Our thirst for gathering SaaS insights to share with our customers is never quenched. CodeScience CEO Brian Walsh and I attended the SaaStr CSS Speaker Series last week, featuring a packed house and a conversation between Phil Fernandez (Co-Founder of Marketo), Doug Pepper (Shasta Ventures), and Jason Lemkin (SaaStr). Phil and Doug have a long relationship, with Doug investing in Marketo back in the day, and now they are colleagues together at Shasta Ventures. Here are some highlights of the lessons learned by these powerhouses.

Photo credit: @shasta

1. How to Build a Great Product

I learned from Phil and his team is that building a great product is necessary but not sufficient. You need an extraordinary team to build the best product in order to win. – Doug

I have always been a product guy and an enterprise sales guy. I listen to what people are and are not saying, which is gold for seeing future products. I listen and interpret. You need to have a foot in both the product and the sales worlds. For Marketo, I spent six months talking to customers to learn their pain points and needs. I asked a set of questions to uncover what people would actually pay money for and have budget. I spotted an opportunity to tap into a budget pull that hadn’t been tapped. Ask: ‘Where’s budget? Where’s pain in the marketing space?’ Build a great product around that! The Cloud SaaS model opened the market up. I wanted to build a product that could be used on Day One that was incredibly easy to buy and grow with. – Phil

2. Monthly or Quarterly Customer Cadence (MRR)?

Anything other than a monthly cycle would have delayed deals in the beginning. That said, as we grew to enterprise level, having a monthly cadence ruined those huge deals and took them down to smaller, quick turns. Enterprise needs time to fit to the problem. – Phil

3. What Your B2B Brand Means to Your Business

My co-founder, Jon Miller, built a brand impression that marketers would love, want to be associated with, and see on their team. A previous boss told me: people are either rooting for you or against you in the world. You’re going to interact with a variety of audiences (VC, customers, press, employees, analysts, etc.). People make decisions on whether they like you based on the totality of what you are doing. Think about your interactions with all your audiences. How you conduct yourself in the world contributes to your brand, which in turn can become your best (or worst) asset. Our brand got Marketo to velocity. That work paid off down the road with our partner ecosystem, Marketing Nation Summits, and more. That’s my lesson on what brand means. – Phil

4. Viewing the Competition

Competition data says the leader of the market gets 70% of market value. What is the balance between being maniacal and sticking to your own knitting? – Doug

Number one, it’s ridiculously easy to get hijacked by competitors. Eloqua built a Marketo killer that they presented to Gartner. I thought that was awesome, because I knew we had gotten into their heads. Don’t chase the competitions’s features. Chase your ideas and innovate. We had our own North Star and ignored the competition. To overcome sales objections in a feature comparison, change the narrative. We don’t have X, so tell them instead about what we DO have. – Phil

5. Finding 10x Producers

How did you hire people that could deliver more than an average person? – Doug

I look for 10x producers, people with the innate ability to deliver exponentially. They display common characteristics like having non domain knowledge, creativity, their eyes are up and out. They ask questions of the world, and have true, innate curiosity. When interviewing, I ask probing questions like: “Talk to me about staying power – when do you give up? Tell me about a problem that either defeated you or one you got past.” If that person is curious AND tells me about a problem they got past, that’s a 10x indicator. – Phil

6. When to Hire a VP of Sales

We were still under $1M in revenue when I hired my first VP of Sales, and it took me another try to eventually hire Bill Binch. It takes 6 – 12 months to hire this person because you’re pulling them out of something. – Phil

7. Salesforce: from Huge Partner to Fierce Competitor

When we shifted from partner to competitor for Salesforce, it was a shock. However, we built an enduring brand and customers didn’t budge. Things didn’t prove to be that bad. When Oracle bought Eloqua, all of their pipeline came over to Marketo. Obviously our team needed reassuring. But we changed the dialogue to what are we doing to innovate vs victims responding to crisis. – Phil

8. The AI Question

Right now 90% of all pitches at Shasta talk about AI (last year it was 50%, and the year before 20%). It used to be mobile first business enterprise apps; now it’s AI first, business enterprise apps. This is a new class of SaaS apps. There’s a lot of hype and promise. Today, you can’t have just a workflow app. It needs something else that allows you to grow above the noise. And you can’t just bolt AI on. It needs to be built from the ground up as a pillar.

Final Thoughts

This session gave insights along every stage of the journey for Marketo, from pre-revenue through post IPO acquisition. Sometimes your greatest fears as an investor turn out to be a boon for the bottom line. You can never underestimate the value of your culture, brand and relationships with customers. Some day you may have to rely on that alone.


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