energy into continuing to close those big deals because of the law of large numbers. What, if anything, has changed at 10 to 20, then 50, then 100 IPO? Now you’re thinking about a billion. You have to think about a…You’re 250. What has changed in terms of that focus and strategy at a high level?

Phil: The numbers get big…

Jason: The numbers get big.

Phil: It’s quite shocking when all of a sudden next year’s sales hiring is you’ve got to figure out how to hire 100 sales people or something like that. That’s just a completely different problem than pushing through, “Get six,” or, “Get one,” or, “Get your first set or sale,s” or something like that.

The scale challenges that come up are just incredible. Trying to be ahead of them. They’re insidious because they’re not things that any given day — it’s the frog in water — any given day, you can power through some scale challenge but some day, all of a sudden, the frog’s been cooked.

It’s exactly that and spotting those things and trying to get enough ahead of them. That’s a lot of what’s going on in business now. What are the couple of priorities? Because, of course, you get 1,000 people and you get all this going on.

The tendency to want option do more and more and more is so strong so how do you bring it back to, stick to the knitting, get a few things done, still establish priorities as the critical focus.

Jason: I think you announced yesterday on that call that Bill Binch had retired to become emeritus, right?

Phil: That’s right.

Jason: He’d run all our part of sales since the beginning, right?

Phil: He wrote an IPO and…

Jason: Zero to $200 million.

Phil: $200 million, yeah. Not bad at all.

Jason: How do I know when I need to change out my team? Top my team? How do I know when to stick with my team? I mean there’s no perfect answers but you’ve learnt. You’ve been on a journey. What’s your advice? How do I know when to stay, change or…especially if I’m passionate about my team. I’m connected to them. preview-upload_card-run the race

Phil: Number one, the degree of change that happens from million to 10 million, it’s just incredible, right? You need continuous learners. As you talked about, Josh talked about Erin and the like, is exactly right.

If you have people that are continuous learners then they are — not guaranteed — but they’re likely to run the race. You can spot somebody’s that’s blocked really fast and that’s somebody that is going to get blocked. I look a lot for curiosity, that drive.

What can I teach? What can I learn? It says a lot from people that are going to scale. Around heads of sales especially, there’s a culture that you get shot. You’re a head of sales that gets boxed into a certain…

[crosstalk]

Jason: I’m a 1 to 20 guy.

Phil: I’m a 1 to 20 guy or whatever. We spent a lot of time on that, where it’s like, what do I need to do next? I just kept seeing somebody and saying, “I want to learn not to be in that box.” We found a phenomenal collaboration around that common mission of, “We’re not going to let this happen,” and, “We’re going to analyze it.

It really is that sense of continuous learning and that sense that I haven’t mastered my job. I have to keep going. Ultimately that’s a case where I then saw that the business model had really diversed.

That guy is the world’s number one specialist in these high velocity models and I’m probably the only CEO in the world that’s busy not trying to tear down a high velocity model to build a little more slow one.

It was also clear that I then just did not have the right skill match and that it was time to start to put a much bigger thing in place. Loyalty had to lose out to raw skill analysis.

Jason: So you want folks that can continue to learn, that helps them scale another stage. You’re at 250 now, rough and tough, let’s just call it 250. Folks hiring now, do they have to have experience at a billion?

When you hired folks at 10 or 20, are you looking for a stage more experience? How much risk should I take? I think the classic mistake we make at a million is we hire someone that’s at a billion. Too many stages. What’s the answer? How much is necessary?

Phil: I would say, I felt like when we got over a hundred million kind of number, all of a sudden, the executive leadership, my need to be outside become higher and the opportunity to do that, the need to really be working on strategy in a much more explicit way and thinking more much systematically about what’s next?

It produces a phase change in the kind of executive leadership that’s needed. People whose first reaction is not, “How am I going to do that?” but, “How am I going to find a place in the organization that can do that thing?”

That their immediate reaction is how to put it into a scalable organization rather than, “I can just take care of that.”

Jason: That’s a big transition right there.

Phil: And that becomes really critical, kind of at that $100 million mark. That’s where all of a sudden, I found that I had to start to be looking at an SAP or looking at a Salesforce or looking at big company people that can come in…

Jason: Folks you used to take shots at. Now you’re hiring them those executives.

Phil: Exactly and they’re the ones that have the experience and the intuition to think about organization design, think about other things that become much more important to continue to scale. That stuff’s very hard to learn on the job. That’s the kind of stuff, you need to have a mentor, you need to have role-modeled for you inside a larger organization.

Start-ups don’t know anything about strategic planning processes, but as a quarter of a billion dollar company we have to have one. That’s a deficit in my own skill set so I knew I had to go get somebody that had seen that at a bigger company and that starts to become real critical at scale.

Jason: Let’s flip that around. You have to hire the SAP, Oracle, Salesforce people. You have no choice. No one else operates at that scale. Now that you’ve been through this, and I mean usually there’s always steps.

What’s the earliest I could bring in that person? Assume I’m well-capitalized, I can hire a few extra people. What’s the earliest that those people can be successful?

Phil: Any one case you could say, “That individual has the ability to go down.” But I think those kinds of people if you want to do that stereotype, are too big below a few hundred employees. preview-upload_card-slowdown2

There’s in some sense a sense of creating what, in a small company, feels like bureaucracy, feels like molasses, sand. Things that slow you down, but at the next phase, when you’re thinking about something or you’re doing whatever, you have something else.

If you get at somebody who’s so immersed in those bigger things they will start to introduce systems and processes that slow an organization down. It’s very insidious. A lot of people start boxing them out, seeing them as an odd person out, I think. I in fact, got to do that.

I did that to myself at Marketo. We don’t need to do names and history, but I had somebody that was just too big and they didn’t make it…

Jason: So you made the mistake that many of us make ourselves, right? How early was that hire by headcount?

Phil: That was about 30 million.

Jason: 30 million. That’s interesting. You found that was too early to hire Ms. SAP?

Phil: It was too early and what we ended up with was just a whole bunch of what felt like big company stuff all of a sudden appearing, where we were still very entrepreneurial and could move on a dime. The whole organization rejected it…

Jason: Rejected or did the organization rejected it but you were OK with it?

Phil: I watched the organization reject…for me it was liberating because I could all of a sudden stop. I could see myself be able to start to do a new set of things and stop doing a new set of things that I was probably still grooving on it.

Other people were like, “This is getting…This is really getting weird over here. He seems to be talking about something that’s different from everybody else in the company.”

Jason: Too much process. Layers, layers of layers.

Phil: Too much process. Too much layers.

Jason: Even at 30 million. This was obviously great executive. You’re great COO, you did your diligence, you did your homework. You did the dinners with the spouses. This was a great person. It’s just even 30 million error was too early. He or she had not experienced this phase before and couldn’t operate in it.

Phil: I was tremendously seduced by what it was going to do for me, but it was just too big, and too early.

Jason: $30 million, I still think of as mid-stage, or late. If I’m at $30 million, or even 20, or 10, and I’m hearing the siren song of this executive. Also, between us founders, I’m getting tired. This feels like relief.

If I just hire the person that scaled it all before, is your advice to just suck it up, and keep pushing through to the next level, or what would you have done differently in that time, to do it again? What would help you get to that next level?

Phil: I needed change, so what I knew I needed to do was change things up. I wasn’t tired, but I was getting a little bit in a rut. Myself, a continuous learner, and I felt like I was being stopped from exploring the next new things. I knew I needed a change. That turned out not to be the right one.

Not very long after that, I brought in my first CFO, much more operational, he took on a bunch of what I was trying to do.

Jason: You brought in a CFO at $30 million?

Phil: I brought in a CFO because that was right. Let let me offload a set of things that I wasn’t, myself, continuously learning into, and it offloaded a different part of me. While he was an experienced public company CFO, a startup kind of guy, and so it didn’t produce the same kind of impedance match.

I do think that that sense of changing up your executive team, of dynamism, of intentional change is important, but that’s the seduction of the big SAP person.

Jason: Everyone falls for it, in their own way, right?

Phil: Exactly.

Jason: The $30 million thing is a pretty interesting one. One thing, on the journey you described, it’s interesting. A lot of folks that I’ve talked to, that have gotten to your scale, talk about reinventing the company, right? We had Jay Simons from Atlassian here on Tuesday, talked about, there had been five Atlassians.

Atlassian is 13, 14 years old. Marketo is nine, or something like that?

Phil: Just celebrated 10.

Jason: Congratulations, that’s quite an accomplishment.

[applause]

Jason: It sounds like, and I might’ve heard you wrong, but you don’t feel like you’ve reinvented yourself four times. You feel like you’ve just continued to refine the focus from the beginning. Have you had to reinvent the company, or is it the same? Is it pretty much the same company, just 250 times bigger?

Phil: No, I think there’s been two real reinventions. We did an early pivot. We had a product out four months after we raised our series A.

Jason: It wasn’t even on Marketo today. It was an SEO product.

Phil: It was an SEO product, that’s right. We killed it, early and aggressively, and it was pretty painful, because we were pretty proud of it, all those kinds of things. That was a real classic pivot at the central level.

Jason: You had already raised your series A?

Phil: We raised series A.

Jason: You had to go to tell them, “We’re killing the product you invested in”?

Phil: We’re killing the product you invested in. It was nice, but sorry. It was actually working, but it was just churning too fast. I played the tape forward, it didn’t end well, and so I made that decision. Then we’ve had a much more strategic one, which is that Marketo started in this sense of, “We help people build more leads for their sales team,” which was what we were all about is, “How do you do that?”

There was a moment, always in the back of my brain, that this was a much bigger idea. It was actually an event where I was out selling to Denise Bey at Clorox, and the woman who at the time ran Hidden Valley Ranch salad dressing globally.

It’s a Clorox product. If you use Hidden Valley Ranch, it’s a little weird. She said, “I figured out, Phil, if I use a B2B lead nurturing product the right way, I can get homemakers to pick up my bottle of salad dressing in Safeway, rather than Newman’s.”

It’s like she had done this whole mapping that took our product, and our whole capability, and mapped it to a whole different use case.

Jason: You hadn’t seen that before?

Phil: I knew it was a factor, but it was not anything in the mix. This was this thing that we seized on strategically. “Hey, this is not a lead management product. This is the future of marketing.” And so we went very big, and it’s what has produced a leadership spot on Gartner Group and other things.

If we hadn’t done that, we would’ve defined ourselves too small, and I think that was the seminal third act, if you will, for our company.

Jason: What did that change? Did it change the roadmap, did it change the team? How did that inspiration, what did you do in the next 12 months to execute those changes?

Phil: What I realized was how deeply ingrained emotions could get in a company. Everybody says the same thing. I’m out with the sales rep, and we’re selling to a healthcare network in Texas or something. He’s talking about, “Leads, and leads in your pipeline, that your salespeople close.”

I’m like, “You’re not speaking any language that is even remotely related to these people that are talking about patient readmission statistics and stuff.” I realized that he was oblivious to the fact that he had learned a set of languages that weren’t relevant to the situation.

What I saw was a company that had just learned a set of motions, and it had gone from learning, to deeply ingrained. It became a creative, “How do you unlearn a set of things, before you can start relearning a set of things?” And so, raising the awareness of, it’s exactly like unconscious biases.

You think about diversity, or other things in an organization, you realize how deeply those things get ingrained, and so it was an unlearning exercise for a year.

Jason: I probably should’ve said that. Did that change? To get back to not symbols, did that allow you to drive ASPs in pricing up, because it was a bigger solution, or did it just enable you to expand your customer footprint, or both?

Phil: Number one, it allowed us as a brand, to position ourselves as a company that you could. You’re still going to execute, it’s still competitive, but you could see it as a billion dollar company, or whatever. The TAM, the ambition, the footprint that we were able to describe, we were far enough along that it was plausible, and it was ambitious enough, and big enough that it gave us a target to shoot for.

I think it’s that BHAG, in some sense, more than anything else that it did for us, which was that it gave us the ability to again take our game up, and present a new phase in the market, a new kind of competent phase. It changed the whole thought of ourselves and our relation to what’s next.

Jason: I want to tease one thing on the Clorox example, because you are talking about meeting with customers. A lot of founders, I think don’t know what to do when we get it wrong. How much time now, and has it changed, do you spend with existing customers and prospects? How do you budget, and has that changed over the years?

Phil: My career started way back when, coming out of Stanford in ’82, and a Kleiner startup that went public in ’83. I got it back in the early days.

Jason: At least three or four iterations ago, right?

Phil: Yeah, I was just a kid, but the sales guy found me, and started bringing to the field, even when I was writing code one year out of school. I found this incredible resonance between talking to customers, telling the story, taking the pitch up, and realizing that I was always learning and asking questions implicitly along the way.

That’s what started my whole career of being one foot in product, and one foot in customer land. I can’t exist any other way, and that’s the primary data. I spend, I don’t know, 25 percent of my time with customers, 30 percent of my time with customers. It would be 60 if I didn’t have investors and other things to spend time with.

Jason: That’s not prospects, that’s existing customers.

Phil: It’s both. Every existing customer, especially in enterprise, is just another prospect, because you land and expand, how do you figure out what the next point is?

Jason: You have two different groups pulling you, right?

Phil: Yeah.

Jason: You’ve got the sales teams pulling you into the big deals, and you’ve got success, and how you define it pulling you. How do you juggle that? 25 to 30 percent of your time, everyone write that down.

Phil: And 60 if I could.

Jason: 60 if you could. You have these earning calls, and a few other things to deal with. 60, because that’s where you see the ROI, you’d like to spend more than half your time. Maybe that’s the lesson to folks who don’t have investor calls in public companies. You’d like to spend more than half your time with existing, new customers, right? preview-upload_card-customers

Phil: Yeah, because I learn from it. I succeed at selling what I take there, but it’s also what you teach the organization. If you’re a founder, if you know the product better than anyone else, if you know the story better than anyone else, the ability to be out, doing that so that people can see it, one sales call in an enterprise, in that way, is worth 10 hours of book learning or something like that.

It also becomes a way to transmit the specialness of a founder CEO, or any founder out to the market, that is always going to be special compared to phenomenal people who fill in behind.

Jason: The customers, even if you have half a million in revenue, they’d love to meet the COO. That’s the thing that’s hard to get from the outside. We go in early days, I’m a COO, but I’ve got nine people. The customers still have to meet the COO, don’t they?

Phil: They do. As you’re looking for, what pain is behind the smile or whatever else. I think also, the very nature of the people that were the entrepreneurs, that are able to see an idea and start a company, it’ll also be able to see behind the curtain.

It becomes just an incredible source of information for a team to be able to get out and do that.

Jason: Related on that, half your time, if you could, 60 percent. Another thing that founders struggle a little bit with is, “I’ve got to spend all my time closing the new deals.” For a while, most of us don’t spend enough time on existing customers until they understand the magic of upsell renewal, multi-years.

What’s your learning there? What’s the right ratio of prospects to existing customers for your time?

Phil: I can speak for a company that grew up with just this amazing acquisition engine, very fast, that we talked about bench building this model. Even though we knew all the book learning about the customers, and retention, and everything else, it was amazing how the cocaine of the new customer acquisition can be very addictive. It’s fun.

Jason: Go out, close the deal, be a hero.

Phil: On the surface, that feels like the growth driver.

Jason: It feels good.

Phil: We got late. Still even to this year, 10 years and a quarter of a billion dollars, our P1 in the business is called “Rotate into new install base.” We’re still fighting to build the same degree of, even sales op discipline for that, as we have grew up organically for new, and it’s like a constant journey.

Jason: That’s interesting. Any Zen learnings in terms of how to manage that, in terms of putting quotas on the customer success team or anything? What’s the best way to have the best outcome, in terms of growing the existing base?

Phil: The things you measure are the things that get attention. I don’t know, Lee Gerstner said that years ago, or something like that, some mangled thing. I think whatever the first set of metrics package, and anybody that’s building a SaaS business without a sense that there’s a set of metrics that need to be the guide posts are probably mistaken.

Making sure that those renewal metrics are in from day one, and success and satisfaction metrics, and realizing, what are the, maybe one metric up from renewal, because that’s a lagging indicator. How do you measure, are you being successful on the install base? To ensure that that’s, from day one, part of the package.

Not, “Oh my gosh, we’re at the one month or one year renewal zone, now we’ve got to think about that.”

Jason: No squishy goals for anything?

Phil: No squishy goals.

Jason: At Marketo, everything is measured, right?

Phil: Everything’s measured. The things we want to either excel at, or change are measured.

Jason: That’s awesome. I wish we had another half hour, but let’s thank Phil. This was an epic session.

[applause]

Phil: Thank you.

Jason: Thanks, my man.

Phil: Thanks.

Jason: It was really good.

Phil: Thank you.

Jason: Take care.

Published on May 12, 2016
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