Hear stories from the gritty frontline of entrepreneurship with Eloqua Co-founder and the CEO of Influitive, Mark Organ. A self-described serial entrepreneur, Influitive is Mark’s 7th business. Mark dove into entrepreneurship head first after realizing he couldn’t hold down a regular job. His first ventures gave him exposure to everything from bootstrapping a business to generating leads and managing a board of directors. Mark survived the struggles of getting Eloqua off the ground, later seeing it sell for nearly a billion dollars.
- Details how Eloqua was created as a boostrapped business by a bunch of 20-something’s who didn’t know what they were doing.
- Shares the ups and downs to fighting their way to year 5 and nailing down their first round of venture capital.
- Genius strategies on how Influitive leverages your best customers as advocates, evangelists and promoters through fun and addictive tasks.
- Why most companies only get a small fraction of what advocates are willing and able to do.
- How using a team with a background in gaming created an easier and rewarding way to attract and keep advocates.
- Discusses how Influitive gets 5x more out of people just by providing an amazing experience for advocates.
- What he learned from CEO Jason Lemkin about customer success, and how Mark takes it a step further.
- Why companies need to go beyond converting customers as a measure for success and look at them as promoters.
- Emphasizes investing early in customer success and setting the bar higher.
- Surprisingly simple insights on customer susceptibility and when they’re the most likely to be impressed by companies.
- How Influitive’s Advocate Hubs work across two key aspects of challenges and game mechanics.
- Why Mark hired pros out of the gaming space to make advocate challenges engaging and fun and the impressive results.
- Discusses how to dramatically boost advocate engagement with incentives money can’t by like unique T-shirts or front row seats at a conference only available to the biggest fans.
- Shares how Influitive grew 8x in the last year and is on track to grow 4x in 2014 with $4 million in sales by the end of the year.
- How 40% of VPs and senior managers make up Influitive’s user base, and why leveraging smaller user numbers with greater value can yield big profits.
- Challenges on luring customers that are more casual about advocacy and turning them into devoted fans instead.
- Behind the scenes with Influitive’s “Explorer Team” and how they create Influitive Labs to entice more customers and work out the kinks during the development phase.
- Why Influitive’s programmers don’t write a single line of code until this is done first.
- How two developers work on the same computer to check each other’s code as they’re writing it, and avoiding the “big ball of bandaids” on a product.
- Insights on attracting Eloqua’s first 100 customers “very painfully” with a team who didn’t know what to do except beg for meetings and convince people to write checks.
- Relives near disasters in flirting with bankruptcy and facing a 4-day countdown to running out of cash.
- Why going after competitors, niching down the target market and raising prices was the real turning point for making Eloqua profitable.
- How an experienced sales person can make all the difference, but the real catalyst for change is the number of leads going up on both quantity and quality. “The best leads close themselves.”
- Dishes on how GE’s leftover paperclip and stationery budget saved Eloqua from near financial disaster.
- Reflects on how naivety can keep you going and your business thriving.
- Tells budding entrepreneurs, “the only thing you can control as a CEO is your own mindset and activity produced.”
- Discusses what he would go back and do differently, including spending more time mentoring and less time managing a board of directors.
- Gives three tips for success: 1) Vision, 2) High standards in recruiting, 3) Don’t run out of cash.
- “The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers“ – Takes an in-depth look management that’s not accessible to founder CEO’s getting their feet wet.
- The Goal: A Process of Ongoing Improvement – The thriller Jeff Bezos of Amazon recommends that will transform management thinking.
- The Innovator’s Solution: Creating and Sustaining Successful Growth – The book Mark kept by his bedside every night when building Eloqua during the early days.
- MAU – Monthly active users of a software or program.
- TDD – Test driven development. Influitive doesn’t write a line of code without a test first so they can focus on innovating instead of chasing down bugs.
- Lead Velocity Rate – Qualified lead growth measured every month as discussed by Jason Lemkin.
- How To Create A Billion-Dollar SaaS Category: Mark Organ’s Dreamforce 2013 Keynote
- 4 Powerful Motivators That Will Get Customer Advocates To Take Action
- Customer Success: You’re Sitting On A Gold Mine of Customer Advocates (Webinar)
- How To Invite And Onboard Customers To Your Advocate Marketing Program
Eric: Hello everyone. Welcome to this week’s edition of “Growth Everywhere” where we interview entrepreneurs and bring you; business and personal growth tips. I’m your host Eric Siu and today we have Mark Organ, CEO of Influitive and former co-found, or former founder of Eloqua. Mark how are you doing today?
Mark: I’m doing great.
Eric: Cool. Thanks for joining us Mark. So, why don’t you talk about…give us a little bit of your background and then we’ll go from there.
Mark: Sure Eric, that sounds great. I could probably be best described as a serial entrepreneur. I’m working on my seventh business now, two of whom are kind of venture scale businesses. I’ve also done consulting and other types of businesses also. I’ve tried to hold down a regular job but…
Mark: Sorry. Anyway. I’ve tried to hold down a regular job, but it doesn’t often work out that well. I think I’m just wired to create companies and run them. So, Eloqua was my last kind of venture scale company. I started it when I was 25 along with a couple other co-founders. Eloqua was a response to what I was learning as a management consultant about the importance of generating leads for sales people. I’ve worked with quite a lot of sales reps on sales effectiveness cases and seeing that reps that had lost the good quality of leads were the ones that really out shown their peers and had a bigger impact than education and training and skills, lots of other things. And at the time in ’99 a lot of the best leads were being generated over the internet and email, using email, so that became the idea behind Eloqua, was to leverage the web in order to get sales reps the best leads so they could be more productive,
Mark: And that was the [Blue Chub Company] [ 0:01:54.8] and we tried to raise some money, but, [from DC’s] [0:01:57.8] it didn’t really work because we were all twenty-something, real green folks that nobody really believed in. So, we raised a hundred sixty-six thousand dollars, we got profitable on that and ran a profit for three and a half years, and subsequently our first product was kind of like this shot on steroids, kind of like large person or a lark. It had morphed into an integrated email or website tracking tool which we then put an automation engine on it and we hit product market shifts on that. Yeah, we were able to grow that business profitably over sixty percent a year until finally we got the attention of some venture capitalists in 2005, five years after we founded the company, who then gave us our first round of venture capital and we started to really take off from there.
Eric: Wow! Okay. And how’s Eloqua doing today?
Mark: Well, they’re doing great. They’re…you know Eloqua did go public in 2012. I was not a CEO when they went public, but really proud that they did go public, which was always my goal at Eloqua. They are now a wholly owned subsidiary of Oracle Corporation and they were bought for almost a billion dollars.
Mark: Pretty amazing story. I’m actually here right now at the Marketo Conference. So, Marketo is Eloqua’s biggest competitor and it is amazing how big and successful Marketo is. And that was always the goal. It was not just to build a company, but we really wanted to build a category and I think we were successful in doing that. And so, I’m really excited about categories. I’m really excited about creating a whole eco-system of new companies, not just [a] single company, over being a number one company. You know there’s just some—
Mark: —you know, that sort of thing. So, that was the Eloqua story. I ran that for seven years, took it to about twenty million in sales and a 165 people before a new CEO came in 2007.
Eric: Got it. Okay. Yeah, I guess we probably would jump into kind of the other slide decks that you created before. Why don’t we talk a little bit about your current company right now, what’s it all about?
Mark: Yeah, well Influitive is all about helping companies mobilize an army of advocates. And so, advocates are like fans, or evangelists, promoters. I mean, typically our customers and these aren’t just customers. These are customer users that are really excited about our product or company. And so they do lots of things that are really important for growing companies and develop a growth today, right? But one of the best ways to grow your business is to have really enthusiastic users and customers tell other friends to go and use their products. So, our mission is to get the full potential out of every advocate.
And so our theory is, which I think has been proven right, is that most companies only get a small fraction of what advocates are really willing and able to do. And by making it easier and making it more fun, and more rewarding, for advocacy comes naturally, you can get a lot more activity out of them. And we do, so our customers simply get five times or more activity out of the same people just by providing an amazing experience for advocates. So, we’re the first company to really focus on the advocate experience and in so doing we make advocates very productive and in doing that, you know, we have companies accelerate sales like never before because their buyers are just surrounded by social proof all the time.
Eric: Got it. Wow! So, we had another guest on the show, Jason Lemkin from EchoSign…
Mark: Oh I know Jason real well.
Eric: Yeah. So he’s always…He’s big on customer success and I think this ties exactly into that right?
Mark: Oh, it sure does. I mean Jason is a mentor for me. He’s someone I respect a lot who I’ve learned so much from. And he does write and speak very eloquently on the need to focus on customer success. You know, I just have a deeper definition of success than he does, right? For me success is not just someone who renews their contract or even someone who buys more and that’s just great, that’s really important, you know, but a truly successful customer will advocate and to me that is the bar that every company should shoot for. And he, no that’s not true, he does write about that. He does talk about why a dollar of revenue…It’s not just a dollar of revenue, right? It’s, you know, sometimes your champion moves to other companies and brings you along and they can also evangelize you to other companies so that they go on and buy your product or service. So yeah, I like him.
I totally agree with a very big early investment in customer success. You know, for us it was a…one of the first employees was someone that could take good care of the customers and, you know, but again, the bar is higher. The job is not just to renew the account. The job of a customer success person is just as much to grow new logos as a sales person’s job is to grow new logos. The way they grow logos is to make the customer really happy especially in the on-boarding phase. Okay, when customer first signs on that is when they are most susceptible, you know, to being delighted, right? To go above their expectations and when they do that that’s really when all the advocacy comes out. So, we offer our customers focus on that.
Eric: Got it. Cool! So how does…Can you walk us through how, will just call it the App right now, how does the App work?
Mark: Sure, yeah that’s a good way to describe it. So, it’s like portal we call it the advocate hug, and there’s two key aspects of that portal, there are challenges and there are game mechanics. Okay so, the challenges are like, “Hey, we’re looking for new customers, can you help out?” “Would you be willing to talk with this guy who wants to buy our product or wants to write about us?” or “We’re looking for great stories on who’s used our product to increase profitability or to improve uptime in our market, or whatever that is,” or “Can someone re-tweet this.”
There’s a bunch of challenges, some of them are fun, some of them don’t all work but like, “Who do you think’s going to win the Super Bowl” and “Which is the next companies book on value that you think will go brew up”. Man, I don’t know, there’s all kinds of things that, we try to make it fun for people too. And then so, the game mechanics, as advocates are doing challenges they get points, they level up, they meet other advocates, they can challenge other advocates, like we make it kind of fund and game like and that makes it quite engaging, so that people do a lot more activity. And we also have quite a lot of automation in there.
So, for example, for referrals we don’t just ask…Sorry, we don’t just enable our customers to ask for referrals. Our software integrates well with social networks of advocates so we’ll pop up people, say, “Here are five people we think that you know that we think would be a good customer. Can you refer us to one of these people?” I’ll use an example. We integrate with CRM systems so that as the prospect moves through a buying process the advocate gets more points and more recognition and so encourages them to help close that deal. Those are some of the things that we do. We sell pretty much only to B to B companies and it’s a white label product. So, basically companies get their own portable…their own portal it’s got their brand name, it’s got their colors, and all that kind of stuff on there. And, yeah, so what we found it’s really engaging. The average advocates does about five challenges per session, so if we get them in to do something, even to go into a “Hi, who’s going to win the Super Bowl?” we can get them to do four other challenges at the same time, right?
“We tweet this, give us five serves on Yelp” right? “Go in and greet a reference request, customer referrals”, right? “And do it really quickly.” So, really, just in a few minutes of their time, they can do lots and lots of activity and that makes them feel good, that they’re productive. And we’ve heard from our viewers it’s kind of addictive but kind of fun. We’ve hired a number of people out of the gaming space, even though we’re a B to B company, who are real experts and make things fun and engaging. We have our own real packing unit that we can talk about later. You know, we’re constantly learning, you know, even as unusual as it is for B to B companies to have growth teams we learned a lot from our B to C peers on how to do that right. So we’re always experimenting, running tests, trying to figure out what’s truly engaging. And we’re rolling out new micro-features every week based on what we learn.
Eric: Wow! Crazy! So if I…Okay let’s just use my marketing agency as an example, right. I want my customer’s to all come through this portal and then what happens is invite our…we can have our customers complete challenges and can we reward them with anything?
Mark: Oh that’s right I forgot where I was. We have a whole reward catalog. What we found is the best rewards are actually things that money can’t buy.
Mark: So, it is possible to gather a gift card or an iPad or whatever, but what we found works really well are things like unique t-shirts. You’ve got a SingleGrain t-shirt…
Mark: Right? Imagine if that had a neon yellow logo and sort of white and it’s only available through…to your biggest fans. You know people do crazy things to get that. I mean, they really want that kind of stuff. Customers will often, like at Marketo here, they reserve the front rows of their sessions for their advocates, as an example, they call them Marketo champions, okay. And so, money can’t buy that. The only way you get that is by advocating for the company. You know, invitations to private dinners, networking dinners, you know, conversations with the chief scientist or some guru that you normally can’t get asked to. So, those are the things that we’ve learned really motivate advocates to do immense amounts of activity. But there are some people who do want another iPad and so, you know they can get that too.
Eric: Got it. Wow, that’s so cool! I’m almost sold on this.
Mark: Oh, cool, thanks. You can check it out on our website at Influitive.com and get a feel for the experience if you’re there.
Eric: Yeah. Absolutely. So, in terms of, you know…are you able to talk about traction right now? Are you able to talk about revenues or number of users right now?
Mark: Let’s see what I can talk about. So, yeah, I mean, I can talk a little about growth. We grew in terms of revenue eight times last year. On track for four times this year. We’ll be doing about…the target’s about four million in sales at the end of this year.
Mark: So these are really senior people. These aren’t your ordinary average users. These are really special people that have no time.
Mark: So, you know, being able to get them on average of…on average they’ll come into their, you know, their…whoever they’re sponsoring a couple times a month and we’ll do something like four or five challenges in a session so it works out to eight to ten activities per month. Eight to ten activities per month…[cross talk 0:14:07.2]
Eric: Per person. Okay
Mark For one person
Mark: And each activity could be worth somewhere between a hundred dollar and, like, or a million dollars for an activity depending on what activity they’re doing. And so, B to B’s a little different that way. The numbers are much, much, smaller, but the value is lot higher. And our focus, a lot of it really around that…I think …I think we’ve figured out the engagement model now, which is really what we we’ve been working on and now…our challenge now is to figure out how to get the numbers higher by not just being able to mobilize the top part of the parallel, kind of where we are today.
I think about, you know, the company has a, let’s say, a thousand customers, right, that’s corporate customers, because we’re B to B and our customers are B to B, you know, so we might get that top ten percent of that customer base advocate, right, so say a hundred customers out of their thousands. And that usually does pretty good for us. Our next challenge is how to get the next ten percent, the people who are not gonna wear a SingleGrain t-shirt like you, right, and show the colors to everybody, but people who are a little more casual, how to get them engaged in the program, is how we get to our next level of growth.
Mark: And I think to do that, I think that’s where the growth unit is so important right, is to understand who this next rung is going to be and how to really motivate them to do more.
Eric: Got it. Okay. Just so our audience knows MAU is actually monthly active users just in case for reference there. So, cool. We’re talking about growth right now so, in terms of your growth team, you know, how is it made up right now?
Mark: Yeah, so our growth team we have…we’ve got a designer, we’ve got sort of a business owner, right, we’ve got somebody who is in charge of figuring out what experiments to run, and tabulating all the data so that…She’s, I guess, our data scientist, and then we have a developer. So, we call it the “Explorer Team”. It wasn’t my name for it. I would’ve liked something like “The Pirates” or something kind of bad ass like that. But, you know, so they run about three experiments a week. Again, for those people who are running consumer companies in the audience they won’t be that impressed with three experiments a week cuz they might run three experiments a day or more. But, you know, being B to B we don’t have those kind of numbers and we are the only B to B company that I know of that actually does this. And the reason why is that we basically hired a bunch of social gaming people and we acquired…not acquired, but we hired their growth team, essentially, and this is something I really believe in. And ever since I met the head of growth from Quora use to run Growth at Twitter..
Eric: Eddie Johns?
Mark: Eddie Johns. Yup. So, I went to a seminar of his and we spent some time together and he got me completely hooked on the idea of growth. And, you know things are little different in B to B, but we’ve applied a lot of his best techniques in the B to B realm and it’s made just this massive impact. I mean, we’ve had single experiments that have yielded seventy percent improvement in engagement just by changing the location of a box or that sort of thing.
I think our next step is that we’re starting to beef up the engineering component of that team now so that it’s not just a matter of moving boxes around or changing colors or whatever, but they’re coming up with entirely new features on the fly and shipping them that week. We have a separate deployment queue. We have some of our customers that have signed up to be a part of, we call it intuitive labs, so, internally we call it the explorer team, customers think of it as intuitive lab. And the ones that are signed up for it they get our newest and most exciting features, sometimes those our buggy features, but they’re okay with that because, you know, there’s a number of, you know, break through aspects in what we do.
Mark: Right? Another step that we’re doing is we’re actually integrating Q and A into the explorer teams so that a lot of these features are coming out a lot cleaner, less buggy, which make more companies want to find out…to be a part of the labs program. So, a big fan of integrated QA, test driven development, and all that kind of stuff. Repair program as well although not on the explorer team. Everywhere else we do that so that the code comes up cleaner.
Eric: Yeah, that’s awesome. I think you guys are way ahead of the curb, like you said, to have a growth team, full of engineers and designers, that’s something that any marketer would want. That’s something that I really like, longed for when I was leading a growth team. I had to…it was like, wow, pulling teeth to get design and engineering resources so, props to you on that for understanding.
Mark: Hey, I’ll tell you, yeah and it was fine…so I was a big believer and I think a lot of it was because I just love Eddie John’s story. But it wasn’t that popular among some aspects of the company because it was seen as a separate team, they were kind of a rogue team…
Mark: They had, you know, their own ideas. Some of the rest of our development is actually it’s you know, it’s quite machine like and we peer program, we do TDD on everything. Like there’s…
Eric: What’s TDD?
Mark: Sorry, test driven development. Sorry to use jargon like that.
Eric: No, that’s alright. No worries.
Mark: But, you know, you don’t write any code without designing the test first ahead of time, before the code gets written, which I believe is best practice and so, you know, it might feel sometimes we’re a little less agile because we are quite careful and deliberate about how we do things.
But the advantages is that the code comes out clean and it means that instead of chasing down bugs our developers can innovate. Right? So, you know, peer programing is a big part of that and I’m a big believer in that, in peer programing. So what that means is, two developers work on one computer. Right? Two screens, so one person checking each other’s code as they’re writing it. And so, a lot of people don’t really understand that and think that seems like a waste of half your developers, but it’s not true because the…you know, the work that we produce is extremely high quality and again, like, one bug, that you can’t replicate, you can have two developers wasting so much time trying to track that down.
Mark: Right? In our cases bugs don’t really get out in the wild in the first place. We fix them ahead of time. Okay, so, there’s pros and cons to the way that we do development. The pro, again, is that super clean code, focus on innovation, whatever, but what it does mean is that we …we couldn’t react as quickly to customer demand and running tests and experiments, whatever, as we’d like. So, that’s why we paired it up with this rogue team, this explore team that…First of all, that group also involves U.S. testing as well, so they’re constantly getting people to try things and try to understand where they’re going sideways, where the users are going sideways, which often is fuel for some of the experiments that they want to run. Right?
So, in putting both of these together I think that we have an amazing system and the way I like to say it is kind of like…hey look, you know, British military dominance or naval dominance, you know, in the 1600’s, 1700’s, they needed both their imperial navies and they needed the pirates, and they both worked in a highly synergistic way. Right? And that’s why I wanted to call these guys “The Pirates”, [Eric laughs] but, cuz I like it. But they needed both. Right? They needed the navy, that super discipline that’s just [making sound] chus chus chus chus, all the time.
Mark: So you needed those crazy pirates too that, you know, on plausible deniability and they were much more random and much more agile and if the two worked really well together, which they did for Great Britain, you know, it was a recipe literally for dominating the world for a while. And so, that’s kind of a way that I look at it here. If all you do is the iteration part and the testing and the experimentation, but you don’t have this measureable repeatable system that is constantly pushing forward I think what ends up happening is you get a big ball of Band-Aids in the product. You get a product that’s just incoherent. It takes six clicks to do anything, you know, and so anyway, we put these two together and it’s really working for us.
Eric: Cool! So doing a comparison I have a feeling that’s a good slide deck for any type of talk in the future.
Mark: Ahh, no. It’s true, I love it. I’d like to put a slide together about the navy and the pirates. That’d be awesome.
Eric: Yeah. Alright. So, in terms of…Okay let’s talk about…I guess I’ll ask this question for both companies…So, for Eloqua, how did you acquire your first couple hundred customers?
Mark: Very painfully. Again, Eloqua was a bootstrap company run by a bunch of twenty something’s
Mark: Yeah. And we didn’t know anything about anything. I mean we just wanted to build a company and we just wanted to survive another month, another quarter.
Mark: Right? So, again, this is a B to B company so you know, I’d probably break it out into the first ten customers and then, you know, eleven to fifty, and then fifty to a hundred. So, the first ten were basically me calling on companies and begging and pleading for meetings and somehow convincing people to write a check and there wasn’t really any sort of process involved. I tried hiring a couple of sales guys, kind of expensive sales guys in the beginning. It didn’t really work out. They couldn’t adapt very well to the environment of the start-up. Jason Lemkin writes about this a lot.
Mark: Then what I did instead with the realization I had was, “Look, you know, nobody’s going to buy from a sales guy at our stage.” It was a new concept that we had and at the time at Eloqua. They wanted to buy from a founder and look the founder in the eye and have the founder tell them they are going to make sure it’s alright. So, instead what I did was hire a couple people that were going to bang the phones and shake the trees loose for leads and then I would still go out and close them. And so, and that was probably the first ten customers or so. We were always sort of flirting with bankruptcy at Eloqua.
The big turning point for us came when we decided to go after one of our well-funded competitors. And so that was right around the time probably, we had something like twenty customers. Our ASP, by the way was around three thousand a month, so it was fairly high and in fact I was always trying to raise it. And so, so a couple of things we did to get profitable; again, we raised one-sixty-six K, we got profitable in that. The two things that we did: one of them is that we raised our prices significantly, we raised the prices from 2K to 4K. We really had a very narrow focus on target market which ended up becoming B to B technology. We originally were trying to turn to real-estate, but that didn’t work out very well. And we charged for services.
So, it was more than just a product. It was an integrated product service that we were able to charge more money for. So, I think that’s one important aspect of the service. In fact I would tell anybody, if they want to get profitable fast and they’re a start-up company, the best thing they can do is narrow their customer focus and raise their prices. And sometimes raises their prices a lot. And, you know, you don’t need that many customers at three-thousand, four-thousand bucks a month a pop if, you know, we’re all eating Raman noodles. You know, you don’t need that many customers. You can get profitable on twenty customers which is absolutely what we did. 66 KMRR.
The second thing that we did was we went after one of our kind our fat, dumb, and happy competitors. So, a company here in the Valley, they raise forty-eight million dollars, and we had a product that had considerable advantage over them…their product, in that we had an integrated email and chat engine and they just had a chat engine. And we just called on all their customers and we flipped a couple over to our side and then from there we could flip a whole bunch of others to our side and we got profitable in December 2001. So, even after September 11th when the market was just completely devastated and technology, we became profitable then and we never looked back. We were profitable for fourteen quarters in a row before any venture money.
Eric: Got it. Incredible story.
Mark: Yeah. It’s pretty cool. It’s a pretty amazing story. So, I think once we hit, sort of, fifty customers, you know at that point we started to invest more in repeatable processes. We had started to hire more experienced sales people including some field people. We hired, even though we were a Toronto based company, we hired…took a huge risk on, at the time, an expensive sales rep in the Bay area. She subsequently [has] become a very famous, quite a famous rep, her name is Jill Rowley the EloQueen and now…anyway you look her up. She’s larger than life.
But a big risk at the time for a bootstrap company to hire somebody like her, but it was a big bet. And then, you know, we were able to hire head of sales at some point and really built a lot of our repeatable processes there in sales. I think the other thing that’s pretty important about repeatable processes is, you know, that I think the top of the funnel is more important than the bottom of the funnel. Actually Jason writes a lot about this, right? That if the number of leads are going up in quality and quantity every month pretty much all is well in the world, right? Someone’s going to find a way to close those leads. In fact the best lead kind of closes themselves. I mean a sales guy can make every mistake in the book, but if it’s a great lead it’ll still close. So, we focus a lot of attention on lead generation. We use our own product a lot which I think is a great thing for companies to use their own products if they can. We use our own products and use them very well and we made sure we were always generating lots of leads and yeah, that’s how we did it.
Eric: Got it. So, Jason talks a lot about…everybody in the audience should read his posts on lead philosophy rates, so go ahead and google that. That’s pretty much what Mark’s talking about. But…
Mark: That’s exactly it.
Eric: You talked about bankruptcy, so, you know, the scariest moment. So how many weeks of cash did you have in that bank, what were you feeling exactly?
Mark: Well, there’s one time I had four days of cash left. Yeah, we were really ready to pack it in and this is a great story. At the time we were kind of living hand to mouth. Our board of directors was literally writing checks every month to fund the company and they made it clear that the last check would be written on so and so a day, I can’t remember what it was, but there was four days left until that day.
And that is when we won a big deal with a division of General Electric and which we did out of, literally, their paperclip budget, this is unbelievable. So, this division of GE, I’m not kidding, literally it’s their budget for paper clips. They had this…This division of GE had a digital…they just had a big program to replace all the paper in their company with digital and they were enormously successful at it, so successful that they had a budget left over for all the stationary and staplers and paper clips and stuff. And literally that was the budget that we sold our product into. Several thousand dollars a month worth of paper clips and we won that deal four days before we were going to kick the bucket.
Mark: And so that’s actually that’s something that somebody …we’ve actually had several of those at Eloqua. I was…We had another one where…What actually led us to win that division of GE there was cellphone in Canada called Manitoba Telecom and they had put out…our competitor, at the time, put out a press release saying, “Hey Manitoba Telecom is a customer.” Now, we’re a Canadian company and I was like, “You can’t get any more Canadian than Manitoba or Winnipeg.” Like it is…It’s like the heart of Canada, okay? And here was our competitor from Silicon Freaking Valley putting out a press release about these guys being a customer. So, this is when we were about three months away from bankruptcy. And I was just livid. I mean, I was furious. So, I called on this company. I’m like, “I don’t know what you guys are doing over there, but whatever those jokers from the Valley are doing, we’re three times better and here’s why…”
And it turns out they weren’t actually that happy with the company and they were like, “Fine. Why don’t you guys fly over here and let’s see what you do.” And that was like October and Winnipeg is like the coldest place on the planet. It’s ridiculous. There’s a blizzard, snow storm, and you’re going there in minus thirty degrees to Manitoba Telecom to show them our stuff. Anyway, they loved it. They ended up becoming a customer a week later, which is like a miracle for a cell phone that they could move that quickly. And because we were able to win them over we were able to win a number of other deals from this competitor and that’s kind of how we did it.
Mark: Yeah. There’re all crazy stories, but we did what we had to do.
Eric: It takes a certain mindset to go through those moments, I mean, I don’t know if you read Ben Horowitz’s book “The hard thing about…
Mark: I sure did. It’s one of my favorites. I love it.
Eric: Yeah. So he talks about the struggle right? Where you feel like you’re in over your head. I feel like you have to be almost naïve at times to just go through it, but everything’s coming down on you, but you just gotta power through. How did you get through that?
Mark: I think it’s funny that you mention naïve because I had one of my professors tell me once that one of my greatest strengths was my naiveté. And it’s true man, like sometimes you’re scared if you know too much. Like when I walked into one of my first sales calls which was with the largest commercial real-estate broker in Canada, it’s kind of like that Cushman-Wakefield, it’s like… and I walk into the CEO’s office with bad fitting shoes and like business cards that was…you could still see the perforations around it, I mean it was just so cheap ass. And our demo was just horrendous, and I just didn’t know any better. I would never do that today, it would be so embarrassing, right? But you know what? There’s something to be said for just showing up.
So, it’s funny you mention, you know you mention naïve…You know, it was definitely a struggle, but I would say at the time I…we just didn’t have a choice man. Like we had raised money from our parents, our families. You know at the time my girlfriend was paying for us to live with her credit cards and her student loans, I mean, it would have been a frickin’ disaster if we let this blow up. But there’s just no choice, right? And…ehhhyeh, man, I could go on and on. But, yeah, I mean good times. I think, you know, I had a great advisor, a great mentor, Vince Chiarelli who told me a very simple maxim which is, “You can’t manage your result. The only thing you can manage is your activity.” Right? And that’s, I mean, that’s in a sales context, but the idea the sales guy is like, “Look, you can’t focus on getting deals. It’s not your…it’s out of your control, right?
The only thing in your control is the activity that you do every single day. The number of calls you make, the quality of calls, the quality of your preparation, right?” But I think that can be extended for the whole company. The only thing you can control, you can control your own mindset, right? And the activity that you produce. And I think Ben does…I mean he doesn’t say that exactly, but I think that’s a big part of him talking about the struggle, right? Keeping a positive mental attitude and so that you’re continuing to produce high quality and quantity of activity every single day. You’re trying to get one percent better every single day. That is the route to victory and success. So, I’m really grateful to him for…to Vince for helping me with that.
Eric: Yeah. I mean, I couldn’t agree more. I think these moments would drive…I mean that’s why you’re an entrepreneur, right? You live for these moments kind of.
Mark: Well, I think the other thing too is that I was lucky enough to have worked in a number of different jobs. A lot of them not fun. And honestly, I didn’t really want to go back to just working a job with my tail between my legs, you know, blowing whatever money my family and employees…a number of our employees went without pay for months. Our entire development team went without pay for nine months. Many of them are multi-millionaires today because they took stock instead of cash, which I’m very proud of. But, you know, you owe those guys something. You know, like there’s, you can’t give up, you can’t throw in the towel. I think that many times the reason why Eloqua did well is that we survived longer than everyone else.
Okay, so here’s something that’s interesting. If you look at the companies in marketing automation email marketing, but it’s scale today, with the exception of Marketo, which was only founded in 2006, and was a classic Silicon Valley company, raised a ton of money, they played it very, very well. But you look at everyone else, okay, Eloqua’s in Toronto; ExactTarget is in Indianapolis; [Amer] [0:37:26.5] went to Nashville, Tennessee; Silverpop is in Atlanta, Georgia. I mean these are all companies outside of Silicon Valley. All of them went through the struggle. All of them. We all had elements of bootstrapping, you know, like…In fact our guys would probably tell you the first ten customers were probably dry-cleaners in Indianapolis, like that’s kind of how, you know, a number of us got started. Anyways, fascinating story. I know ask me some questions.
Eric: No, We’ll you have you on this show another time for more of these, but this is…I think we’re just barely scraping the surface here. Cool. So, a few more questions from my end here.
Eric: So, you know, in terms of what you’d do differently if you…Let’s just go back to the Eloqua story, if you could do anything differently, what would you go back and change?
Mark: Probably manage the board a little better. Boards don’t work exactly the same way management teams do. I learned that the hard way. And, they do require management and that’s something I never really wanted to spend much time at because it felt like I wasn’t really driving a business forward. I felt like, you know spending time with customers and employees was the way to really move things forward. And I think ultimately, even though the company’s doing very well, it’s one of the reasons why there was a change in CEO. While I wasn’t the guy to ring the NASDAQ bell in 2012, so that’s something I’m trying to spend a little more time at now. I think that the importance of us spending a lot of time with employees and teaching, mentoring, and growing them, it’s not something I really understood that well at Eloqua until it was too late, you know.
So, after we raised money the company probably needed different behavior from me and I was still in the field all the time selling and meeting with customers, which a good thing too, and I think it’s important for a CO to get out of the building, but my focus is different now. It’s not just about getting revenue, like when I meet with customers without understanding what they’re going through and try to figure out how to make a better product and service. It’s not about trying to get some more revenue in the door. It’s not about trying to get more users. And so, it’s just…I’m more deliberate about my approach now that I understand a little better.
So now I do more one on ones in my director’s reports every week. I do one on ones with other people throughout the company. I do at least a couple lunches and coffee every week with people throughout the company organization, try to understand how to make their experience better. I never did this in Eloqua. I didn’t do it until too late. So, I would definitely change that. I would change the way I managed the board. You know, I’d probably think a few times before I acted, particularly sending angry emails. Angry emails are a killer. Just don’t do it. Just an empty email. Make it a draft, think about it.
Eric: Yeah, that’s what I do. Cool. So, you know, Fred Wilson says the goal of a CEO is to recruit, that’s number one, and to keep cash in the bank and then vision. Would you add anything to that?
Mark: I agree that those three things are really important for a CEO. The thing is that a lot of founder CEO’s are acting in more than just a CEO role. They’re often a de-facto COO as well and that does require additional responsibilities up until the time when those types of functions are being hired for. So, I do agree those are the three most important thing: vision; high standards in hires and recruiting; and don’t run out of cash. I would add a couple of things to that. As long as the COO is also chief operator and that is; development of repeatable processes throughout the company. Doesn’t all happen right away, but I think, you know, over time, more and more processes in the company need to be codified and repeatable.
I mean, that is if a company wants…If the CEO wants to build a highly scalable company that’s going to be one of these billion dollar shoot the moon shops in seven years which is what my goal is, right? I don’t have a lot of time, but the best companies in the world are able to build a billion dollar of values seven years after founding. So, I feel like there’s no reason why I can’t do that too. But, if you want to do that, there’s no way to do that successfully without having repeatable processes throughout the company. What does that mean? It means, in recruiting managers should be able to recruit really well without having BPS and C-level people babysit them. That’s possible if those processes are codified.
New customers should be able to be on-boarded in a highly standardized and repeatable way because there’s no way that you can grow at the kind of pace that you need to grow if you want to build, you know, the kind of start-up venture backed sort of value. So, I’d add that. I’d also add development of strategy as well. So, I think strategy and vision are not the same thing. I mean, vision is what you see yourself becoming, it’s how you see the world evolving. Strategy to me is about: what is the real-estate that I need to own; what is the hill I need to take? And that hill or that strategic high-ground, if I own it, I own all the fertile valleys below. Right? So, it’s the idea of leverage. Right? Because as a start-up you don’t have instant resources. Right?
So, you need to concentrate your resources so that you own something, that, even though it’s small, there’s a high degree of leverage over vast portions of the market, vast portions of the value chain. And, I think it’s really great if the CEO is in charge of that. And I think the company needs that from the CEO. At least up until the time of getting to, a hundred fifty to two-hundred employees and maybe beyond that. So, I’d add those two. Now, I think when the company develops a highly operational CFO or a COO or a chief revenue officer or someone like that, who’s actually able to take on multiple functions off the CEO. I think at that point a CEO can really focus on those three things and probably the company needs that. I think the company…If I were to spend all my time developing repeatable processes and strategy, but keeping my eye off the ball from high standards and recruiting, I’m probably not doing my job at a certain point of time. So, I’d add in those couple of things.
Eric: Super helpful. Alright. Cool. Final two questions from my end. So, what’s one book you’d recommend to entrepreneurs?
Mark: Oh man, there’s so many of them. You know, it really depends a lot on the entrepreneur and what…where their gaps are. I really do like “The Hard Thing about Hard Things”, but, I mean it’s a pretty new book. I think it’s…I learned a lot from that and its…I think what’s great about that book is it teaches a lot about management that is not really all that accessible to founder CEOs. So, I’ve learned a lot from that. I’ll just talk about some other books I like. I really like theThe Goal: A Process of Ongoing Improvement. You like that? Yeah, Jeff Bezos makes all his direct reports read it. From that I learned about the importance of working on the global optimum…
Mark: As opposed to local and to understand better about what [inaudible 0:45:43.1] really is I really liked that book. I like that book a lot. You know, for those of us that are building disruptive companies, you know, for the innovators the “Innovators Solution” is a classic. I think whether you’re building a disruptive solution or whether you’re trying to prevent someone else from eating your lunch, you know, that was my bible, literally. It was by my bedside every night while I was building Eloqua in early days and I really credit that book with a lot of the success that it had. “Crossing Chasms” is another one.
Again, these are all sort of standard books, but, you know, it is amazing how prophetic that book is. The importance of micro- verticalization, right? Finding niches that you can dominate. I think it’s one of the most important lessons for building a start-up and, you know, I think a lot of entrepreneurs are so heavily influenced by success stories, you know, like Facebook and whatever, Microsoft, Google, and they see these really broad companies, but don’t always appreciate…or Salesproof.com, and B to B, but don’t appreciate how narrow they were in their early days. Right?
Like Salesproof.com, they’re so narrow about who they focused on. They focused on high growth venture funding companies, B to B companies in Silicon Valley area, right? And they nailed the use case for that and they rolled out of there and so, I think there’s very little that’s more important than development of the start-up than target market identification and focus and, you know, being able to dominate a small niche, it’s a great way to get profitable fast, for you to grow fast, and you know, roll out of there to adjacencies once you’ve started figuring something out, that you can own. I learned that from “Classic Chasm”. And the importance of referenceability, which is a big part of what my new product does too, which is really cool. I don’t know, I read a lot of business books, but those are some of the classics I’ve really come to like.
Eric: Cool. You’ll have to share your other books on a blog post some time, I guess. Final question from my end. So, what’s one productivity hack you can share with the audience?
Mark: Ah man. Yeah, I’m not that great at productivity. So, it’s hard to say. It’s something that I’m really working on. I mean, there’s one that my coach has me doing every day that’s really simple, but it is working for me, which is; every morning I write out three things I have to get done that day and I put them in the calendar and typically I only get one out of the three done, but at least I get one done. And, I mean, that’s an old method that was actually one of the Rockefeller method.
Eric: Good book.
Mark: You read that too? You know, just making sure that you make the main thing the main thing and that’s it for me. But I’m…Time management is something I’ve always been working on. I’m actually not that great at it. So, I’ll have to listen more to your podcast to learn about more [inaudible 0:49:09.8] from my fellow CEOs.
Eric: Alright. So, Mark, thanks so much for doing this. Tons of insight. I have to get you again on the show and I know there’s more stories. But, yeah, we’ll talk to you again soon.
Mark: Sounds great. Thanks so much. I really enjoyed it
Eric: Thank you.
Ep27: The Startup Story You Didn't Hear About: The Billion Dollar Company That Was 4 Days From Going Bankrupt by Eric