October 9, 2019
The Founder’s Guide to First Sales Hires
Advice from startup founders who have successfully gone through the process of finding that first sales hire for their teams.
In this Heavybit talk, Jennifer Johnson shares a methodical approach for developing a go-to-market strategy. She covers category design fundamentals and what companies can do to differentiate themselves and achieve category domination. She reveals the importance of framing the problem you’re solving, constructing your corporate point of view, defining your category and developing category evolution strategies.
Hi, I'm Jennifer Johnson. Most people that know me call me JJ, so that's totally fine if you want to call me JJ. I'm absolutely thrilled to be here this evening speaking with you, so thank you. I know everybody's really busy. You have these little things you're starting called companies, so I really appreciate you taking the time, especially with all this rain, to get here and listen to the talk.
So today we're going to talk about one of my favorite topics in the world, go-to-market, and something I am really passionate about, and I'll talk to you about the experience I've had over the last six months. Now category design, it's become this buzzword lately in Silicon Valley. But there's a real meaning behind why it's so critically important, and that's what we're going to talk about today. But before we get started, just a little bit about me.
I've been in the enterprise software marketing space for over 15 years. I worked in product marketing, solutions marketing, campaigns marketing, pretty much every gamut of marketing for really big companies, Veritas, ManTech, HP. I went and I did my first CMO role at a company called Coverity, which is in the development space. They, think of it like co-testing and now it's part of Synopsys, so I was therefor just about five years, and we'll talk a little bit about the repositioning in the category that we built around development testing at Coverity.
In between Coverity and Tanium I did a stint as an in-house CMO for Andreessen Horowitz, so part of my role there was to work with portfolio founders, CEOs, marketers just like you, on anything go-to-market, so that could be as fundamental as what is marketing all the way to go-to-market strategy, hiring your first marketer, how to think about marketing. So I'm very familiar working with all of you.
I understand how difficult it is in the spot you're in, and then I went to a company called Tanium in the cybersecurity space, as not only their first CMO but their first marketer. So I literally built marketing and the brand from the ground up. I'm very proud of the work we did there and since then, for the last six months I've been doing advising for start-ups in the security space and working with a company called Play Bigger, and I can't really see out there, but how many of you have heard of Play Bigger and the book?
Has anyone read the book that they just wrote? A few of you, okay, excellent. So one of the homework assignments after this, and I'm going to touch upon some of the concepts from the book, but Play Bigger, it was started by three former CMOs, including the former CMO at Mercury, and they started an advisory firm working with entire executive teams on category design. And we're going to talk through what that means and why I think it's so important.
But they just wrote a book about six or seven months ago called Play Bigger, and I'd encourage all of you to go and get that book, and read it, and really embrace it, and some of the things that I talk about today are in this book, but let me tell you, it is more important than ever, and I know you guys are all living it every day, it is more important than ever to have a point of view, and stand for something, and be different out in the market, and dominate a category.
Position yourself or be positioned. That is something I live by every day, so I'm really passionate and excited to share some of the concepts from that book as you're thinking about your positioning in the market. So how do I think about marketing? And I think it's very easy, and look, I get it. I've worked with technical founders, I've worked for technical founders, I understand when you have this great technology that you just want to get it out there and the technology is going to sell itself.
There is an element of truth that great technology gets viral. You all know this, you all live this, but great technology only gets you so far, and good marketing and great marketing is absolutely critical from the first moment that you start your company, and I think about it in two contexts. I think about it as air war and ground war, and what do I mean by that?
Air war is really about what you stand for and about casting a large shadow.
If you only allow your technology to go viral and let developers or admins or whoever tell their friends, all of that's great for building a base, but at some point in time, no matter how successful you are there's going to be a point in time where you might need to go upstream, or the broader world doesn't know who you are right, because there's a lot of constituents out there that you need to educate, and influence, and evangelize your brand to, customers, analysts, the press, investors.
So you have to think from the beginning about who are we, what do we stand for, why are we doing something fundamentally different, not better, but different in the world, and how do we actually get that out there to the masses? And that's what I think about air war, and category design fits very much into that. And then ground war, and that's of course how do you actually go and generate this little thing called revenue, right?
And that's everything from helping your sales team with the messaging, and the content, and the programs, and the leads, and making sure you have a product strategy and packaging that allow you to scale the business, and we'll talk through some of those things as well.
You really have to look at marketing as both sides of that coin, and great marketers understand that the war is fought on two fronts.
So why is this so important today? 2000. Anyone want to guess what that number is out there? Alright. I will give you a hint. Number of software companies that received venture funding between January and September of last year alone. So a lot of companies, right? 80%, what do you think that is? 80% of these companies were actually early stage investments, so angel, seed, series A. So as you know, it's easier than ever to start a company.
There's a lot of venture money being poured into the industry today. There's a lot of companies fighting for air cover, and why they're relevant, and fighting against those big incumbents. So it is upon all of us to make sure that you actually can cut above the noise, and why is this even more important? Anyone want to guess what this number three is? It is the number of software companies that went public during that same timeframe, right, so think of it like a funnel.
There's a lot at the top of the funnel and you have to fight for your place in the world and very few actually make it to that end of the funnel in the context of a liquidity event, in the context of a public offering. So anyway, what does this all mean? The first thing that I say to everyone, which is the fundamental step one, is have a point of view, and what do I mean by that? Everyone wants to talk about how great their technology is and how great their solution is, and they love this solution, and they love it, and they built it, and it's amazing, and everyone should just flock to it.
And all of that is great but I read something the other day and it really stuck with me and it's fall in love with the problem, not the solution. Yes, the solution is important to how you solve it but you have to stand for something, and standing for something and having a point of view is all about falling in love with the problem, and framing the problem, and the companies, I have lived this, I have done this, I have seen it.
The companies that frame the problem the best will be the companies that win.
Because if you frame the problem the best you own the solution, because you're going to frame it in a way where you're the only solution to it. And the companies that do that the best and tell that story and that narrative the best are the ones that are going to win. So this is the fundamental question that I'm asking all of you to think about, is what problem are you solving?
You know the answer to this better than anyone, and let me tell you, while you are still at a point where it's controllable and you don't have that many people, get this down on paper and commit this to memory, and every single person that enters your company, they have to understand what that problem is because I guarantee you if you don't go through this process now, what's going to happen is you're going to be so successful and all these people are going to come in, and your marketing team's going to come in, and all that tribal knowledge of why you started this company in the first place, which all revolves around some insight you saw and a problem that you saw in the market is going to be lost.
We're working with a couple of companies at Play Bigger now which are amazing companies, 10 years old, founder is not even in the business of one of them anymore, and all of that tribal knowledge of the inside of that company went out when the founder left the business, and so now the new team is sitting here going well what problem are we solving? And it was as simple as you bring the founder back in the room.
He or she, you have all that information in your head, so one of the most important things you can do is be really crystal clear on what problem you're solving. And I know that sounds like it's very obvious, but it's not always that obvious, so what I'd love for you to do, and not right now, is think about what that problem is, and if we have time at the end of this session I would actually love a couple of very brave volunteers, if you want to come up and actually talk to the rest of the audience about what problem it is you're solving.
It seems like it's a very straightforward question but it's not. The other thing to also note is that
If you ask five people or ten people in your company what problem it is you're solving, you'll get 10 variations on that answer.
Probably about 80% will be the same and 20% will be different, and it's that 20% that'll get you, because that's where your message starts to go off in different directions. So be super super clear on the problem you're solving. So how do I think about constructing a point of view? There's a couple things that I always go through this process, right, and so if you think about the components of delivering and constructing a point of view, this is how I would think about it.
The first is, what was that founding insight you had? because you know a secret, you saw a problem that someone else or no one else saw or no one else knew how to figure out how to solve. What was that insight that you had? That's the first fundamental thing is to think about that. And was that a market insight or was it a technology insight? So a market insight might be something like Airbnb.
They had an insight, or a Lyft, or Uber, they had an insight to something that was broken in the market and they knew there was a better way or a different way, and in some cases it was a problem that people didn't even realize that they had. Now this is important because sometimes you actually have to show people a problem that they didn't even think that they had. So you not only have to educate them on what the problem is, you actually have to educate them on why it's a problem to begin with.
Or was it a technology insight? Something like VMware, where they created virtualization as a technology problem to solve. So that's kind of the first thing, founding insight. Secondly, is this an existing problem with a bad solution or is it a new problem that people didn't know they had? And depending on what the answer is to that, you might have to think about how you market and how you construct that story differently.
Who has this problem and what's causing the problem? What's the antagonist? Every great story has a protagonist and an antagonist, and there's nothing different. Even though it's technology, you're still, think about it in the way of how any great story is created. This problem, it's causing pain for someone or something, and what is it that's causing that pain? It could be legacy approaches, it could be legacy tools, it could be there is no solution to it, it could be whatever, but this is where that problem has to be simple and emotional, and it has to get to the heart of why it's causing, it needs to be dramatic, because you're telling a story.
You need people to feel that there's something really broken. And what are the ramifications of not solving it? Is it something that it's okay if you don't solve it, or is it something that it's really urgent and if you don't solve it there's going to be serious consequences, whether it's in ramifications, whether it's to you personally, whether it's to your company, whatever that is, but you need to create urgency with this story.
And once you've framed the problem, you've earned the right to actually explain what your vision is and explain how you can solve this problem in a new and different way.
A lot of what you're doing is disrupting existing industries, disrupting different legacy tools, whatever that is, but really what you're doing is you're prescribing a new way to do something, a better way but a different and a new way to do that. But you have to actually tell the story and then you've entered it into a way that you're the only way to solve it, and then of course, what are the benefits of solving it this way.
So again, I highly encourage you, what I do whenever I go into a company is I actually sit down, and this is what Play Bigger does, this is what I do as a CMO, is I sit down with the founder, with the executive team, with any other leaders in the company, business or technical, and I interview them and I ask these exact same questions. And you start to see where you have commonalities and you start to see where you have differences.
And actually just physically get it down on a piece of paper, and socialize it with the leadership team or the people that matter, or maybe it's your whole company depending on your size, and actually get everyone to agree to that narrative. Because when you start to scale them and you start to grow, this is the North Star that, think of it like almost like your source code.
This is your source code of you story, and as you grow in scale you're never going to lose this.
Here's just a couple of examples of provocative points of view, and I always think of like coming up with an interesting and provocative headline or a tagline is a great way to frame your point of view. These are just some of the ones I think that are some of the best. I mean Salesforce, look at what they did. They actually created, Marc Benioff created an entire category around cloud based CRM but actually what he did first was he actually created an argument to say that on prem was no longer the way, and so this whole no software campaign actually was even just bigger than Salesforce.
What he did is he, I don't know if everyone knows this, he invented the term on premise, he invented the term on premise to actually show why on premise was bad, and how the cloud was the new way to do business. It was more scalable, more cost effective, less, you know, you don't have to bring in all these consultants, all of that good stuff, and because he was able to articulate that point of view of no software, that provided him and Salesforce the forum to actually go out and dominate the CRM space.
So if you think about it, he was probably one of the best category kings and category designers out there, but that no software campaign, and it still lives today, to this day, 20 years later. Airbnb, this whole notion of belonging anywhere. So if you think about what they've done in the last couple of years with their rebranding is it's not, obviously we all know Airbnb, right?
They actually had to go out and articulate a problem that people didn't know that they had. Hotels were, I don't think, were okay, right? But this was all about, belonging anywhere is about actually creating an experience. You're not just going to a hotel. You're actually living somewhere. You're having an experience, you're belonging, you're part of the community, and belonging anywhere, and that could be a room in a house, a boat, wherever it is.
And so I thought this campaign that they did and this tagline, belong anywhere, was such a brilliant way to encapsulate what made them unique and what made them different, and framing the problem around the fact that hotels are very transactional and actually doesn't allow you to be part of a community, in part to experience something. And then of course I had to put that in there, but actually I'm very proud of what we did at Tanium.
I know some of you are building companies in the security space. When you start to look at every space now is so crowded, and security is probably one of the most crowded spaces if, those of you who were in the city last week probably saw that the traffic was a nightmare because of RSA, the big security conference. But I mean there are literally, I mean I don't even know, at least 500 vendors that were, maybe 1,000 that were in that exhibit hall, and if you walked down the hall of that exhibit hall, if you walked down the aisles and you looked at every company and you counted the amount of times that people said, we eliminate risk, we stop breaches, we have 100% coverage in detection.
I mean it's like everybody sounds the same and you know, if you are, security is something whether you're in security or not that affects all of us as consumers, as individuals, and so I feel very passionately about this, is that marketing actually is doing the whole industry a disservice in security,
Because when you sound the same and you don't have a point of view, not only are you not like educating the market on what you do differently and how you're going to help them, you're actually just confusing everyone, and that doesn't help anyone.
So what I did when I got to Tanium is we were really clear around, we need to make ourselves sound different but let's start with the problem. And the problem was framed around, so if you go back to the constructing a point of view, it was a technology insight, so the story of Tanium is it was a father and son. They had previously started a company in the systems management space called BigFix that they sold to IBM, configuration management, patch management, compliance, so all those types of things, and what they realized is that the whole world had changed.
Cloud virtualization, all these big computing trends came on the scene and all these technologies that these companies are trying to use for systems management were built way before that. And so what they said is look, there is a problem that these technologies don't scale because the number of devices has exploded beyond a point where any of these systems management tools were built for, and the problem is that the speed in which it takes to actually either get data back from your endpoints to know that there's a problem or actually do something about it like patch systems or whatever that is, it takes so long that now the damage is already done.
So they had a technology insight based on what they knew from their previous experience, and we framed the problem around speed and scale. And what we said was, the existing technologies that were built before these big trends, they just can't scale given the pace of change, the number of devices, the time it takes now to compromise a system, so the only way to get ahead of security attacks is actually to get that data in seconds, because now you can compromise the system in minutes.
And so what we did with that is A, we made our unique differentiated point of view, and that's where this notion of 15 second visibility and control was, so we differentiated ourselves, we framed the problem around speed and around scale, and what we did is we created a new SLA. By having a quantifiable, defensible position and point of view, we now put, they put every other vendor in the space on the market, on the defensive to actually show, were they better than 15 seconds or were they slower.
So companies either had two options, they either had to say, oh no we're five seconds, which I mean that's just ridiculous. They couldn't back that up. But that's also falling into the trap of saying, oh no, no, no, we're better, we're better. But we already had defined the problem and we had defined the point of view, and we owned that message and that position. So the thing I can impart onto all of you is figure out what that 15 second message is in your business and do that through your point of view, and that will manifest.
That's how you tell your story. It's the most important thing that you can do, trust me, and spend the time to actually get it right, because that will transcend your entire, not just your marketing strategy, it will transcend your entire strategy.
So step two is defining and developing your category. The point of view, and what Play Bigger does and what we do when we go into a client to do category design, is that point of view actually becomes a key part of the process, because the point of view is how you manifest and tell that category story. But ultimately at some point you're going to have to know, like what space do you fit in. Where does Gartner put you? If you talk about yourselves, what are you? Are you an infrastructure management company? Are you a CRM company? What are you?
And so you have two options. A, you have to stand for something, and so your point of view can help you tell a differentiated story, but you really have two options.
Are you out there trying to disrupt and revive an existing category that might be stagnant? Or are you actually defining a new one?
There's two schools of thought on this, is that, well you definitely should always define a new one, a new category, because if you're reviving an old category, by definition you are going into a category or a market that someone else has defined.
So you are walking into criteria that somebody else has already set. So you should absolutely start a new category and do that. Now the thing I will say, not against that, but the thing to caution is if you're going to go and define a new category that the market doesn't know about yet, out of the gate, A, if they don't know who you are sometimes you have to earn the right to be able to do that, so it's almost like a step process to get there.
The other thing is it costs a lot of money to do that, and it's something that you have to commit to. I'm not saying it's not the right thing to do, but it's something that takes time and commitment and it's a multi-year effort, and it becomes a strategy. So I think another key point, and I don't know that, look, I don't think there's one answer for everyone, but I will say if you're going to go and try to revive a stagnant category, you need to be really clear about, there's already some perception of what that category means and who the players are in it, and why they're the leaders if they are.
And so you have to be really, really, super clear on what your point of view is and why it's different. We did that at Tanium. We didn't go out of the gate trying to start a new category, we actually went in to revive endpoint security, and we actually did a great job I think of actually creating, what happens is like you create this, revive this category and then you get like a couple incumbents that have been around for a long time that have a lot of the market share, but maybe they haven't been innovating.
The new company comes in and says, okay, we're reviving it, and then all of a sudden you get all these other companies that pop in the space or decide to pivot over into that space, and you get more startup or small challenger vendors to the incumbents, and then what happens over time is one category king emerges and the rest either get subsumed or die out. I think just to think about what your strategy is. If you're going to go into a stagnant category, I would almost look at that as revive a category as a stepping stone to actually have the brand recognition and the credibility to actually go and then build a bigger category, which is where Tanium is now. And the one thing I will say is if you think about why that takes a lot of courage to do.
The big data landscape, if you think about it, it's really crowded, clearly. Security is probably one of the only other market categories that's more crowded than this, but most of them look crowded. And so big data is kind of like the mega category, and each one of those boxes within it is a subcategory, but it's a category.
And so you want to be very clear what box you're in. If you're going to go and start taking out one of the other boxes, be crystal clear on how you're going to go own that box, and then plan your endgame.
Is it to go take out and consolidate four more of those boxes? So kind of understand a little bit of the endgame, but before you start, because obviously this is like the number one reason that you want to have a category, because you're going to walk in and have a clear point of view. Because if you don't you're going to walk in and you're going to be a logo on this very crowded, in one of those very crowded boxes on this very very crowded landscape.
So it's absolutely critical. A couple of category evolution strategies I think are interesting, and all of these come at it from a different point of view, but really what they all did is they framed the problem, they built a strong base, and then they owned the control point. I'll talk about that in a minute. So if you look at like what Uber and Lyft have done, and by the way, I put them both on here because you know, you could say that Uber is the category king, but I actually don't know that in the end the true category king has emerged from the two of these.
And so what did they both do? They actually created a problem that didn't exist before, a problem that people didn't think that they had, was around taxis suck, we're going to do ride sharing. So they effectively created this category around ride sharing very successfully. But if you look at where they're both going, and in fact I think Lyft had a great piece that they talked about their vision of transportation as a service, and Uber I know has talked about something very similar to that, but ultimately it's not really about ride sharing.
It's actually about reclaiming, not only eliminating traffic and congestion, but being able to go anywhere you want on demand, but even reclaiming a lot of the, what would be wasted space without as many cars, garages, meters, et cetera, and actually being able to reclaim that space for other things like schools and parks. Autonomous vehicles become part of that journey and it's really interesting if you actually look at what their endgame is, is actually not about ride sharing.
But what ride sharing did, and building that ride sharing category, what gave them the on ramp to actually tell a bigger vision for what they believe is the future of transportation. So that's kind of one way to think about it. Facebook did a very similar thing. They started with, Mark Zuckerberg started with a social network for academics and college campuses which then became your social network, building a social graph across the world, to has a much bigger vision for where Facebook is going to go in the future.
Snap, right, one of the hot upcoming IPOs. So what they did is they actually took an existing category and they created a unique point of view on it. I wouldn't say they revived a stagnant category but their take on it was that social network actually is not personal anymore, and everything you put on the social network is very public, and so they came up with a different take on that category to personal sharing social network. What I think is really interesting is now that they've built that, and obviously all of these companies that I've talked about did a really good job of going and building up a base, and kind of owning the control point.
Obviously with Lyft and Uber it's riders and the transportation itself, and then with Snap, they believe that whoever owns the messaging framework and where all the messages are being delivered actually is going to be the one, and who actually owns the camera itself, I thought this was really interesting. In their S-1 they actually called themselves a camera company, and that's why I wanted to put that on here, is that their actual endgame is not just about being a social networking company, it's actually about being the platform that people use for their messaging.
And they believe that whoever owns the camera, sorry, excuse me, whoever owns the camera, that's the control point for actually owning the entire experience. I thought that was a very interesting way of seeing how they're looking at the future. GitHub is another one, right? So the control point being developers. We all know how important and central developers are becoming to businesses in the world, and innovation, and I think they did a great job of being very bottom up, viral, all around developer collaboration around software projects, and now they're moving to this, from a developer collaboration tool to a place that connects developers.
That's a very, that's a nuanced but a very different thing around, well if you have developers there now and they're sharing code, and they're writing code, now you can actually leverage that as almost a system of record for not only development, but you can translate that into recruiting and talent, HR, and maybe even beyond developers. I actually think they have an interesting play in this whole connected office war that is heating up.
Actually GitHub, I think, has a role in that as well, and whoever owns where, in this case, where code is being written, and code is being shared, and projects are being managed, that's a major control point. So I guess the message here is
There are different ways to think about your category evolution, but have a point of view, figure out what your entry point is, go frame the problem, go build your base by framing that problem. And get whatever that control point is for you, and then that gives you the on ramp to go think about a bigger, broader category.
Maybe going out with that bigger, broader category is the right thing to do out of the gate. But sometimes it's just as important, if not more important, to enter the market in the right way, and do it in a differentiated way. Because I can guarantee you, if you don't do it in a differentiated way you're not going to rise above that noise. It's going to be that much harder for you.
One of the things I always get asked as part of this is, well why don't you just leverage Gartner? They have magic quadrants, or Forrester, or whomever. Analysts already are tracking markets so why shouldn't we just do what Gartner's doing? On the flip side people say, well do we even need to talk to Gartner, because for example if you have more of a viral bottom up SaaS strategy or you're selling to, getting developers to use your platform.
Developers don't talk to Gartner, so do we even need to go talk to them? It's an interesting one and it's one that I've had a lot of conversations about with both Play Bigger as well as the executive teams and the companies that I've been in. Well let's just kind of like level set. Analysts, you know, Gartner, Forrester, whomever right, IDC, some of the niche players, do they matter?
And so I think the first thing you should think about is what do you need them for and what influence do they have? They really don't have that much influence with the large, large enterprises. So like Fortune 100, Fortune 250 at the C-level. They might be talking to them for like strategic planning purposes, but in terms of calling Gartner to get, who are the security companies, who are the big data companies I should be looking at? And creating a short list, they're not going to Gartner for that, and in fact Gartner is going to learn from them versus the other way around.
So if your target is really those large, large enterprises and that's really all you're selling to today at the highest level, analysts probably aren't making a big influence on that decision. On the flip side of that, individual users, developers, administrators, those individual users aren't really talking to Gartner, they're talking to their peers. In fact, that's probably the case at the C-level too. So they're not really going to give you a big influence there, but this goes back to, marketing is much broader than just that one component.
There's a whole host of constituents that you have to be thinking about, and
Analysts really do matter when it comes to mid market, lower end enterprise, companies that may not have the scale of teams to actually go out there and do vendor bake offs or go and research what the new thing is on the market. They actually look to Gartner to create a short list for them.
They'll print out the magic quadrant and that becomes their short list. So if you're not on that magic quadrant you're by definition not on their short list. Decision makers, again, sometimes use them for strategic planning. The procurement process. So in a lot of times, if you're going in through an enterprise sale, the procurement team, they need to know that they checked their boxes and did their due diligence for their negotiation, and part of what they'll do is they'll pull a Gartner report, they may call Gartner to get pricing information, so they're talking to the analysts.
And the other thing, I was actually at one of the VCs a couple months ago, and they were saying it's not really an impact with Gartner for customers, it's an impact when you start to think about going public. So they had a later stage company that was looking at filing their S-1 and bankers, when they're doing their due diligence, they will call Gartner and they will say, what market do you classify them in and how big is that market?
And here's where the danger is.
This is like the biggest danger, I think, from a financial perspective, of letting Gartner define your market. If you don't like the market they put you in or the market that they put you in as a subset of the bigger market that you are actually in, then they are going to devalue your company.
So the biggest message here is you need to think about analysts a little more holistically than just, well if we're selling to developers and developers don't talk to Gartner, then they don't matter, right, so you have to look at, really, as kind of a holistic strategy of where analysts fit in even beyond that.
Again, this is like don't let analysts dictate your strategy. This is where I think it becomes a dance in a two-way relationship with analysts because if you just go by where Gartner puts you, A, they might put you in a subset or a smaller market, and the other thing is like, likely if they have a magic quadrant there's already multiple vendors in it, which means someone somewhere has set the agenda.
They have a list of criteria that they use to plot you on that magic quadrant, and someone else probably set that. So that's a really dangerous place to be if you're going to let them dictate your category and let them dictate where you're positioned in that. The one thing I would say is that there's other ways to, I would think about working with the analyst firms like Gartner or like Forrester, right?
There's multiple reports, for example, like you can get a cool vendor. Like that's one of the first things I did when I was at Tanium, is we got on a cool vendor report. That's a great way to get awareness. Their hype cycles, their market guides, it doesn't have to be a magic quadrant, and you know, it could be that you might fit in a few different magic quadrants so you have to make a decision. Do we go into a magic quadrant where we might not be the leader, we might be a niche player?
Sometimes that's a bad outcome. If you already have brand awareness that might not be the greatest outcome, but if you're just trying to get on the map in a market just to get on a short list, being anywhere on that magic quadrant might not be a bad thing. So I think it's like just a philosophical question that you have to ask yourself based on the outcome that's right for you, and I don't think it's a one size fits all. But I do think that it takes a long time to move analysts, because they don't track markets until there's already, until they already see presence of that market, like they're getting a lot of inbound requests from the people that you will sell to and your users, and they see a lot of vendors talking about it.
So by definition, if you're doing something new and disruptive you're going to be philosophically misaligned with the way the analysts think and work, and how they track markets.Everyone always says I hate analysts. I actually think it's about understanding how to work with them and playing the long game with them, because at some point you're going to hit a point where you actually need them.
If you don't pay attention to analysts and you don't educate them, they will actually cause you a problem somewhere down the line, whether you need to go upstream, whether it's financial due diligence. And they can actually help in a lot of cases.
So that's my very objective view of the world on analysts.
So step three is aligning the go-to-market strategy. When you have your point of view, your category, whatever that is, this goes back to my notion of air war and ground war, is how do you actually drive those two elements together to drive your category? And if you think about, you know, if I were to put in, like there's different people, different stakeholders that you need to move from, to, they have a perception in their mind of what the current state is, right or wrong, and you have to move their perception from one place to another.
You have to get them to think differently about how they work, you have to get them to think differently about how they cover a market, whatever that is, but there's always going to be from, to's that you have to move to and your go-to-market strategy is intended to help you get to that movement faster So if you think about air cover, press, journalists, bloggers, influential developers and thought leaders out there, analysts, all those people are going to help you from an air cover perspective.
There are influencers that are going to help you get and influence customers, going to get your message out there more broadly. Ground war, that's really about how do you actually move the people that you sell to? How do you sell to them, how do you get them to subscribe to your way of thinking, loving your technology, getting more people to buy into it? It's not just about using the product because that product represents a different way of working and living, which is ultimately your category.
So a couple of things to think about, and this is what we did at Coverity. When I joined Coverity it was a small company, flat growth, really cool technologies, that was static code analysis, for those of you who are engineers you probably know what that is. It's basically a way to take a lot of lines of code, like millions of lines of code, and automatically analyze it and scan it for defects, and in the case of Coverity in the early days it was mainly quality defects in the C, C++ code. And all of the marketing when I got there was around the science behind static code analysis.
Developers really loved it, they loved to find cool defects, was a low false positive rate, and all the like ways that actually happened, from more of a scientific point of view. And so what we said when I came in is, okay, we, that's nice, that's great. Don't disrupt that because developers really think it's cool and it makes their life easier, but ultimately we need to go grow and scale this business. So we need to actually get up the chain in the organization and start selling to the people who are actually making the decisions.
Now as you all know, if developers don't like the technology they're going to throw up all over it and it's going to become shelf-ware, so you need to keep the developers loving it, but you also have to tell the business why they need it.
And so what we did is we flipped that, we evolved that story and said, it's not just about finding cool defects, it's understanding thebusiness impact of that defect?
Like if you actually had that defect shipping, what would that impact be from a risk perspective, from a brand perspective, from, you know, QA finds a bunch of defects, throws it back over the wall to development, and the whole release gets delayed. Right now you have things like continuous development and agile, and all of that, and you're doing multiple releases in a day and DevOps, and like that, you just can't have that anymore.
So we created a category around development testing, and our whole point of view was that you had to find, you had to give developers technology that fit in their workflow to allow them to find and fix defects as the code was being written, getting it right the first time, and then when it goes to QA and security, that they can then focus on the types of things that they were meant to be testing for, like functional performance, security issues, and you have agility and less cost, and it's going to be less risk, and all that great stuff.
And so that category did a couple things for us. From a air cover perspective it actually allowed us to go out and tell a business level story around the new way to do testing. Not that the old way of QA testing was bad but there's just a new way in development, and so things like, you know, product releases, our ecosystem became very important to this, because people like HP, which was all the former Mercury products and testing, they all did QA testing.
So that was a big gap in their portfolio. So we figured out who are the right ecosystem players that are actually going to go help us fulfill this story? And we're actually a missing link in theirs. So you start to get the HPs of the world telling your story, you're starting to get the Forbes of the world, and the publications to start telling your story about this new category that is emerging. And you probably can't see, Wikipedia, right? And so you start to get independent, objective third parties talking about development testing.
That other thing that you probably can't see very well is an analyst's report on development testing that was actually sponsored by one of Coverity's competitors. So that's even the best, is when you actually start getting your competitors in the market to start using that terminology. That's when you really know you've built a category. And by the way, you're the ones that have set the agenda for what the characteristics are of that.
But these are all things that you should be leveraging, not just to get your buzz out there for you company, but start to evangelize. There's all these like different vehicles, whether it's bloggers, or journalists, or analysts, or influential thought leaders in your industry, or your own coms efforts that can help you get that message out there, but this is one of the most, like still one of the most important ways. The most important and effective way is to actually get it out there, cast a big shadow, talk about why you're doing differently, and get people to start paying attention.
So from a ground war perspective reaching every audience is important. And so a lot of you might be thinking about this bottom of the triangle, the individual users, and going more bottom-up, getting viral within that, but you still have to think about each one of these audiences, and so as part of your go-to-market when your marketing teams are thinking about how they're positioning, how they're messaging, how they're building programs, you need to think about what each of these pieces of the triangle care about.
Because while an individual developer or admin might think about, it's making my life easier, I'm more productive, I can go home and not work on the weekends, all those great things, their boss is thinking about something very different, about, I have to be more efficient with my people, I have to release this product on time, I need to keep it on budget, and the CXO is thinking about how do I get to market faster than my competition, how do I reduce my operational expenses, how do I keep our name out of the paper, and a big fat fine, and brand risk, and lost customer trust because we had a breach?
So you have to think about all those different pieces of the triangle and message to them simultaneously. And a category still can provide a wrapper for all of that, but you have to think about each one of these, and then align your program mix as follows. The different types of programs that you run at each one of those levels is going to be slightly different. Obviously at the bottom it's a lot more of a digital, social, free trials, freemium, things to just get the product out there and seed the market.
Whereas you start to go up the chain and it becomes more high touch things, more content, more influencer like press and analysts, more high touch events. So think about like, of that triangle, and it might change over time, where do you put the majority of your dollars across those different pieces of the triangle, and then align your programs appropriately?
And then how is that mix going to change over time?
One last thing. This is the enemy of category design, and I've had actually, I had this issue at both places I was a CMO, and I see this all the time. You get this platform or this tool and it can do all these great things, it's like a Swiss army knife, and that's like the kiss of death when I hear that word. Some people love it. They're like, oh it's great, it's a Swiss army knife, it can do everything.
As a marketer I want to cringe when I hear that because what that actually means is you're in like a million categories but not really owning one, right. It's like well what do you want it to do? It can do whatever. That's not a great way to go sell, and you need to be a little bit more prescriptive.
So category design is not just about being a marketing strategy or a marketing campaign, it actually is a company strategy and it can really provide a framing and a container for your product strategy and your roadmap, and that's one of the biggest things I think that companies don't realize when they go into this process around category design, is it actually does touch every aspect of your company and your go-to-market.
And if you think about, this is a kind of a very common evolution from going from a tool to a platform, and how category design can help, is that you start out your tool, maybe it does one thing really well, and then over time you realize, okay, we're going to add some more features to it and maybe it's going to become a collection of products, still targeted at the same persona.
And it becomes a suite, and then basically, you might be getting a little more revenue on top of that but you're stuck. You need to figure out, how do you scale your business? How do you have different revenue streams? And so what category design can actually do is create this wrapper for how you think about building your product, where that tool now becomes the base platform. Maybe it's a freemium offering that seeds the market. Maybe it's a point tool killer.
We did that very successfully at Tanium where we had different point tool, it became a point tool killer saying that other is a way to deposition other tools in the market, that it was just that base and then you build things on top of it. But it's basically that common IP, and then you can start to build modules or applications on top of it, things that are more use-case driven, persona driven, they might have dashboards, and content, and workflows that are driving to a specific use-case, and each one of those things then allows you to monetize, and it also gives you a container over time that you can start to build future applications, and it makes sense.
Your product strategy now doesn't look like it's all over the place but it actually looks like it has some logic around it, and it's all tied in that wrapper of your category vision. because
Your category actually shouldn't be something you can do 100% today, and actually probably never because you're going to need an ecosystem most likely to deliver it.
But it gives you a North Star if you will, that you can think about. And this is what we did at Coverity. Our evolution was that we started as a static analysis tool, as I mentioned, and then we created, we came out with this thing called Coverity 5, which was like our static analysis suite, and it added things like workflow integrations, ID integrations. We had this thing called defect impact where you could find a defect in one line of code and then you could find all the other places in the code that that same defect was, or all the different branches.
So it had all these cool bells and whistles, but it was still in the context of static analysis, specific to quality. And then when we created development testing, then it was, okay, the static analysis tool, which used to be the only thing that we monetized, became what we called SAVE, the Static Analysis Verification Engine. And that engine drove all the apps that sat on top, but we were able to then use that as a freemium offering in the market.
Our old competitors were other static analysis point tools, so now we could say, oh look at that bottom box, important box, with that bottom box at the bottom, that's where all of our competitors sit and we have this bigger platform. So it allowed us to tell a much bigger story and then go monetize. Each one of those applications over time was then now a scale, and revenue on top of the platform.
And that gave us a framing to say, yes we started with quality but it's all about testing your code, so anything you can test your code for in development, that's part of our platform, so it allowed us to pivot and expand over into security, which then brought us into entirely new markets, unit testing, and then when Synopsys bought Coverity, they've made a series of acquisitions post acquiring Coverity that extends this vision.
So something to think about. You might still be in that single tool box today and that's okay, but the thing I would say is think about how as you go through this journey of who you are, and your point of view, and your category, is that it also can provide a nice wrapper for your product strategy as well, because this will ultimately be the thing that scales your business. So again, if you remember three things, frame the problem, that is so, so, so important to do. Have a differentiated point of view. It's not just about being better, it's about being different and having a new way to do things in the market, and category design is a strategy, it's not a marketing campaign.
If you go and ask your marketing person, marketing team, whatever, to go and figure out your category, what will happen is it might become a nice tagline, it might become a campaign that lives for a few months and then it'll kind of die. You're at actually a great place to really get alignment on who it is you are, and what do you stand for, and why are you different, and let that permeate through your entire strategy, and it will become part of your soul, and your brand, and your DNA as a company.
So with that, thank you so much. I'll open it up for questions now. Thank you.
I don't know that it's so much about developer versus B2B, as much as it is I think, think of what it is that you actually are doing. Like what is the problem that you're solving? If you're a developer technology, like are you helping developers, are you making it easier for them to deliver software, or collaborate together? Like what problem is it that you're solving that they can't do today?
If it's a B2B application that's used in the enterprise, who is it that you're solving it for? Is it a C-level problem, is it a manager problem, is it a user problem, and it really comes back to the insight that you had. Like what is it that made you start that company? What is that problem that you saw, independent of, and then who is it for? But like that's the foundation of everything, is that. So I don't know that it's different for like developer versus B2B. I don't know if that answers your question.
So I think, well one is if you start to get, like, momentum in terms of press talking about it, and this doesn't need to be Forbes, by the way. This could be, you know, a developer publication, or you get developers blogging about it. Obviously there's just like signals in your business that it's working, whether that's your number of downloads, your number of trials, your number of paying customers, your average deal size, whatever those revenue signals are, or metrics that you're tracking in your business.
I mean I think there's a philosophical debate of like, okay, well is it because our category is working that our metrics are getting better, or is it just that we're executing better? And I think at the end of the day if it becomes your strategy you have to like believe that at some level, that is a factor in it. It might not be the only one, but I think it's when you become a place that people come to, they seek you out, and like at Tanium I will say it was just something as simple as like we would send an email out and we had a 40% open rate on every email we sent.
That's like unheard of, right? So it's not just about getting the Wall Street Journal to write about you and getting all these logos, which is all great and that, and getting CESOs telling their other CESO peers about you, but it's like even things like that. You get a webinar, you send a webinar invite out and you get 1,000 registrants in like two days. You know you now are a place that people go to, and you have earned the right to actually go and tell it.
They're actually looking for it. They're looking, that's why they're coming to you, is because they're looking for that bigger, broader vision. So maybe it's not on the same scale as that, but you know what I mean, right? Like you'll know in your business.
You'll see either metrics that are out of the norm based on benchmarks for your peers. Or you'll start to see that movement in your business, like you see an inflection point where things just start moving up and to the right.
Yeah, I think at some point you need to find new revenue streams and scale your business. So is that the only way to do it? No, but I think that, you know, if you have a monolithic one single platform that you, maybe you have a different, even a couple different tiers of pricing within it, at some point, you know, at some point you're actually leaving money on the table. It's not wrong, but I mean, what if you actually could be?
If you are a platform that you can use for multiple different uses, why wouldn't you want to actually go and create a way to scale your business and monetize and not leave money on the table? So I mean that's a lot of the conversations that we have at Play Bigger with CEOs, is they're looking at category design as, now I actually have a way.
I have to figure out how I'm going to go from X to Y, and that could be 100 million to a billion, or whatever those milestones are in your business, and they're looking at, like, how do I actually go shift my project strategy to go do it? In the case of, I mean I don't know what the answer is in the case of Uber. I'm saying that's one way to think about it. I think you take GitHub as an example.
I don't know exactly what their pricing strategy is today but obviously they have an enterprise offering. They have a free version and they have an enterprise offering, and it'll be interesting to see what they actually do, because I think that's an interesting story of a company that I think could parley their platform into a lot of different elements, even beyond what developers are using it, or companies are using it for today. So if they didn't have a way to monetize all those different use-cases, I, like this is just my personal point of view, is that they'd be leaving money on the table.
It's just a way to think about it. If you look at any company that kind of came with roots and open source, all of them at some point had to figure out, how do we actually go and monetize that? And I think the key is not losing your open source roots and your base, which is about collaboration, and ubiquity, and getting it out there, and all of that, but then how do you actually leverage that and go start building, whatever that is?
It could be services on top of it, it could be new products on top of it. I think that's a, I don't know that there's a one size fits all. I think it's a decision that every company has to make based on what business they're in, but it's a decision you have to make early on, and it's also part of your culture too. I think if you look at some of the companies that have roots in open source, this notion of free, right, becomes in democracy and all that, which is great, becomes part of the culture.
I think that though it's something to be aware of early on of, at some point you might need to actually go and start monetizing and build revenue streams on top of it, and sometimes there's a cultural, a cultural barrier internally to your company to actually moving into what's more of a traditional enterprise model.
So I think it's just something to be aware of, not to lose the soul of the company and what makes you great to begin with, but that you actually have to figure out, how do you take your base and evolve it over time? But I don't know that there's like a one size fits all of like where you move from, like where you start monetizing. I think it's just dependent on the business that you're in.
No, I don't know that there's any way to quantify what's easier or harder. I'll say there's pros and cons to both. And I think it's a decision you have to make, so I think there's, you know, like there's so I think there's, you know, like there's definitely conventional wisdom that would say you would want to create a new category versus reviving a stagnant one because, like I said before, if you're going into a category that already exists, there's already pre-conceived notions of what that category is, and who the vendors are in it, and what the characteristics of that category and the technology are.
So you have a bigger hurdle. You have to overcome an extra hurdle, of instead of defining a brand new space where you can own the agenda and you talk about what actually needs to happen. The flip side to that though is that you are going and having to create something that didn't exist before. So sometimes it's easier to actually go in where there at least was some recognition of a market, a category, people are already, like have talked about it.
And so if you're going to go, I think it just depends on, in a perfect world you go out from the beginning and you define a new category.
In a perfect world with unlimited mind share, and budget, and people, and you have years to go do it, I would say go out and define a new category, because you are setting the agenda.
It doesn't always work that way. And so sometimes I think it's a fine strategy to say, we're going to have a really like compelling point of view about why we are shaking up a market that hasn't had any innovation in it, for example, for the last 10, 20 years.
And that would be the reviving a stagnant category, and then when you actually get some ground swell and some momentum, then you start, like you use that as kind of an anchor to go tell a bigger story. I don't know that there's empirical data that one is better than the other. I just think that there's a perfect world, you go build something new to begin with, but that doesn't always work that way and it takes a lot of time.
And sometimes, again it really is just entering the market in the right way. Like at Tanium they still don't have a category, of where they're ultimately going, but we created a really compelling point of view in the market that by the way, 15 second visibility and control. You don't see security in that by design. Like technically, if you can get data and do something with it in 15 seconds off of an endpoint, you could do anything with that.
You can do security with that, you can do operations with that, so that was very much by design of not pigeonholing ourself as a security company. We just chose to go in and disrupt endpoint security because it was a very, it was stagnant, it was relevant, it was really painful, like there were lots of budget like in the news, there were a whole host of reasons why we chose to go and tackle that category first.
But ultimately they have a much bigger story than just that. So I think it's just all about, you know, and at the end of the day it's like make a decision and go execute it. Go execute it consistently and with everything you have, and if you need to course correct or evolve or whatever in a year, two years, three years, that's fine, but it's better to make a decision and have everybody marching in the right, in the same direction on it than waffling. That would be my biggest piece of advice. Thank you. Thank you so much for your time, I appreciate it.