Michael Katz is the Founder & CEO @ mParticle, the customer data platform for brands leading the customer data revolution with clients from Airbnb to Spotify to Postmates. To date Michael has raised over $120m in funding with mParticle from GV, Social Capital, Greylock, Bain Capital Ventures and a friend of the show in Zach Coelius. Prior to founding mParticle, Mike was the Founder & CEO @ Interclick, where he organically grew revenue to over $140m in 5 years. The company went public in 2009 and was acquired by Yahoo in 2012 for $270m, a 50% premium on existing share price. If that was not enough, Michael is also on the board of Brightline and a mentor with Techstars.
In Today’s Episode We Discuss:
* How Michael made his way into the world of SaaS and enterprise SaaS having founded and IPO’d an adtech business previously.
* Why did Michael make the move to CRO 8 months ago? How does Mike think about when is the right time to hire your first CRO? How does this hire correlate to your hiring in sales enablement? What are the different CRO profiles Mike has seen? How does Mike advise founders on those that work best for early-stage?
* Why does Mike believe that playbooks are for suckers? What is the reasoning for the reductionism towards the power of the playbook? How does Mike think about the relationship between playbooks and predictability?
* How does Mike make sales data really actionable within the company? What is the right way for founders to do post-mortems on won and lost deals? What is the right way to structure their sales pipeline? Who should be involved in analyzing this data? What can be done to incentivize sales to be accurate in their sales data?
* Why does Michael believe that most sales meetings are unproductive? What is the right way to structure your sales meeting? Who should be brought into the meeting other than the sales team? How does Michael advise sales reps to maintain customer relationships post-sale? Where do many go wrong here?
If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:
Jason Lemkin
SaaStr
Harry Stebbings
Michael Katz
Below, we’ve shared the transcript of Harry’s interview with Michael.
Harry Stebbings: We are back for another week in the world of SaaStr, and diving straight in today, I recently tweeted about the importance of a sales playbook, pre-release, scaling out your sales team. This guest today, he pushed back hard on me for it on Twitter, with some very good reasoning. So I’m delighted to welcome back to the hot seat today, a friend in the form of Michael Katz, founder and CEO at mParticle, the customer data platform for brands leading the customer experience revolution, with clients from Airbnb, to Spotify, to Postmates.
Harry Stebbings: To date, Michael has raised over $120 million in funding with mParticle, from GV, from Battery Ventures, from Social Capital, from Greylock, from Bain Capital Ventures, and a friend of the show in the form of Zach Coelius. Also, prior to founding mParticle, Mike was the founder and CEO at Interclick, where he organically grew revenue to over $140 million, in just five years. The company went public in 2009, and was acquired by Yahoo in 2012, for $270 million, a 50% premium on the existing share price.
Harry Stebbings: That’s enough from me, though, and I can’t wait to welcome Michael Katz, founder and CEO at mParticle.
Harry Stebbings: Michael, it is so great to have you on the show today, I always so enjoy our chats. So thank you so much for joining me, once again today.
Michael Katz: My man, thanks for having me.
Harry Stebbings: Not at all. But, before we dive in, I would love to context that a little bit for those that have made the terrible crime of missing our prior episodes. So tell me, how did you make your way into what we both call the wonderful world of SaaS, and come to found the incredible mParticle today?
Michael Katz: Yeah. I mean, we’ve been at mParticle for the good part of seven, eight years at this point. We’ve been in market since 2015, though, so we spent the first few years building. It’s the second company that I’ve founded, and the first one was in the ad tech space, started that company in the mid-2000s.
Michael Katz: Long story short, we built a pretty interesting and innovative data platform that allowed us to ingest first and third party data signals from a variety of sources, and systems, and distill that to individual and anonymous customer profiles, and then connect that to our ad server really fast. And by fast, in 2009, I meant under an hour or so, when the next fastest system was taking about a day to update audience manifests. So, fast forward, we got bought by Yahoo in 2011, for a little under $300 million. Stayed there for about a year, saw a bunch of things changing, and decided to go and build modern data infrastructure.
Michael Katz: So had a few thoughts, toyed with a couple ideas. But then, ultimately built what we’re still doing today, which is really nice. Helping brands unify data from multiple sources and systems, to create a unified view of the customer, and help them protect their data quality. And then, make it really easy to integrate into all the different systems and tools that they use, to run and grow their business. I’ve been CEO since inception, and I have a couple other co-founders, including my brother Andrew, and a guy named Dave Myers, who’s our chief operating officer. And recently, have taken over the role of CRO, or head of sales as well, and it’s been quite a ride over the past six months.
Harry Stebbings: Can I ask you a couple of questions there? Why did you decide to take over that role, one? And then, two, I’ve got a portfolio company now that’s at $2 million in ARR, and it’s asking itself the question of, do we need a CRO now? When’s the right time to get our CRO? I guess, the question is, first, why did you decide now is the right time for you to take over that position? And then, second, if advising an early stage company, how would you advise them, given your insight, on the right time to hire?
Michael Katz: Yeah, I have a lot of thought on the second one. Just some quick context.
Michael Katz: So I took over sales, after we re-orged the go-to-market teams at the end of Q3 2019. We had grown a bunch, but our market had changed, and our go-to-market really needed to change as well. So we had a good head of sales prior, and he helped us grow a bunch. But, with all the change needed, we mutually decided that change in terms of leadership and ownership over the sales team and go-to-market function was needed.
Michael Katz: I’ve always been pretty hands on with go-to-market, both on sales and marketing. I’m kind of the annoying founder, who wants to evaluate our messaging strategy, so we go through a multi-month exercise. And then, by the time it’s done, I’m already unhappy because it’s out of date, so I can’t help but meddling.
Michael Katz: So I took over sales, back at the end of Q3, maybe early Q4 2019, and admittedly, was really nervous. I knew what I didn’t like and what didn’t work, but that didn’t necessarily mean that I knew how to fix, really, anything. My problem was I had effectively outsourced the CRO/head of sales function to someone else, since really early on, and I just never spent the time that’s ultimately necessary to learn the role, first. So I think in turn, I effectively failed at outsourcing the role, and I failed a couple times for various reasons, but I think the biggest mistake I made was not truly trying to understand all of the mechanics, first, before bringing in someone, ultimately better than me, to hand it off.
Harry Stebbings: Can I ask the question, here? That’s my point with the tweet, I’m incredibly passionate about this one. I totally agree, and I’m nodding my head going, “Yeah, absolutely.” So maybe the handoffs didn’t work because you had to build the playbook yourself, and really see that firsthand experience to build it yourself, before you could hand it off successfully, as I’m sure you will do in the next, maybe, six to 18 months. Do you, in fact, see that?
Michael Katz: Well, I do. I think learning what’s needed for successful sales execution will also teach you what you need in a sales leader, when the time comes, because there’s, ultimately, lots of different types of sales leaders. There’s the deal guy, the relationship guy, the process guy, the spreadsheet guy, the big company at scale guy, the scrappy early stage startup guy, the guy from another industry who doesn’t get the space, but has a great resume. It can be just really dizzying, and it’s super easy to choose the wrong type of sales lead if you haven’t taken the time to understand what it is that you need, given the specific physics of your business.
Harry Stebbings: Can I ask, just before we move on? I am interested on the timing element. You’re advising my portfolio company here, so this is very helpful. How would you advise early stage founders on the right time to hire a CRO?
Michael Katz: So I think even before you hire a CRO, I think hire a head of sales enablement. I say this with perfect hindsight, but if your job, ultimately, is to figure out how do you make this thing predictable, and repeatable, and what are the key drivers of what makes the model move, not every founder has the time or the patience to dedicate all of their cycles to doing that. So I think for most, ultimately what you want is somebody who can help create and implement a system, it requires systems thinking.
Michael Katz: I think in lieu of a sales head, you want to take the tribal knowledge that’s been accumulated, whether it’s founder led sales motion, or there’s a couple early sellers, or a combination of the two, you want to just start to codify a bunch of that stuff. In my experience, at least, and we’re fortunate enough to have just an incredible head of sales enablement, that person is typically better suited to translate that tribal knowledge into a playbook, or into process, or into just something more structured than a career sales manager, or sales leader.
Harry Stebbings: Do you not have to give that head of sales enablement the playbook to run with, though? You said before to me that, “playbooks are for suckers,” and I love that quote. It should be a book, actually, one day. But, do you have to give them the playbook, so to speak? And, how do you feel about the playbook for suckers comment?
Michael Katz: Well, what I meant by that is that there’s really no such thing as a universal playbook for success, every company is different. I would also encourage anybody who’s looking for the “playbook” to stop thinking that somebody else has all the answers, because they don’t. Again, every company has a unique physics, and motion to their business. Are you selling to B2B brands, or are you selling to B2C brands? Are you upmarket, or downmarket? Is it an established category, or an emerging category? Are you selling to technical, or non-technical stakeholders? Is it a land and expand motion, or are you looking to maximize the economics of the relationship on day one?
Michael Katz: There’s lots of different variables that come into play, so to think that somebody can come in with some sort of a playbook, that they’ve brought from another company, unless all those things line up, you’re effectively just guessing.
Harry Stebbings: Can I ask, without a playbook, is it possible to have predictability? Because playbooks can, largely, also determine sales cycles, and velocity of contract progression through the funnel. What’s the relationship between playbook and predictability, do you think?
Michael Katz: When I think about playbooks, I typically think about tactics. And, when I think about predictability, I typically think about systems. So maybe there’s lack of clarity on nomenclature, but if what you’re going for is predictability and repeatability, you ultimately want to think about it in terms of a system. So that system also includes input, as well as inflows from non-sales employees and resources. Part of the sales system includes product, and marketing, and product marketing, and solutions engineering, and sales enablement.
Michael Katz: When I think about sales playbooks, it’s about the things that the sellers need to do specifically, but when the right system is in place, sales almost becomes not quite just about sales. It’s about a functioning system that can consume information, disseminate it to the parts of the organization that all contribute to that sales process, or sales motion, and ultimately, and over time, produce the desired result.
Harry Stebbings: Can I ask, in terms of the systems thinking there, I’d love to dive deeper on that. In terms of the system you want to build at mParticle today, how do you think about that systems thinking applied to the system that you want to build? And, I guess, what have been the core challenges in turning that systems thinking into the working system?
Michael Katz: Yeah. If there’s anybody out there trying to wrestle with this exact thing, I would say go back to the Lao Tzu quote, “The journey of 1000 miles begins with one step.” What that ultimately means is you’re not going to fix everything all at once, you have to embrace continual improvement.
Michael Katz: When I took over as sales leader six months or so ago … actually, probably eight months at this point, I wanted to first make sure that the daily habits and behaviors are there for monthly and quarterly success. So one thing that we started doing was tracking everybody’s opportunity creation. How much activity is there, week over week? Not to force everybody to send a bunch of cold outreach, in fact I continued to remind the team, cold outreach should really be the last resort. It’s about focusing on how they spend their time, time management, every single day, to build the required pipe. Whether that’s inbound, outbound, events, partnerships, referrals, social, it doesn’t even matter. It’s just about, first, establishing a system of accountability, and showing that leader board to the team, and to the company.
Michael Katz: And then, the next thing that we started to look at was the data, the data matters. I think too many people underestimate the importance of the data that’s going into the CRM. Look, no salesperson likes to have to input data into Salesforce, and I don’t blame them, it’s a garbage UI, and it’s clunky. But, there’s also tools like Troops, which makes it easy to import data directly from Slack, so there’s less of a good reason why not to keep good Salesforce hygiene these days. So when I took over the sales team, what I found was that the information being produced, the information entered into Salesforce was utterly trash. We had six different reasons that we were using to explain why we weren’t winning deals, and actually zero reasons to attribute to success.
Michael Katz: And, of the six closed lost reasons, four of them were all saying the same thing. It was that the deal wasn’t qualified, which is just utterly useless. So we had to look at overhauling the information that we could make available to the rest of the company, so that over time, if we see trends or patterns in terms of why we’re winning, or why we’re losing, that information can then get disseminated out to the product team, and the marketing team, so we can either fix the things that aren’t working, or where we have a competitive disadvantage. Or, we can double down on product and marketing, to make sure that we’re boxing out any potential competition.
Harry Stebbings: Can I dive in, and ask that … Sorry, just too interested. You said that, backing of the data enrichment, and the importance of it, I think often companies fear that, even if the data’s good quality, it goes to Salesforce to die. I guess, how do you take this high quality data now, and make it really actionable? What’s that next step, in terms of really improving the system with the data, what does that look like?
Michael Katz: Yeah. We use the data to create feedback loops. The data needs to be cut a lot of different ways, so we have an awesome head of sales operations who’s great with spreadsheets. And, I’ve worked with him to create the necessary type of sales analytics.
Michael Katz: To your point, the data can go to Salesforce to die, but only if you let it. Unfortunately, we were letting it, which is kind of embarrassing. First thing was just cleaning up the data, getting the right type of fields available, redacting a bunch of fields that weren’t necessary, cleaning up the closed won, closed lost reasons, making certain fields mandatory that maybe weren’t mandatory, and using it to create more effective data exhaust.
Michael Katz: Because, the other thing that I point out is, your sales team isn’t just out there to close deals. Yes, that’s why you had hired them, but they’re having conversations all the time, and you have to look at them as the tentacles from the business. So if they can go out, and they can extract and absorb information back into the business, that allows you to make better decisions, or at least make less dumb decisions than you did yesterday, that’s also extremely valuable.
Michael Katz: We started looking at the data, just started cutting it lots of different ways. We were looking at wins and losses by seller, and by buying persona, and by market segment, and the geos we were in, and we just started to see some really clear trends. You have to de-average the data, or else you’re not going to get any of the necessary insights. Unfortunately, none of this was happening in the past, but when I talk about the sales system, this is what I mean. When I talk about the inflows, and the outflows, and creating those feedback loops, to make sure that you’re then strengthening the overall quality of the system.
Harry Stebbings: I mean, my word, so many things for me to unpack there. I love it when we just completely move off schedule. You mentioned a lot of the times, in the early days, qualification, maybe, of deals not being quite there, and not being a fit.
Harry Stebbings: I see two contrasting types of SDRs. One who’s totally willing to get involved with pipe generation, and really actually enjoys that. And another, who’s much more segmented, and specialized, and expects leads to be given to them for the specific qualification process. How do you approach the role of the SDR? And, do you prefer them to get involved with pipe generation, or be segmented?
Michael Katz: I look at pipeline generation as it’s everybody’s problem, or everybody’s opportunity. It’s not just on the SDRs. And in some cases, when you’re selling really expensive, highly customizable software, you could even argue that an SDR team isn’t necessarily going to be super impactful.
Michael Katz: Where we see lead generation from, and ultimately pipeline creation, you have your inside sales team. We also try to hold our outside sales team accountable to building their own pipe. But then, there’s also partnerships, and marketing, and the executive team, and our investors. You have to look at it not in a way where it doesn’t put all eggs in one basket. So I get incredibly excited about that, because the old saying is pipeline cures all, so the more robust your pipeline is, I think the healthier the business is going to be, over time.
Harry Stebbings: Totally with you, I think absolutely, it’s all about top of funnel. It’s like fundraising, always say the same, all about top of funnel.
Harry Stebbings: I do have to ask, though, because often pipe reviews is the core element of any sales meeting. I know you’re learned a couple of lessons, in terms of the right way to think about, and structure a sales meeting. What’s the right way to run a sales meeting? And, what’s been some learnings for you, from the last eight months now?
Michael Katz: Yeah, here’s what I’ve seen. Most sales leaders will call together a weekly, or a semi-monthly sales team meeting. Yeah, everybody just goes around the room, round robin, everybody talks about the deals that they’re working on, maybe some people ask some questions, and everybody just talks at everybody else. The problem with that is everybody just ends up waiting their turn to speak, and then nobody else listens. So you go around the room, or in today’s time, you go around the Zoom conference, and nothing gets really accomplished, there’s just a bunch of either reprimanding going on, or people patting other folks on the back for moving deals along. But, nobody actually learns anything, it’s a total waste of time.
Michael Katz: I would say that, for any founder, if you see your sales lead not including people outside of the sales team in that weekly, or semi-monthly sales meeting, they’re doing it wrong. Because the point of the meeting is not celebration, it’s about alignment, so it has to include everybody that contributes to revenue. It’s co-founders, and product, and engineering leads, marketing, sales enablement, solutions engineering, customer success. Yeah, it makes the meeting a little bit bigger, but it turns it from completely useless to, actually, pretty useful.
Michael Katz: So you have to focus on creating a dialogue, so that the sales team can get everything that they need in order to be successful, because ultimately, that’s the spirit of what that meeting should really be about, and that requires key stakeholders from around the organization.
Harry Stebbings: Can I ask you a potentially stupid and naive question here? But, how do you know which stakeholders to bring in, when, and how often? Because you don’t want to bring in large elements of the product team, every week, when it may be not necessary. How do you know when, and who to bring in?
Michael Katz: Yeah, you’re right, you don’t need to include the whole product team, I’d say maybe the product lead. Your job, as a sales lead, if the product is falling behind, is really, really tough. The best seller, and the best sales team in the world, trying to sell a garbage product is only going to have so much success.
Michael Katz: So when I go back to the point around creating the system, and using that date exhaust to, ultimately, make better decisions on the product side, as well as the marketing side, they need to hear the details of the weekly conversation. They need to be as much part of the conversation as anybody, because in other organizations, that information may be filtered through a solutions engineering team. That’s probably one of the worst things that you can do, because then you get into a game of telephone. It’s all about protecting, and improving the integrity of your communication system.
Harry Stebbings: Yeah, no I do totally get you. I do want to ask, though, because talking about bringing in all these different functions, and really unifying the team itself, when I had Ben Braverman, CRO of Flexport, on the show, he absolutely went on the rails against specializing within sales, saying it’s not how business is done. No one, especially enterprise clients, want to be handed from SDR, to AE, to rep, to whoever you hand it over to in the sales process. Would you agree with him, in terms of sales specialization looks good on paper, but actually it’s fundamentally not how you do business? And, how do you think about specialization within your sales process?
Michael Katz: I think it really depends on the business, and how strategic or how transactional the nature of the sales process is. I can speak to our experience, but we have, I don’t know, three to six month sales cycles, on average. Sometimes it’s a little bit less, sometimes it’s definitely more.
Michael Katz: But, product capabilities aside, a lot of the times, people are still basing the decision on who they want to work with off of who they trust, and who they like. So as you’re going through that courtship, say, over a six month period of time, if you keep rotating in a cast of characters throughout the sales process, and then the seller immediately rolls off the opportunity, it almost feels disingenuous, because it’s like, “Oh, you actually didn’t really care about how I was doing.” Or, “All those times you checked in, you were just trying to get the deal done.”
Michael Katz: The relationship that gets built during the sales process should absolutely extend for the duration of the customer relationship. Some of our best sellers are really, really good at that. That’s not to say that there shouldn’t be a handoff to the customer success team, but you also shouldn’t disappear completely. So there’s a balance, I would say.
Harry Stebbings: Yeah. No, I agree with that balance. Final one before the quick fire, but I am too intrigued. I had a founder on the show the other day, and he said, “The danger with customer success teams is if they’re so good, they can actually hide flaws in product because they’re so good and effective that they make customers happy, despite imperfections in the product.”
Harry Stebbings: What are your thoughts on this? And how do you think about that, and the interplay between customer success and product?
Michael Katz: You know, I think for us, what we want our customer success team to do, not only to be the voice of the customer, but solicit as much feedback as humanly possible. The good, the bad, the ugly.
Michael Katz: If your customer success team is hiding, or over compensating, rather, for product deficiencies, what that means to me is that there’s probably something wrong with how they’re engaging. Because I think that, if they are going to truly be the voice of the customer, which is to say that they think about value creation before they think about value extraction, you have to solicit as much critical feedback because that’s, ultimately, how you improve.
Michael Katz: I think the premise of the comment cuts a little bit deeper than, I think, maybe what was said on the surface.
Harry Stebbings: Yeah. No, I do agree, in terms of that deeper nature. I do, though, Michael, want to move into my favorite element of the show, as you know, you’ve been through it before, the quick fire round.
Harry Stebbings: So I say a short statement, and then you hit me with your immediate thoughts. Are you ready to rock and roll?
Michael Katz: Let’s do this, man. Let’s do it.
Harry Stebbings: Okay. So your biggest challenge with your role with mParticle today?
Michael Katz: Not enough hours in the day, or days in the week.
Harry Stebbings: What do you know now, that you wish you’d known when you started mParticle?
Michael Katz: Oh, so much. You know, you asked me this last time I was on the show.
Harry Stebbings: I’m going to compare.
Michael Katz: I would probably give the same answer, which is to say that it’ll all work out, don’t stress the highs or the lows too much, try to just stay balanced. I’m working with an incredible CEO coach named Jerry Colonna, and his whole thing is, the point isn’t to get better at riding the rollercoaster, it’s to not ride the rollercoaster at all, and that would be my advice.
Harry Stebbings: He’s the only person that’s ever made me cry on the show, so I have very special feelings for Jerry so I’m thrilled that you’re working with him.
Harry Stebbings: Tell me, though, discounting, should reps do it to get the deal done in COVID times?
Michael Katz: Yeah, why not? Especially if there’s sensitivity on the buyer side. Now, you don’t want to do anything stupid, so I would say that, as long as it’s within the confines of what makes sense. But, play the long game.
Harry Stebbings: Tell me, how has new, inbound pipe been affected by COVID?
Michael Katz: So, what we’ve seen, and I think there’s a lot of other software companies which have experienced the same effect, is that COVID has actually served as an accelerant of digital transformation. Yeah, there’s lots of stages of digital transformation, and typically when we think about digital transformation it’s helping companies go from one to N, not zero to one, so we’re not focused on helping companies who have never had a digital presence create a digital presence, or move to the cloud, or anything like that, it’s about the optimization of how they’re doing business.
Michael Katz: So, we’ve actually seen a pretty considerable uptick in the amount of inbound, and overall pipe. It’s not just the types of customers that you would think would need to accelerate digital transformation, it’s also the types of customers that have been materially, negatively impacted by COVID, and they’re taking the opportunity, because their business is at a standstill right now, to implement the necessary infrastructure so that when things do go back to some version of normal, they’re able to move faster, and be more efficient. It becomes more of a necessity, and less of a luxury.
Harry Stebbings: That’s fascinating because I think everyone’s saying, “Hey, segment your customer base, figure out who’s struggling, and then, essentially, house them in the red for churn count, most def.” So, really interesting to hear that.
Harry Stebbings: COVID does change one thing, so this is off schedule, but I’m intrigued. It’s obviously change management, especially with, now, in-person change, and in-person coaching not being possible. What does great change management mean to you?
Michael Katz: It’s a pretty broad topic. For me, it’s about future proofing, it’s about making the necessary decisions and investments that hold up over time, and scale as you scale. So there’s an element of lifecycle management, and you can look at from a product development standpoint, you can look at it from a customer standpoint, but ultimately, yeah, it’s about being ready for whatever happens in the future, because I think the one constant is change.
Harry Stebbings: Tell me, if you could change one thing about the world of SaaS, what would it be, and why?
Michael Katz: Man, that’s a tough question.
Harry Stebbings: Shorter sales cycles.
Michael Katz: Yeah. Look, I obviously want shorter sales cycles, my investors would love that, my sales team would love that, but making everybody earn it also feels really, really good.
Michael Katz: You know what? I don’t know if I would change anything, I truly love it. Especially coming from a different industry, coming from ad tech where you weren’t as close to the economic buyer, and go-to-market was based on irrational decisions being made at the bottom, versus people who have more experience and more knowledge, in terms of what they want to do with the end product.
Michael Katz: I love it, I wouldn’t change anything.
Harry Stebbings: Final one. Who in SaaS do you look up to and admire, and why?
Michael Katz: I admire my team, actually. I’ve never had mentors, I try to figure as much out on my own. But, our team has been through a bunch, and I think that they’ve shown a ton of resilience. And the fact that we’re, now, in a position where we’re accelerating growth, and we’ve battled through a number of growing pains, and fought through some pretty competitive environments, I can’t say enough great things about the team that we have. You know, I probably don’t say it enough, but I’m truly proud of, really, everybody on the team.
Harry Stebbings: Michael, listen, I was so thrilled when we could make this happen. Thank you so much for joining me again, and this was, as always, so much fun.
Michael Katz: Absolutely, man. Great to catch up.
Harry Stebbings: I have to say, I do just love having Michael on the show, and it’s been incredible to see all that he’s built in the sales process, with mParticle. If you’d like to see more from us behind the scenes, then you can on Instagram at @HStebbings1996, with two Bs, I really do always love to see you there.
Harry Stebbings: As always, I so appreciate all your support, and I can’t wait to bring you another set of fantastic episodes next week.