Legends of GTM: Eloqua's Founder Talks Category Creation - Mark Organ
Many entrepreneurs dream of creating categories. But few have actually done it - much less built a category worth billions of dollars.
Mark Organ is one of those rare few. As founding CEO of Eloqua, he pioneered marketing automation in the early 2000s, paving the way for other players and selling to Oracle for nearly $900 million.
Mark and I chat through how he co-founded Eloqua, the pivots and experiments needed to achieve product-market fit, and how category creators may be wired a bit differently.
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About Today's Guest
Mark Organ is the founding CEO of Eloqua (the first successful marketing automation platform) and Influitive. His greatest professional passions include creating new billion-dollar categories in technology and developing new leaders. Today he helps CEOs achieve their full potential in their businesses and their lives as the CEO of Categorynauts.
https://www.linkedin.com/in/markorgan/
Key Topics
- [00:00] - Introduction
- [01:05] - Founding Eloqua and marketing automation
- [07:47] - Origin of the lead generation playbook
- [10:39] - Getting to product-market fit
- [16:03] - Genesis of lead scoring
- [19:08] - Toolkit software vs. opinionated software
- [24:25] - Pivots and brushes with death are the norm
- [27:09] - When is it right to build a category?
- [30:14] - Building a category around an under-served hero
- [33:51] - Creating a category for the second time
- [36:42] - Challenges with churn at Influitive
- [41:05] - Alternatives to VC funding in SaaS
Resource Links
- Categorynauts - Categorynauts is the leading global community of category creating leaders, helping CEOs looking to discover, develop and dominate their category.
Learn More
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Transcript
You're listening to RevOps FM with Justin Norris.
2
:Welcome to RebOps FM.
3
:And today we chat with Mark Organ,
the founding CEO of not just one,
4
:but two category creating companies.
5
:Mark is a real legend in the space of GTM.
6
:First, he helped usher in the era
of marketing automation at Eloqua.
7
:Which later sold to Oracle, and he
then founded the Advocacy and Customer
8
:Engagement Platform in Fluidiv.
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:So this is someone who knows a thing
or two about creating categories.
10
:Today, Mark is the CEO and Head
Coach at Category Knots, where he
11
:offers coaching to CEOs on category
design and company building.
12
:And Mark and I are going to chat
about what was it like building the
13
:category of marketing automation
back in the early days, and then
14
:just dive deep into his playbook for
category creation more generally.
15
:What does this mean?
16
:When should we do it?
17
:How is it done?
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:Mark, I am so excited to
have you on the show today.
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:I'm excited
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:Mark Organ: too.
21
:Let's get
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:Justin Norris: going.
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:Alright.
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:I mean, let's start at the beginning.
25
:Some inside perspective
on the days at Eloquo.
26
:What was it like?
27
:What was your idea in the
beginning founding that company?
28
:And how did it evolve into what we came
to know as, I think, the first marketing
29
:automation platform, if I'm not mistaken.
30
:Mark Organ: Yeah, I mean, the first one
to get any attention, the interesting
31
:thing is that there's nothing really
new under the sun and there actually
32
:was before Eloqua, there's at least
one company that I do recall, I can't
33
:remember the name of them, that built an
Eloqua like thing, but this was before
34
:the idea of multi tenant cloud databases.
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:So this was on premise, They had to
sell their product for at least a
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:quarter million dollars up front.
37
:So there's something to be said
for just having good timing.
38
:Often there's an enabling technology that
allows a disruptive technology to work.
39
:Like a good example is in the
automobile, which was actually
40
:around for a good 15 years before
it really started to take off.
41
:And it wasn't until the key
ignition, people had to stand
42
:outside and crank the car, if you
might have seen old videos of that.
43
:And that wasn't a very good experience
for a driver, but the combination of
44
:the key ignition pneumatic tires made a
big difference for the quality of drive.
45
:So sometimes you need that
enabling technology to work.
46
:And I think in the case of Eloqua and
other technologies like it, I mean,
47
:you can make a case for CRM as well,
really only taking off after the cloud.
48
:I had a bunch of other technologies,
but yes, I mean, the first one to
49
:really get to commercial scale, uh,
and it was a very interesting story.
50
:Eleco was a bootstrap company.
51
:I was the oldest person in the
company at the time at 25 when I
52
:founded the company and really,
we were just trying to survive.
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:We raised 166, 000 and managed to
get profitable on that really was not
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:thinking about creating a category at all.
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:We're just trying to.
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:Figure out a market is really
what we're trying to do.
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:We're trying to figure out a market
and trying to do something that was
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:different from what else was out there.
59
:The reason why we founded the company
had nothing to do with marketing at all.
60
:Interestingly, when we started it, and
this is something that not a lot of
61
:people know, but the idea really came
from the experiences that I and my
62
:partner, Steve Woods had when we were at
Bain companies, management consultants.
63
:I was doing work in the sales
effectiveness space and seeing how sales
64
:reps were really not being very effective.
65
:The advent of modern technology
allowed buyers to screen out
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:sellers a lot more effectively.
67
:As it turned out, there was the rise
of the internet, and that's where a
68
:lot of new prospects were spending
time, either on websites or in
69
:email, this would be in the late 90s.
70
:At the same time, my partner Steve,
Who became the CTO of Eloqua.
71
:He was struggling to buy all
his Christmas presents online.
72
:He wanted to buy his
Christmas presents online.
73
:That was the challenge he
gave himself in:
74
:And couldn't really do it and
found it really needed advice and
75
:service in order to make it work.
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:So he kind of put these ideas
together and said, What if we could
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:use the internet to connect buyers
and sellers together on websites?
78
:That would be cool.
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:And so what we actually created
was something that you now see
80
:in like intercom was like a chat.
81
:It was a chat product.
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:And literally it was an embodiment of
this idea where we connected buyers
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:and sellers using chat on the Internet.
84
:Our very first customer was our
commercial real estate agent.
85
:Um, it just turned out to
be completely lucky today.
86
:They would be known as
Cushman and Wakefield.
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:It was like the number one
commercial real estate brokers.
88
:And I guess they took pity on
us and became our customer.
89
:After the tech rec in 2000.
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:And so that was our first customer
that we launched this chat product.
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:Justin Norris: Just to clarify, it sounds
like a very early version of drift.
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:Yeah.
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:So drift
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:Mark Organ: or Olark or intercom.
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:Yeah.
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:I mean, if you were to look at the
screenshot, it really looks very similar.
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:To those products.
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:But what was interesting is our very
first customer was a B2B company.
99
:So everyone else in the space at the time.
100
:So the big player in the space,
which is still around, what we
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:call live person was focused on the
consumer market like everyone else.
102
:And as it turned out, our first
customer was B2B and that was lucky.
103
:And so as it turns out, commercial
real estate sales reps that make
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:hundreds of thousands of dollars a
year don't really want to chat with
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:random prospects on the internet.
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:But what they were interested in doing was
in following up with people when they were
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:ready to talk about a particular property.
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:So we actually built the email
engine because we thought, well,
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:we're not getting a consistent
enough flow of chatters.
110
:So let's build an email so that
we can get more consistent flow.
111
:And then that actually ended up becoming
the MVP was really, it was an accident.
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:And so it was a sort of combination
of email marketing and what actually
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:was website tracking, putting those
two together and allowing sales reps
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:to follow up with prospects in order.
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:That became the MVP.
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:It was an absolute accident.
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:But what was interesting, though, is
that the foundational mission of the
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:company, which is to connect sellers and
buyers over the internet, that was true.
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:But the technology that we
used ended up being different.
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:Like, we ended up jettisoning
the chat product after a while.
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:And then even the email marketing and
website analytics, like, even though
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:those two components Were a key part of
the technology that wasn't the category
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:like the category was focused around
nurturing prospects until they were ready.
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:To buy, so the fact that we were an email
marketing or website analytics, like those
125
:are not the markets that we played in.
126
:We actually created a new market
and it was pretty interesting
127
:because nobody would fund us.
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:Right?
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:So the VCs all turned us down, the
analyst firms refused to cover us and it's
130
:because they thought we were confused.
131
:So they thought we're like,
are you a web analytics player?
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:We're like, well, no, I mean,
we have that technology, but
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:that's not the market we play in.
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:We're happy to have.
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:Web trends at the time, website
story, which became omniture
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:have that part of the market.
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:Email marketing became a
huge market unto itself.
138
:Again, not really the market that
we wanted to play in selling emails
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:at a quarter of a cent per piece.
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:The emails we sent were
20 times more expensive.
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:The reason why is it's not about email.
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:The reason why it was about this other
sort of function that we created.
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:And that really became the genesis
of what was a new category.
144
:Not just the way that the technology
was used, but probably most importantly,
145
:and probably get into it, the people who
used it, which are not really necessarily
146
:the sales reps, but these would be like
the early marketing automation people,
147
:marketing operations people that were
in charge of having a more efficient
148
:and productive marketing organization.
149
:You
150
:Justin Norris: alluded a bit to the
essence of what that motion was.
151
:Basically, the idea that people might
come to you doesn't necessarily mean
152
:that they're ready to buy, but if we
can continue to engage with them over
153
:a period of time, send them relevant
content, build that relationship, then
154
:when they are ready to buy, we can
be ready to hand them over to sales.
155
:Like, kind of very simplistic, but broadly
speaking, And actually also spoke to john
156
:miller from marketo about the genesis of
this and from his point of view it kind
157
:of emerged sort of almost organically
like hubspot was talking about something
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:similar within by marketing marketo
was talking about something you were
159
:doing this thing was it just sort of
this organic thing that was in the air
160
:or do you remember the origin of this
idea of going to market in this way.
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:Mark Organ: Yeah, no,
I do remember the idea.
162
:Yeah, and it's interesting because
we were founded more than six
163
:years before Marketo and HubSpot.
164
:I think to some degree, both of those
companies were a reaction to Eloqua.
165
:In fact, I saw the early VC deck that
Phil Fernandez and John Miller produced.
166
:And it had Eloqua in there, but
the challenge with Eloqua, which
167
:they correctly identified was that
the user experience was not great.
168
:And they improved on that.
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:HubSpot also was a reaction to Eloqua
to some degree because it was to them
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:all about interrupting buyers and
not actually providing the best buyer
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:experience, which I'll get to in a bit.
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:So I think buyer experience is really
important here and probably one of the big
173
:insights that I had, there's sort of two
foundational ideas that built up Eloqua.
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:One was my insight on sellers, but the
other one was Steve Woods insight on
175
:buyers, that he wasn't able to have
the experience he wanted as a buyer.
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:And I think there's a lot of.
177
:Insight in that that great marketing helps
buyers get the feelings that they want
178
:to get the experience that they wanted.
179
:So this idea was really quite central
when we founded the company again.
180
:Number 1 was that the Internet could be,
which includes email and the web could
181
:be a powerful tool for sellers to connect
to prospects when they're ready to buy.
182
:So that was an insight that we had
even when we started the company.
183
:And the second one is the
experience of buying is not great.
184
:And if we can improve it, then
you probably have a market there
185
:somewhere, even though the technology
that we built first was wrong, like
186
:it was not what the market wanted.
187
:We still had an insight that
came from our own experiences.
188
:And also in my case, I mean, interviewing
hundreds of sales reps as part
189
:of my consulting work so that our
brains were kind of primed for this.
190
:We knew the type of
problem we wanted to solve.
191
:Solve.
192
:We had an understanding of the data that
we would expect if we were solving it
193
:properly so that when our technology
was wrong and not just our technology
194
:was wrong, so is our target market.
195
:So we're based in Toronto and Toronto is
a big financial center in North America.
196
:And so our initial target was finance
insurance and real estate because that's
197
:what you have here in downtown Toronto.
198
:And it turns out that
market was wrong too.
199
:That's banks and insurance companies.
200
:They don't really care that much
about lead generation and demand gen
201
:because they have really tons and tons
of people that they could sell to.
202
:But most of them are not appropriate.
203
:They don't have the right kind
of credit score and whatnot.
204
:So that was off too.
205
:But again, I think because we had
a strong initial hypothesis as to
206
:what data we would expect to see if
things were going well, we changed
207
:the technology and we changed the
market so that we ended up tacking
208
:to a target market that actually was
desperate for High quality opportunities.
209
:In fact, that was the biggest
problem that they had.
210
:And maybe one of the ways that we got
this insight was that it turns out there's
211
:a part of the real estate market that
actually ended up being affected for us.
212
:So Cushman Wakefield was not
actually a great customer for us, and
213
:eventually they ended up churning.
214
:But we did end up getting pretty
lucky in that we had some customers
215
:in the vacation real estate space.
216
:It turns out we had a partner
in Toronto that was really
217
:big into vacation real estate.
218
:And that became a hit.
219
:So understanding, well, why did
that work and other real estate
220
:companies, for example, not work?
221
:And it turns out that vacation real
estate is different in that their
222
:real estate is more perishable.
223
:Like when they build something,
they have to sell it pretty quickly.
224
:Being able to sell out properties
allows them to raise more money on Wall
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:Street and go and do the next project.
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:And that's kind of more software like.
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:So if you think about when you build
a piece of software, it is perishable.
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:You need to sell like hell.
229
:And if you don't, there's
going to be competitors that
230
:are going to catch up to you.
231
:So that's when the light bulb kind
of went off and said, Oh, I get it.
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:We need to sell to companies
that need qualified leads
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:like their life depends on it.
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:And those are the best opportunities.
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:And then an even bigger lightbulb came up.
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:Another random thing.
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:As I said, I'm an ex scientist.
238
:Before I got in the business,
I was actually literally at
239
:the lab bench for eight years.
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:I was going to get my PhD in neuroscience,
literally doing lab bench work, right?
241
:And if you look at the history of
discoveries, I mean, often they are
242
:accidents, but there's a prepared
mind, like a prepared mind We'll
243
:see the accident and see that.
244
:Oh, this thing could
make a good post it note.
245
:For example, like someone discovered a
glue that wasn't a very good glue, right?
246
:And said, Oh, this crappy glue
would actually be really good.
247
:And that's where the
post it notes came from.
248
:And so I think like a good
entrepreneur, their mind is always.
249
:They're in the market.
250
:They're talking to prospects and
customers and they're feeling it.
251
:And they're actually looking
potentially for adverse data.
252
:The adverse data may
actually be what you want.
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:And so we got another interesting
customer called J boss, which at
254
:the time was one of the biggest open
source software companies in the world.
255
:It was our first open
source software customer.
256
:So this would be like 2004.
257
:So other companies at the
time would be like my sequel.
258
:You might remember them red hat.
259
:And I have a funny story about Red
Hat, which shows you what product
260
:market fit really looks like.
261
:But Jboss was a massive success for us.
262
:We generated 10 times better return
for them than we did for any of our
263
:other customers that we had before.
264
:So what went on there and
why was it so effective?
265
:Well, it turns out that open source
software companies are different
266
:from regular software companies
in that they already have all the
267
:leads that they could ever want.
268
:They're drowning in leads.
269
:They're using the damn thing for free.
270
:What you need to do is figure
out who's the best fit.
271
:And prioritize those for sales
reps in order to follow up
272
:with being able to do that.
273
:Absolutely transformed J Boston's
economics, and they ended up
274
:selling for a huge multiple.
275
:And so at that point, we got that
every other open source software
276
:company in the world actually became
our customer, including Red Hat.
277
:This is really funny because we
went down in North Carolina to go
278
:to go in and launch at Red Hat.
279
:And these poor people had to go
and buy like Windows terminals.
280
:To use our product because we're
like in a cathedral of open source
281
:with our Microsoft based product.
282
:It's like going to Mecca and
offering a pork sandwich.
283
:I mean, it's hilarious.
284
:That's what product market
fit really looks like.
285
:When someone has to buy a whole bunch
of computers just to use your product,
286
:you know you're doing something right.
287
:But then we really got it.
288
:Like we really got it.
289
:This is okay.
290
:What we're really good at is
this lead qualification thing
291
:and prioritization thing.
292
:That's what we absolutely nailed.
293
:And so from that point on, like
our growth went nuts because
294
:we knew exactly what we were.
295
:Why we did what we did, who the best
possible fits are for us, who the
296
:best partners are for us, what are the
best next products for us to build,
297
:because we really understood ourselves.
298
:And that's really because of our
interaction with the market and
299
:the data that we had coming back.
300
:And to me, this is what building
a software company or any
301
:company really is all about.
302
:It's about, there's a scientific method.
303
:You develop hypothesis as to what you
think is the right target market, the
304
:right offering for that market, the
right way to position it and market it.
305
:And then you go and get data coming back
and that tells you kind of where you
306
:should go and point your company at that
307
:Justin Norris: point.
308
:When you talk about the lead
prioritization use case, are we
309
:really talking about lead scoring?
310
:Like, was that the genesis of
what we call lead scoring today?
311
:It is.
312
:Mark Organ: That's exactly it.
313
:It was the genesis of lead scoring because
you needed to have a score in order
314
:to prioritize who to follow up with.
315
:And that really did come from
our foundational research
316
:that I did into Seller.
317
:So what I discovered when I was
Learning all about sellers is, number
318
:one, seller time is super valuable.
319
:It's way more valuable than most
companies really give it credit for.
320
:The second thing I learned is seller
longevity or tenure is super important.
321
:So salespeople really start
to pay off big in their third
322
:or fourth year with a company.
323
:That's some of the
research that I had done.
324
:So when a company is losing
their sales reps after two
325
:years, it's an absolute tragedy.
326
:And why do sales reps leave companies?
327
:Well, the other thing I found out
is they leave because they're not
328
:getting the leads that they require.
329
:It's not about their education.
330
:It's not about their management.
331
:A lot of really.
332
:And this was a kind of a blinding insight,
not just for me, but for my client at the
333
:time that lead quality was so important.
334
:So sales reps are wasting
time on poor quality leads.
335
:It is devastating.
336
:It feels like absolute crap
because they're not only are they
337
:not being successful, they're
wasting a lot of their time.
338
:So optimizing sales rep
time and efficiency was a
339
:huge focus for us at Eloqua.
340
:Which you think about it,
is super weird for a company
341
:that's in the marketing space.
342
:Like why is a marketing company
obsessed about sales rep productivity?
343
:It's because of where we came from.
344
:It's because of our origins.
345
:And I do think it's one of the
reasons why Eloquest succeeded.
346
:I think we succeeded because we
were focused on the right metrics
347
:and metrics that were completely
different from everybody else in the
348
:space because of who we were, that
we were the marketing company that
349
:was obsessed with sales success.
350
:In fact, a number of our customers, we
were told many times, this is the first
351
:time in two years where we've got together
with the sales organization again,
352
:like we'd have these meetings that had
marketing and sales together on the same.
353
:Table in order to discuss
what is a qualified lead.
354
:How do we score these properly?
355
:We would be the driver of
that conversation, especially
356
:in the earlier days.
357
:I mean, the later days at Eloqua, sure,
everyone started talking about this.
358
:You had serious decisions that
was bringing this to market.
359
:Really, we were the first company to
ever partner with serious decisions.
360
:This is another interesting
story in itself, in terms of
361
:why we partnered with them.
362
:But yeah, I think that one of the ways to
do well in the software industry, which
363
:has got tons of noise, lots and lots
of players in it, Is to build processes
364
:that have never been built before.
365
:And those are most commonly
found when you bridge over
366
:departments, you bridge function.
367
:So Eloqua really was a bridge between the
sales function and the marketing function.
368
:And Fluidiv, which came later, was a
bridge between the marketing function
369
:and the customer success function.
370
:So when you bridge across two functions,
which are often are your fault lines
371
:in companies where you have departments
that don't talk very well together,
372
:building processes that bridge those very
well and using technology to do that.
373
:It's a great way to build a company that
374
:Justin Norris: works.
375
:What extent do you feel that the
platforms that you've built are
376
:agnostic in the sense that they're
toolkits that can be used in a variety
377
:of ways versus platforms that have
a kind of opinionated perspective
378
:on go to market built into them?
379
:So if we take the example of Eloqua, The
motion that sort of evolved around that
380
:and I think evolved around the category of
marketing automation generally is the one
381
:that we've kind of alluded to use content
to collect leads you nurture you score you
382
:hand over to sales that was like the basic
scaffolding of that motion and do you
383
:feel that is sort of centrally embedded.
384
:In the platform and if that motion
changes is I think that there's
385
:questions and that is evolving today.
386
:Do those platforms need to evolve as well?
387
:Or do you feel that they're more just
like, these are toolkits that we can
388
:use in any way to market, however we
389
:Mark Organ: want.
390
:Yeah, that's a great question.
391
:I think a great piece of
technology really does both.
392
:If you're just a platform that can do
anything, users don't really know what
393
:to do with all the power in the product.
394
:If you don't have an opinionated way, at
least for some of the critical things.
395
:If there's not an, what you call
opinionated, which I just think
396
:is intellectual property that's
embedded in a piece of software.
397
:If you don't have that, then
I think you're probably not
398
:going to hit your potential.
399
:I think we have both, where at least
for some key functions, there is
400
:a best practice way to do things.
401
:But there's also something for power
users that have innovated, like there
402
:needs to be a way for innovators
to use your product as a canvas
403
:to do what it is that they want.
404
:And oftentimes those, I mean, I've
found it many times, both with Eloqua
405
:and Includiv, that our customers
knew better than us what to do.
406
:They would tell us,
well, here's our vision.
407
:I remember DocuSign with their
150 different nurture streams,
408
:which they could do in Aliqua,
you couldn't do it anywhere else.
409
:We never conceived of anything like that.
410
:That was something that they
said that they wanted to do.
411
:And so we were able to push the
product into that direction.
412
:I think what product managers
have to really think through,
413
:and this is really difficult.
414
:This is why product management, when you
get a good one, a good product manager,
415
:a good CTO, they're worth their weight
in gold is you've got to figure out in
416
:which directions do we need to scale.
417
:You can't scale at every dimension.
418
:At Eloqua, what we decided is we
want to be able to scale in the
419
:direction of Basically allowing for
the most sophisticated marketing
420
:campaigns ever to be created.
421
:We want it to be for people who want an
ultimate power to be able to do that.
422
:But there are a lot of
dimensions that we didn't scale.
423
:You couldn't have an unlimited
number of sales reps, whatever.
424
:You couldn't have a ton
of users on the product.
425
:I think it would break.
426
:You couldn't have.
427
:5 million simultaneous
visitors on a website.
428
:So if you wanted to go super
high scale B2C, it would break.
429
:And we knew that we're not going
to try to go after those spaces.
430
:I think the limit of where we went to,
which ended up being also an accident,
431
:was a number of sports teams used the
product because we started in sort
432
:of selling seasons tickets and then
move from there onto the B2C side.
433
:But that was really straining
the product quite a lot.
434
:So there's like B2C, we're
not going to go there.
435
:Lots and lots of users.
436
:We're not going to go there, but if
you have in mind a killer campaign
437
:that you want to do, that has a huge
amount of sophistication to it, if
438
:this happens, then just do this.
439
:If this happens and do that, we want
to be able to nail that and it'd
440
:be the best in the world at that.
441
:And I think that was a good
decision that we went into.
442
:Those are things, for example,
that Marketo or HubSpot could never
443
:do, even today, could not do them.
444
:They could do a lot of other
things, and maybe even including
445
:things that Eloqua can't do.
446
:Like, I think Marketo again made
a smart decision and said, We are
447
:going to compete on ease of use.
448
:And so there are going to be a lot
of Eloqua's potential customers that
449
:are not going to need all that power.
450
:And they're going to want to
make it more of a joy to use.
451
:And I think they did a great job.
452
:I give a lot of credit to John
and Phil for what they did there.
453
:And then at HubSpot, I mean, they
weren't even really in the marketing
454
:automation space in the beginning.
455
:They were really inbound marketing.
456
:Somehow they made marketing
automation inbound y.
457
:I'm amazed at their ability to do that.
458
:Because for years, Darmesh said,
we're not getting into that space.
459
:We don't like it.
460
:And then they did.
461
:And somehow it worked, I guess,
as testaments to great marketing.
462
:If you want to make it big in the
marketing software business, you
463
:need to have platform potential.
464
:You need to have the ability for people
to do things that you did not conceive of.
465
:But you need to think about,
well, what direction is that going
466
:to go in and can we own that?
467
:And at the same time, you absolutely need
to be opinionated on some critical things.
468
:Like you have to understand
the best way to do things.
469
:And drive those best
practices for, for companies.
470
:And to your question, I
mean, things are changing.
471
:I do think that product
led growth is the future.
472
:I just can't imagine that any
company is going to be purely
473
:sales driven in the future.
474
:If you're not using your product to do
more of the other functions, the sales,
475
:the marketing, the customer success
functions, even the product functions.
476
:If you're not doing that, then
you're going to lose to someone
477
:who is going to do that well.
478
:And I think the current marketing
automation tools today are
479
:actually not that good at that.
480
:They're really not evolved
for getting those deep product
481
:signals that are in there.
482
:And I think we're yet to see
who's going to win in that space.
483
:I don't think it's going to be
484
:Justin Norris: the existing players.
485
:About how you had to pivot multiple
times start over the wrong market wrong
486
:technology wrong product it's funny
because i am listening to audio book by
487
:ben horowitz hard thing about hard things
and he talks about his experiences and
488
:very similar they were selling servers
they were failing the pivoted to selling.
489
:Software they almost died so many times
and then they had a big exit and same
490
:for you selling to oracle for almost 900
million dollars and so do you feel that
491
:these pivots and these sort of brushes
with death so to speak maybe that's a
492
:bit too dramatic but just approaching
failure and then needing to reassess.
493
:Is this just inherent in the journey
of entrepreneurship or are there
494
:some people that just get it lucky
and they're like, yep, here we go.
495
:And it's a smooth path to kind
of fame and fortune from there.
496
:Mark Organ: You're not being overly
dramatic about brushes with death.
497
:I mean, we came within four
days of kicking the bucket.
498
:I mean, there's some crazy stories
of how we kept ourselves alive.
499
:which included, which running was great
about that is that our employees owned
500
:a lot of the company a lot more than
what was typical because we had a number
501
:of brushes with death and we ended up
selling stock to the family members of our
502
:employees and they ended up doing well.
503
:So yeah, no, it was
definitely a hairy experience.
504
:I think it's possible that there's
some people who just get lucky, but
505
:I work with a lot of entrepreneurs
and a number of them have had to do.
506
:Multiple like what you're talking
about really is the pivoting from
507
:servers into software or whatnot.
508
:I mean, that's a big pivot or so.
509
:Maybe more of these mini pivots where
their target market is wrong, their
510
:pricing model and offering is off.
511
:That's a big one, right?
512
:So that was a big one at included.
513
:We went from a freemium model to
a paid pilot model, and that was
514
:actually really big for getting our
growth going in the right direction.
515
:So, yeah, business model
target market messaging.
516
:Yeah.
517
:That's why I advocate this sort of
scientific Agile approach where as a
518
:CEO, you're constantly testing ideas.
519
:You're constantly saying, what about this?
520
:I wonder what would happen
if we charge this way?
521
:What would happen if we
try this target market?
522
:And you're doing it really as a
way to get closer to the answer.
523
:And the answer being, this is our target
market with this offering, with this
524
:pricing model, with this messaging,
that is going to be the answer for
525
:winning a multi billion dollar market.
526
:And so, being open to other
ideas that maybe your initial
527
:hypothesis wasn't right.
528
:In fact, it's almost sure to be wrong.
529
:Your initial hypothesis
is sure to be wrong.
530
:But, but then once you're starting to
learn, having increasing conviction in
531
:how you're going to market over time.
532
:Justin Norris: And then maybe that's
a good transition into the topic of
533
:category building generally, because
you've made that the focus of your
534
:current career with category knots,
which is a super interesting idea.
535
:Maybe just as a first question, should
everybody try to build a category?
536
:Is there times where like actually
don't build a category, do something
537
:within an existing category?
538
:How should people think about this?
539
:Mark Organ: Building a
category is not for everybody.
540
:It's funny.
541
:I mean, the last time, uh, when I wanted
to start in fluid in my significant
542
:other, why don't you just go and do it?
543
:Marketo did.
544
:Why build something completely new?
545
:Cause that's why I'm wired.
546
:It's just what I'm excited about doing.
547
:I'm actually not a technologist.
548
:I mean, a long time ago, but
God bless Eric Yuan and zoom.
549
:They built a, an amazing product to.
550
:Capture an existing category, but
he'll be the first to tell you they
551
:had no interest in building a category.
552
:You wanted to build a better mousetrap.
553
:For the existing one and I think
that could be a fine way to go.
554
:I think the people who are
excited about building categories.
555
:It's just because that's the way they are.
556
:They're pioneers.
557
:It's the way that they're wired.
558
:The 1 thing that I do really
love about building categories
559
:is that while it takes longer.
560
:I think if you follow a good step
by step process, you actually
561
:can build something great.
562
:It may not be a multi billion dollar
category, but I think if you do
563
:it right, and you're the owner of
even a smaller category that's,
564
:it's a 30 million category, but
you have 50 percent share in that.
565
:I mean, you still have a business
that's doing 15 million in sales,
566
:and it's probably profitable.
567
:I actually have a friend
of mine who did just that.
568
:He was a top sales rep at LinkedIn
and he was burnt out and his wife
569
:was a permanent makeup artist.
570
:Like they basically tattoo
makeup on women's faces.
571
:I'm burnt out.
572
:I'm going to help build their
business for a little while
573
:while I figure out what's next.
574
:And at the time I talked to him about my
playbook around how to build a category,
575
:which he thought was really interesting.
576
:And he's like, we'll
try some of your ideas.
577
:And so at the time there was like a few
hundred permanent makeup artists in North
578
:America and his wife was one of them.
579
:So they started by just making kits.
580
:These are like permanent makeup kits.
581
:They just assembled a bunch
of stuff and ship them.
582
:That's how they started.
583
:They ended up building their own products.
584
:So they source their own products.
585
:They did training.
586
:They did certification.
587
:They ended up doing a award ceremony.
588
:A lot of the things that I've done
in terms of category building.
589
:Today it's actually a
pretty interesting business.
590
:It's in the double digit millions.
591
:They own a hundred percent of it.
592
:They're probably doing a lot better than
many people in the software industry.
593
:They could probably sell their business
to a private equity firm for like a lot.
594
:And so it's not a huge category,
but they own it and that's not bad.
595
:Yeah, it's taken them 10 years
and typically is how long it
596
:takes to really build a category.
597
:But the step by step process.
598
:Actually makes it to me a little
bit less risky compared to trying to
599
:catch lightning in a bottle, building
a new piece of technology for an
600
:existing category to me actually feels
riskier and maybe it's just because
601
:of my skill set around categories.
602
:So let me tell you a little bit about
what that step by step process is.
603
:It starts with having what I call
the underserved hero, which at
604
:Eloqua was the demand gen marketer.
605
:So we found these really interesting
people when we went out to go and
606
:visit prospects, and these were
these marketers that often did not
607
:even have a background in marketing.
608
:A lot of them came out of engineering.
609
:In fact, some of them came out of
sales, but basically what happened is
610
:you had these companies where the CEO.
611
:And other senior people figured
out that the Internet was the
612
:way to go for marketing, like,
and making something more process
613
:oriented was kind of the way to go.
614
:And they often didn't have people
even in their own department
615
:that were good at this.
616
:They had to go and find other
people that were a little more
617
:quantitative and process oriented.
618
:And these were people that were
attracted to us, to our product.
619
:And I mentioned serious decisions.
620
:They're also very attracted
to serious decisions.
621
:And their research at the time when
we partnered with them, they were four
622
:people and a dog over top of a rented
storefront in Danbury, Connecticut.
623
:They were absolutely tiny, but
these demand gen people really loved
624
:research because they were the ones
that were doing research in this
625
:area in terms of demand generation.
626
:And the reason why we call ourselves
demand gen automation was because these
627
:people call themselves demand generators.
628
:They literally didn't even
call themselves marketers.
629
:So we generate demand for a living.
630
:Like we are the people that in a demand
poor environment, make it happen.
631
:And so all we did at Aleppo was we
built a company around these people.
632
:So we didn't just give them product.
633
:We gave them services.
634
:We gave them an ecosystem.
635
:We gave them a conference, content, a
book, a platform to build on top of.
636
:And we just surfed that wave.
637
:And that's the same way that
Lucatina Davies served for
638
:their permanent makeup company.
639
:Who did they serve?
640
:They serve these underserved heroes of
permanent makeup artists, which swelled
641
:from 500 people to 5, 000 people.
642
:Kind of surfed that wave.
643
:At Influitive, there were customer
marketers at the time when we started
644
:customer marketing was this really,
it was not really much of a thing.
645
:Okay.
646
:These are the people that were
in charge of getting references.
647
:To help close deals.
648
:And maybe they would do a
referral campaign now and again.
649
:And what we saw was that this is going
to be huge because, well, because
650
:we're driving everyone crazy with
these emails all the time, the buyers
651
:were getting frustrated with that.
652
:They wanted to hear from their peers.
653
:They wanted to hear from real customers.
654
:And as it turns out, getting customers
to talk to advocate was not that easy.
655
:And so what we did is say, okay, well,
as opposed to having separate processes
656
:for referrals and references and case
studies and five star reviews online and
657
:all that, well, shouldn't you have one
person in charge of all customer evidence?
658
:And let's go serve those people.
659
:And that's all we did.
660
:And we did the same playbook, which
is we gave them product, service,
661
:ecosystem, community, award ceremony,
book and other content and platform.
662
:And honestly, if you've chosen well,
if you've chosen people that are on
663
:the way up, that's all you have to do,
is you just serve those people, and
664
:eventually you'll actually have something
decent, and because you were the first.
665
:You're going to get your share
of the winnings of that category.
666
:And even if you don't choose well,
that's my whole point, like, let's
667
:say the category doesn't end up
becoming that big as you thought.
668
:You still might end up with 30 40
percent of something, and 30 or 40
669
:percent of anything is actually still
670
:Justin Norris: decent.
671
:Did you find it?
672
:Easier the second time around like coming
in doing in fluid if I really remember all
673
:that vividly because I kind of remember
the first days of influence of and then
674
:marketo had purple select and I knew
your team because I was also in Toronto
675
:so I kind of was like on the periphery
of that a little bit watching it was it
676
:easier or was it still just as hard and
require pivots and all that sort of thing.
677
:It was
678
:Mark Organ: easier.
679
:So at Eloqua, I was completely rammed.
680
:We had no idea what we were doing.
681
:We made a lot more mistakes
than the second time.
682
:And it was actually, I'm really grateful.
683
:My credent at Salesforce, who asked me
to give a talk about category creation
684
:in the early days of Influitive.
685
:So that forced me to think about
what did we actually do at Eloqua?
686
:And why did it work?
687
:And then what are we
doing now at Influitive?
688
:And that actually codified
a number of my ideas.
689
:When I gave a talk at Dreamforce,
and so yes, there were less pivots.
690
:I also raised more money, which
is both a blessing and a curse.
691
:So Ellico was a bootstrap.
692
:And in hindsight, there's
a lot of value in that.
693
:At Influitive, I already
had a name for myself.
694
:So I raised A lot, 30
plus million dollars.
695
:And to be honest, not all that
money was invested wisely.
696
:Once you raise that money, you have to go
and put it to work, but it did probably
697
:make it easier to get to product market
fit, but the pivots were less severe.
698
:We understood the target market.
699
:While we sold to the same target
that we sold to at Eloqua, which were
700
:sort of complex software companies.
701
:So we understood that.
702
:We did change the business model.
703
:We did change the pricing models.
704
:I mean, those things changed the
messaging, the messaging did go through
705
:pivots, but we didn't go through such
like a huge product pivot, probably
706
:what we did learn some of my big insight
that I had coming into Influitive came
707
:from my experience where I was on the
board of a social gaming company and
708
:seeing how interesting gaming companies
are compared to software companies.
709
:You don't have to train
people on how to use a game.
710
:They use it on their own and how
it really drives a lot of user.
711
:Addiction.
712
:And so one of the things that we did
learn is that the more fun and game like
713
:we made the product, the better we did.
714
:So we did go through a number
of interesting pivots to make
715
:it more and more like a game.
716
:But still the same process.
717
:Like that was a hypothesis that we
had and then we went and tested it.
718
:Let's predict what'll happen.
719
:Let's see the data come out.
720
:The data coming out says,
hey, this is really positive.
721
:Let's go and double and
triple down on this idea.
722
:Justin Norris: I'll give just
an homage like from an outside
723
:perspective at that time your
marketing team was really top shelf.
724
:Jim williams was your marketing
leader and alex shiplo who i know
725
:pretty well was leading demand and
just seemed like you guys were on
726
:fire like it was the hot place to be
people were closing you had really.
727
:innovative ideas.
728
:So it really did feel like at that
moment in time you had latched on
729
:to something special and it was just
moving along at a really fast clip.
730
:I don't know if it felt that
way internally as well, but it
731
:certainly appeared that way.
732
:Mark Organ: That was a really fun time.
733
:We were at the time growing very quickly.
734
:So that was the time we started
Advocamp, the Advocamp event, which
735
:ended up being a big hit as well
with Jim Williams running that.
736
:We hit a significant
rough patch after that.
737
:And the churn started to really go up.
738
:So while we were winning a lot of
customers and there was a lot of
739
:excitement around the idea and still
is a lot of excitement around the idea.
740
:The churn started to really go up.
741
:One of the challenges was that so for
people who don't know on your show,
742
:it was basically gamified community
and the purpose of the gamification
743
:is to drive advocacy, so to get more
customers to invest their time and
744
:energy and reputation into companies
that they really love with referrals,
745
:references, case studies, videos.
746
:Tweets and all those sorts of things.
747
:So that's what the product was all about.
748
:The insight for when to the product,
I mentioned a little bit about making
749
:things fun and game like, but it's pretty
not a blinding insight, which is if
750
:you make the process of advocating more
pleasurable, people will do more of it.
751
:So make it more valuable, make
the experience better, which is
752
:really what Influent is about.
753
:So that was the first ever community
approach for doing advocacy.
754
:The challenge was that this is a community
that lives separately from the product.
755
:It wasn't that easy to get advocates
to do their thing like you really have
756
:to build a good relationship with them.
757
:So what we found is that there was
there a player customer marketers
758
:out there and they got tremendous
return on investment for the product.
759
:And then you had B and C grade customer
marketers, which are 70 percent of the
760
:market, or 80 percent are B and C players.
761
:And sometimes one of these people
would go on mat leave, or they'd
762
:leave their job or whatnot, and
they'd get replaced with someone.
763
:So even a community that
was going really well.
764
:Would sometimes start
to crest a little bit.
765
:And so the churn started to go up and
then the reputation for churn got out
766
:into the market, which was not great.
767
:So the company started to flatline
a little bit in terms of growth.
768
:We had got ahead of our skis
in terms of our burn rate.
769
:So I had to do a couple of
rounds of layoffs in order
770
:to get things right sized.
771
:Eventually I did end up leaving the
company to actually homeschool my son,
772
:which was, that was sort of nine years
in, he was getting a little bit tired.
773
:And then I think the company never
really, with the new management team,
774
:didn't really hit its full potential.
775
:So I still think it's a very
interesting category, and it will
776
:be a multi billion dollar category.
777
:The key is going to be
solving that churn problem.
778
:And maybe AI is going to be
an important part of that.
779
:I mean, that's generative AI was
not something that was part of the
780
:experience before that's something
that could make a big difference.
781
:I think that making the community a
more organic part of the experience
782
:of using a product, I think could
make a big difference the same way
783
:that in a Tesla, you have the referral
machine is built right into the car.
784
:You don't have to think like, Oh,
you're happy with your experience.
785
:Go refer a friend and we'll
give you something for that.
786
:I like our conversation before about
enabling technology, the right enabling
787
:technology, I believe will make this a
multi billion dollar category because
788
:for sure the companies that get their
customers doing more of the work for
789
:them, if your customers are doing
more of your selling, your marketing,
790
:your product work, your customer
success work, you're going to win.
791
:You have people who are better than your
people and they don't cost anything.
792
:And so there's just no way that this
can't be a multi billion dollar category.
793
:And I think we'll see that in the
next few years, someone is going
794
:to go and build the category killer
795
:Justin Norris: here.
796
:It's funny that you mentioned gen AI,
because I think again, as an outside
797
:server, one of the challenges I perceived.
798
:In running an influential community,
the person labor required to like
799
:keep it going, like new questions and
quizzes and challenges and things,
800
:there was a constant stream of that.
801
:It was relatively labor intensive and
AI could certainly relieve a lot of
802
:that burden on the customer marketer.
803
:Mark Organ: That's my hypothesis.
804
:Yeah.
805
:I think that generative AI may
turn those B players, custom
806
:marketers into A players.
807
:Maybe we're also getting things
like optimized scoring systems.
808
:I think there's a lot of amazing
things that we could do with AI.
809
:That could be the version of the
key ignition for this market space.
810
:So for any entrepreneurs that are
listening, I think that there's a
811
:very bright opportunity in the space.
812
:Justin Norris: I want to ask one more
question about the sass market in general
813
:and particularly the funding model
and this theme has emerged organically
814
:and a lot of your responses about
bootstrapping Eloqua raised a lot of
815
:money within fluid of your friends with
the permanent makeup business and how
816
:they did it and I think over the last
year or so what we've seen with capital
817
:markets drying up lots of layoffs.
818
:A lot of companies that with these
insane valuations that will probably
819
:never recover their initial value.
820
:So even though they may have raised
hundreds of millions of dollars, those,
821
:that equity is not very valuable.
822
:All that is to say, do you think
that we're about to see different
823
:models emerge that the traditional VC
model of like raise a whole bunch of
824
:rounds, keep raising, keep burning?
825
:Is that changing and is bootstrapping
going to become cooler or other
826
:funding models become more popular?
827
:Mark Organ: I think the answer is yes.
828
:I think things are going to change.
829
:I think the SAS, the industry is
maturing and there's still lots of
830
:opportunity in a maturing space.
831
:It's just, you're just not going
to see as much innovation around
832
:sort of new functions to automate.
833
:I think almost every function in a company
is now got some automation around it.
834
:So that gold rush is
over, but then there are.
835
:Opportunities and things
that are maturing.
836
:There's a ways to put different functions
together that haven't been done before.
837
:There are suites of software that you can
put together and you can integrate them
838
:in ways that haven't been done before
that I think are going to be interesting.
839
:I think there's more opportunity
now in bootstrapping than erasing.
840
:Today.
841
:So if I were to build another software
company today, well, first of all,
842
:this, the cost has gone down so much.
843
:I mean, if you could scrape together
a hundred thousand dollars today, you
844
:can build a pretty decent product, get
it to market, test it with thousands
845
:of different potential customers.
846
:That would have taken 5 million when
I started Eloqua now, and now it
847
:would cost a hundred thousand dollars.
848
:And that's with a lot of
inflation at the same time.
849
:I think that there's.
850
:An opportunity really to raise
now when like we did it out.
851
:I mean, the reason why I raised
money, I mean, really for two reasons.
852
:One was we had a bunch of idiots
on our board that we have to get
853
:rid of these angel investors that
were actually pretty terrible.
854
:Um, they had to buy them out,
but the other one was we actually
855
:knew what we were doing, right?
856
:So we like, holy cow, we have
a market that's accelerating.
857
:We can put revenue generating units
together at a profit in five months.
858
:Two sales reps, a lead generator and
a half a sales engineer, and we can
859
:make them profitable in five months.
860
:Why wouldn't we raise all the money?
861
:We can't in hindsight, like that's
really the right thing to do.
862
:Because we could tell the investors,
like, you put your money, here's the
863
:box, and here's what we're going to
do with it, and where are you going
864
:to get return on the way back out?
865
:Whereas at Influitive, honestly,
they were taking more risk, which
866
:they were willing to do, because
they're like, well, Mark will figure
867
:it out, because he's done it before.
868
:And we were also taking a lot more risk.
869
:And in hindsight, I'm like, I'm not
sure that was a really good idea.
870
:Again, maybe one of the advantages
of being a category creator is
871
:you actually do have more time.
872
:We didn't have all competitors
breathing down our neck.
873
:We had no competitors at all.
874
:So I think we actually had more time.
875
:Maybe in my case, I was just like,
well, they're throwing money at me
876
:and the valuation is really high and
I'm kind of sick of writing checks.
877
:And so sure, why not?
878
:Let's take some money and
make life a little easier.
879
:I can afford a vacation this year
and some other things like that.
880
:If you can keep 100 percent or maybe 80
percent of your company, because you give
881
:more, give more equity to your people.
882
:Keep 80%, keep 70 percent
of the equity for yourself,
883
:give more out to your people.
884
:And then once you figure things out, well,
then you really do need, I mean, the scale
885
:of go to market, you really do need money.
886
:Now, especially if you actually have
competitors, you may lose the market.
887
:That's the other reason why we had to
raise Elk at the time was that I started
888
:to sense new competitors were coming.
889
:I was right, right?
890
:Marquetta was founded a year later
after we raised 10 HubSpot and these
891
:companies in Silicon Valley would,
that's what they're good at doing.
892
:They're good at raising
money and putting it to work.
893
:Like I thought they were
bananas at Marquetta.
894
:I'm like, I can't believe
they're doing this.
895
:Why are they overpaying so much?
896
:Well, actually they were right.
897
:It was the right thing to do.
898
:So yeah, no, I do think
we'll see a different model.
899
:I think we'll see more bootstrapping.
900
:I think we'll see more
intelligent use of debt.
901
:As a way to get companies to a level
to where it makes sense to raise more
902
:money at a higher valuation and invest
in nailing the go to market motion.
903
:So
904
:Justin Norris: interesting, Mark.
905
:I really appreciate you chatting
with me, hearing this all.
906
:It's just interesting to put into
perspective a lot of things that like I
907
:saw this much of and your point of view.
908
:Living through that.
909
:Thanks, and I really hope
to chat with you again.
910
:Thank you,
911
:Mark Organ: appreciate it.
912
:Have a great day.
913
:Justin Norris: Hey everyone, I want to
invite you over to the RebOpsFM Substack
914
:community, where you can sign up to get
rough transcripts, show notes, longer
915
:form articles, and other bonus content.
916
:Just head over to rebops.
917
:fm slash subscribe to get free access.
918
:I'd also love to know what you thought
of the episode, and to hear suggestions
919
:for topics you want to learn about.
920
:Feel free to leave a comment on Substack.
921
:Or send me an email at justinatrevops.
922
:fm.
923
:Thanks for listening.