It’s Better the Second Time Around
I had the honor of hosting Jon Miller for a Q&A session at the recent SaaStr conference in San Francisco. I’ve known Jon since 1999 and not only is he a formidable marketer and a proven leader but he is also a market creator. Or, as he humbly claims, a market definer.
But I believe — especially now as the highly respected CEO of Engagio — Jon creates market-leading categories and then proves it by building world class break-out companies.
Along with his cofounders Phil Fernandez and Dave Morandi, Jon built Marketo from the ground up. He established the marketing automation category before taking the company public in 2013 and selling it last year for $1.8B. Jon’s the real deal. Now he’s doing it again with his company Engagio. He’s defining the market category — account based marketing (ABM) — building the leading company in this space and working with the ecosystem to generate awareness of the category.
During our talk at SaaStr, Jon offered an open, honest conversation about what he learned at Marketo over those many years of success and how he’s applying those learnings to doing things even better the second time around at Engagio.
Jon readily admits that it’s better as a repeat entrepreneur — it’s easier to raise money, to build a market presence, to sign up initial customers. But as a CEO, he has more pressure. Here are my key takeaways from our session and the top learnings that Jon shared:
Fishing with Spears
At Marketo Jon built a revenue engine where marketing was generating 80% of all deals the sales team closed. Using content, inbound marketing techniques and lead-nurturing technology, the marketing team had a widely efficient system and drove a ton of growth. But in 2012, when the then-CEO wanted to grow more, Jon realized he couldn’t just add more content to the engine — it was hitting its maximum. He needed another way to reach potential customers.
According to Jon, “I realized there were two styles of go-to-market strategies at play. One is fishing with nets where we didn’t care which company responded, we were more focused on ‘did we get enough?’ With the second strategy, account based marketing, we identified accounts we wanted and reached out to them directly. This type of marketing is much more like fishing with spears. We no longer wait for leads to swim into our net, but instead reach out to them proactively. That was the genesis for Engagio.”
Marketo and other marketing automation companies are great for fishing with nets but Jon is building the platform for fishing with spears. He’s automating the process. He started Engagio two years ago this March and they’ve had an extraordinary fast start –counting more than 100 customers and growing each week. To achieve this type of success, Jon is using some of the following key learnings from Marketo.
3 Greats Make a Win
With marketing automation and ABM, Jon and his team went after great markets, delivered great products and conducted great sales and marketing execution. He saw an existing trend, defined it and then helped to amplify it. In both markets, there were existing buyers and competitors but barriers to entry failed to prevent a rising start up from winning by executing well. Both of Jon’s companies built and delivered products that not only attracted customers but nurtured and engaged them. With Marketo and now Engagio, Jon helps educate sales and marketing teams on how to leverage new technologies to do their jobs better, faster, easier. He also insists on measurable results that help drive high velocity sales deals and grow the business.
Health Over Smarts
One of Jon’s goals at Engagio is to build a healthy company. He is instituting a lot of the methods prescribed by Patrick Lencioni, an expert in organizational health and structure. For example, Jon and his co-founder defined Engagio’s core values before they incorporated the company. Today, he’s got a focused effort on team building, and creating a work environment that invites debate and healthy conflict, accountability and commitment.
Jon is making sure that every process — from hiring and onboarding to reviews and promotions — reflects Engagio’s mission and core values. It’s a big task. One that became easier when every employee signed up for one of the process teams and became accountable for its execution. Engagio has grown a lot since the initial teams were created a year ago so they now have to figure out a new updating process!
Easier Money But Not Always Better
In less than 18 months, Jon raised $32M at Engagio — almost as much as Marketo raised in 4 1/2 years. It’s easier to raise more money the second time but not necessarily better. He raised the money at a high valuation which is possible as a second-time founder but eventually means that when he raises money again, it will be based on business metrics and not on the fact that it’s his second time.
As a repeat founder, there is pressure for operational discipline – ensuring the money lasts long enough to achieve financeable milestones (at an up round!). The benefits of this strategy is quite significant. There is less dilution and less distraction. Jon doesn’t have to think about fundraising for 2 ½ years which is great for driving the business.
As a second timer, Jon has a roadmap. Back in the days of Marketo, they didn’t know how fast they should be growing, what’s a reasonable quota for a sales rep or what the gross margins should look like. Fast forward to today, he’s got experience, a network and a lot of great resources to help gauge how fast they should grow and what they should do at certain stages of the company. The ability to map your company’s growth is incredibly important in keeping everyone focused and on track.
Building an Enterprise Muscle - Earlier
Jon is focusing on bigger deals the second time around. At Marketo, they focused on small- and mid-sized businesses (SMBs) starting with fairly small deals of $12K. It was a tough business. There’s churn with customers and it takes just as long to get up and running with a small deal as it does with a big deal. According to Jon, SMB customers have more questions and less expertise. At Engagio, Jon’s team has a higher goal of $40K average contract value and regular six figure deals.
Jon’s team is building their enterprise muscle earlier. They’re not a full enterprise company yet but that’s their goal. They’re trying to be more balanced at the beginning. They’ve got marketing driving both inbound and outbound sales and they’re creating a team-based culture that embraces fishing with nets and fishing with spears.
You can watch Jon’s full talk below.