Marketing
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Customer feedback is a development opportunity
Kyle Lomeli is the CTO and a founding engineer at CarGurus.com.
Online commerce accounted for nearly $518 billion in revenue in the United States alone last year. The growing number of online marketplaces like Amazon and eBay will command 40% of the global retail market in 2020. As the number of digital offerings — not only marketplaces but also online storefronts and company websites — available to consumers continues to grow, the primary challenge for any online platform lies in setting itself apart.
The central question for how to accomplish this: Where does differentiation matter most?
A customer’s ability to easily (and accurately) find a specific product or service with minimal barriers helps ensure they feel satisfied and confident with their choice of purchase. This ultimately becomes the differentiator that sets an online platform apart. It’s about coupling a stellar product with an exceptional experience. Often, that takes the form of simple, searchable access to a wide variety of products and services. Sometimes, it’s about surfacing a brand that meets an individual consumer’s needs or price point. In both cases, platforms are in a position to help customers avoid having to chase down a product or service through multiple clicks while offering a better way of comparing apples to apples.
To be successful, a company should adopt a consumer-first philosophy that informs its product ideation and development process. A successful consumer-first development resides in a company’s ability to expediently deliver fresh features that customers actually respond to, rather than prioritize the update that seems most profitable. The best way to inform both elements is to consistently collect and learn from customer feedback in a timely way — and sometimes, this will mean making decisions for the benefit of consumers versus what is in the best interest of companies.
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Pantheon bets on WebOps as it charts a course to an IPO
It has been 10 years since Pantheon launched. At the time, it was mostly a hosting service for Drupal sites, but about six years ago, it added WordPress hosting to its lineup and raised more VC money as some of its competitors did the same. After its 2016 Series C round, things started quieting down, though the company has clear ambitions to become a public company in the next few years. To chat about those plans and the overall state of the business, I sat down with Pantheon co-founder and CEO Zack Rosen and new Pantheon board member Elissa Fink, former CMO of Tableau.
Maybe the biggest change at Pantheon is that when it launched, its team was almost solely focused on the developer experience. And while Pantheon was essentially a hosting service and offers personal plans, its focus was never on individuals who wanted a WordPress blog (which a lot of companies focused on, especially in the pre-Twitter days). Its efforts always revolved around businesses, large enterprises and the agencies that serve them.
“Back then, our overriding focus was really around the developer experience — the practitioner experience — of using our product,” Rosen explained. “And frankly, at the time, we actually really didn’t know what to call it. It really didn’t have a category, but we always felt it was something new.” He noted that over the last few years, Pantheon started talking to a lot of marketers and realized that the needs of these marketing leaders are driving this space.
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Revenue train kept rolling all year long for Salesforce
Salesforce turned 20 this year, and the most successful pure enterprise SaaS company ever showed no signs of slowing down. Consider that the company finished the year on an $18 billion run rate, rushing toward its 2022 revenue goal of $20 billion. Oh, and it also spent a tidy $15.7 billion to buy Tableau this year in the most high-profile and expensive acquisition it’s ever made.
Co-founder, chairman and CEO Marc Benioff published a book called Trailblazer about running a socially responsible company, and made the rounds promoting it. In fact, he even stopped by TechCrunch Disrupt in San Francisco in September, telling the audience that capitalism as we know it is dead. Still, the company announced it was building two more towers in Sydney and Dublin.
It also promoted Bret Taylor just last week, who could be in line as heir apparent to Benioff and co-CEO Keith Block whenever they decide to retire. The company closed the year with a bang with a $4.5 billion quarter. Salesforce, for the most part, has somehow been able to balance Benioff’s vision of responsible capitalism while building a company makes money in bunches, one that continues to grow and flourish, and that’s showing no signs of slowing down anytime soon.
All aboard the gravy train
The company just keeps churning out good quarters. Here’s what this year looked like:
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How startups close their first big sales
Joe Procopio is a multi-exit, multi-failure entrepreneur. Joe is currently building Spiffy, and previously sold Automated Insights, sold ExitEvent and built Intrepid Media.
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No matter what your startup sells or who you’re selling it to, companies that survive — and grow — need big customers and lots of them. But how do you land million-dollar deals with limited resources and no credibility?
In more than 20 years of building companies and products, I’ve learned that in the grand scheme of the startup lifecycle, while you scale your way through growth to eventual sustainability and success, acquiring your first customer is relatively easy. Any good salesperson can sell a good product to the prospect of their choice. Hell, any mediocre salesperson, even when they’re hawking complete crap, can get lucky once. Your first customer is a great signal, but it’s just a signal, not a savior.
What actually matters is what we learn from that first signal and all the signals that follow.
Aggregate value to target prospects
The process starts way before the first sales pitch. Your chances of closing your first big sale are going to be directly related to how well you’re targeting your prospective customers. So let’s begin with a discussion of aggregation and targeting.
All product and service sales come down to usage and aggregated value. It doesn’t matter if your target customer is a consumer or a business. It makes no difference if your price point is dollars or thousands of dollars. It doesn’t matter if your transaction is completely frictionless or requires a six-month hand-hold by your sales team.
If your customer is a consumer, they’re going to have limited usage with your product or service and the value needs to be tightly wound into that small usage window. If your customer is a business, they’re likely going to have multiple users and almost continuous usage of the product or service, so the value will be delivered over time.
So a “lot of customers” for your product or service might be 100, or it might be a million. Either way, you’re offering the same value per dollar based on usage. You’re aggregating that value into the sale, so you need to be targeting those customer prospects with the highest expected usage.
A classic rookie mistake made by most entrepreneurs is spraying and praying at large prospect audiences for the sake of their largeness alone, hoping that those shards of value surface for the right people at the right time.
Don’t do that. Instead, for B2C sales, you’re going to need some intelligence about your prospect list, which means more than Facebook ad demographics — it’s being able to predict the usage based on the source of the prospect. For B2B sales, you need to determine the optimum type of business to sell into: their size, their industry, their appetite for innovation, and anything else you can use to narrow your focus.
Figure out who is going to get the most aggregate value for their usage and target them.
Targeting customer prospects based on value aggregation is not only going to increase the chances of closing, it’s also going to dictate the near future in terms of the growth of your startup. A targeted, good customer is going to make your life a lot easier. A random, poor customer is going to fill your world with complaints, support requests, change requests, feature requests, and ultimately severe changes to your product roadmap.
Consolidate and find a champion
When you’re a startup, your customers are buying innovation. The tricky thing is, no one needs innovation. Rather, they need the derivatives of that innovation — time, simplification, throughput, security.
In order to close a big sale, in other words, the aggregation of many, many units of that usage and value, you’re going to have to consolidate that usage and find a champion of value on the customer side.
So the question becomes: Who benefits the most from the derivatives of innovation brought about by maximizing the usage of your product or service?
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Virtual product placement is coming for TV and movies and Ryff has raised cash to put it there
In a world where ad rates are declining for traditional broadcast media, the corporations responsible for making the fictions that millions devour daily need to find a new business model.
Subscription services are on the rise — with every major broadcaster launching an on-demand service — and so are ad-supported video streaming services to replace the traditional networks.
But there’s another Holy Grail of the advertising industry, long thought to be too technologically difficult to achieve, that may finally be within reach. It’s the on-demand product placement of branded goods in a video, and it’s the technology that Ryff has been developing since it was founded in early 2018.
Product placement is an increasingly big business in the U.S., raking in some $11.44 billion in 2019, according to data collected by Statista. That figure is up from $4.75 billion in 2012. The same report indicated that roughly 49% of Americans took action after seeing product placement in media.
The effectiveness of product placement has even been proven by researchers from Indiana University and Emory University. They found that “prominent product placement embedded in television programming does have a net positive impact on online conversations and web traffic for the brand.”
And while streaming services enjoy the dollars their subscribers are throwing at them, they’re also looking at ways to diversify their revenue streams. Netflix and Hulu are both expanding their product marketing divisions and analysts like those from Forrester Research predict that product placement will be a huge moneymaker for the company as traditional ad rates decline.
There are companies that handle product placement already. Startups like Branded Entertainment Network, which works with brands and producers to place real brands into contextually relevant scenes in movies and television, and Mirriad, which adds branded billboards to scenes, are working to bring more money to platforms and producers.
Ryff takes the technology to the next level, using computer vision, machine learning and rendering technologies to identify objects in a scene and replace them with branded products that can be tailored based on customer data.
“The infusion of SVOD/streaming platforms into the market, combined with platforms like Netflix that are unsuccessfully trying to grow their subscriber base will force those same platforms to explore and embrace alternative revenue streams,” said Marlon Nichols, managing general partner at MaC Venture Capital, and a new director on the Ryff board. “In addition, consumers on paid platforms do not want their content consumption interrupted by ads. As such, product placement will be an important growth channel and Ryff’s new marketplace and unique technology set it up to be the unequivocal growth market leader.”
To continue its technology development and ramp up sales and marketing, the company has raised $5 million in financing. According to Crunchbase, Ryff had previously raised $3.6 million from investors, including a subsidiary of the Mahindra Group and undisclosed investors. The new financing came from Valor Siren Ventures, MaC Venture Capital, Moneta Ventures and Vulcan Capital.
“Ryff’s offering is well-timed with the rapidly increasing demand for solutions that extend the reach of a brand’s content and drive business results,” said Uday Ghare, vice president for media and entertainment at Tech Mahindra, in a statement at the time of the company’s investment. “We believe the market will continue to see a shift of brand dollars to both content marketing and programmatic advertising as brands increase their reliance on content-centric programs and look to scale those efforts.”
Ryff’s ads can be tailored to the viewer’s taste, the platform on which video is being distributed, the geography of the broadcast, the date and time of the broadcast and a broader demographic profile, according to the company. Basically it’s like AdWords for videos.
In a blog post writing about the rationale behind his investment firm’s capital commitment to the company, Marlon Nichols of MaC Ventures wrote:
Imagine a future where an IP owner can maximize the value of its content by putting it on the Ryff marketplace, where that content will be mapped for dozens if not hundreds of product placement opportunities and be layered with restrictions that comply with creative needs. Those opportunities will be ranked and priced by their effectiveness to drive marketing goals for brands. Brands can bid on in-video placement opportunities that fit their marketing strategies and budgets. 3D brand assets can be uploaded and inserted dynamically into content right before the moment of video delivery.
Ryff’s first disclosed partnership is with the “reality” television producer Endemol Shine.
“Ryff successfully takes the concept of product placement, the only advertising format that can’t be skipped by the viewer, and delivers a scalable and adaptable advertising solution that can be applied to any content, at any time and in any market,” said Roy Taylor, founder and CEO of Ryff, in a statement. “The result benefits all — content free from annoying distractions, audience-specific brand placement and delivering a new means towards monetizing video assets.”
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Brand power vs. product power
David Friend is the CEO of cloud storage company Wasabi, and co-founder of cyber security company Carbonite, recently bought for $1.4 billion. Wasabi is his sixth startup.
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Most tech companies — particularly B2B companies — either don’t understand the power of a brand, or do a really poor job of creating one.
An informal survey of a dozen of my young CEO friends showed that, given the choice, 10 out of 12 — 83% — would rather spend an extra dollar on product development than brand-building. It is dangerous (or at least foolish) to assume that the ROI on product development is greater than the ROI on brand building.
As a serial entrepreneur and CEO, I have had to make this choice many times. In 2006, I co-founded PC backup company Carbonite . I left the company five years ago after taking it public and I no longer have any financial interest in it, which is why I can write about it now — it was just sold for $1.4 billion to OpenText. There were many other backup products on the market at that time and many more appeared over the first five years of the company’s life. I would argue that Carbonite was slicker than most of the others, but essentially every backup product accomplishes the same result.
Unlike Carbonite’s competitors, we focused on our brand. That meant raising more money than we would have if we were just investing in R&D. But, after five years of investing in our brand, we had eleven times the brand recognition of any other consumer backup company and we dominated the market.
Here’s why: a study by Kettlefire Creative showed that 59% of people prefer to buy brands that they have heard of. Since none of our competitors had widely recognized brands, we got most of that 59%. Of the remaining 41%, we fought it out on other criteria and won most of that as well. Put yourself in the shoes of a potential customer looking to back up their PC. What do you worry about? Well, before we even launched the company, we asked PC owners to choose the five most important attributes of their ideal backup company from a list of ten possible attributes, and we found the following:
1. Trustworthy: you won’t look at my files or allow anyone to see them (1127 votes)
2. Peace of mind: when I go to retrieve my backup, it will always be there (811 votes)
3. Reliable: it backs up everything and doesn’t stop (696 votes)
4. Helpful: if I lose my computer, I want to talk to a human who can help me (446 votes)
5. Easy: it should be simple and require little attention (444 votes)
The attributes that didn’t make the top five:
6. Fast: backups happen quickly
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Adobe announces GA of customer data platform
The customer data platform (CDP) is the newest tool in the customer experience arsenal as big companies try to help customers deal with data coming from multiple channels. Today, Adobe announced the general availability of its CDP.
The CDP is like a central data warehouse for all the information you have on a single customer. This crosses channels like web, email, text, chat and brick and mortar in-person visits, as well as systems like CRM, e-commerce and point of sale. The idea is to pull all of this data together into a single record to help companies have a deep understanding of the customer at an extremely detailed level. They then hope to leverage that information to deliver highly customized cross-channel experiences.
The idea is to take all of this information and give marketers the tools they need to take advantage of it. “We want to make sure we create an offering that marketers can leverage and makes use of all of that goodness that’s living within Adobe Experience platform,” Nina Caruso, product marketing manager for Adobe Audience Manager, explained.
She said that would involve packaging and presenting the data in such a way to make it easier for marketers to consume, such as dashboards to deliver the data they want to see, while taking advantage of artificial intelligence and machine learning under the hood to help them find the data to populate the dashboards without having to do the heavy lifting.
Beyond that, having access to real-time streaming data in one place under the umbrella of the Adobe Experience Platform should enable marketers to create much more precise market segments. “Part of real-time CDP will be building productized primo maintained integrations for marketers to be able to leverage, so that they can take segmentations and audiences that they’ve built into campaigns and use those across different channels to provide a consistent customer experience across that journey life cycle,” Caruso said.
As you can imagine, bringing all of this information together, while providing a platform for customization for the customer, raises all kinds of security and privacy red flags at the same time. This is especially true in light of GDPR and the upcoming California privacy law. Companies need to be able to enforce data usage rules across the platform.
To that end, the company also announced the availability of Adobe Experience Platform Data Governance, which helps companies define a set of rules around the data usage. This involves “frameworks that help [customers] enforce data usage policies and facilitate the proper use of their data to comply with regulations, obligations and restrictions associated with various data sets,” according to the company.
“We want to make sure that we offer our customers the controls in place to make sure that they have the ability to appropriately govern their data, especially within the evolving landscape that we’re all living in when it comes to privacy and different policies,” Caruso said.
These tools are now available to Adobe customers.
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Vendr, already profitable, raises $2M to replace your enterprise sales team
Vendr has developed an enterprise SaaS solution for managing enterprise SaaS.
The new startup, founded by InVision’s former head of enterprise sales Ryan Neu, is another standout from Y Combinator’s latest batch. Contrary to the majority of those businesses, however, Vendr is already profitable.
In classic YC fashion, the company has created software to sell to other startups, and, as such, it was quick to gain the confidence of top venture capital investors. Headquartered in Boston, Vendr has raised a $2 million round led by F-Prime Capital, with participation from Ashton Kutcher’s Sound Ventures, Joe Montana’s Liquid2 Ventures, Garage VC and angel investors including Canva co-founder and chief operating officer Cliff Obrecht and HubSpot COO JD Sherman.
The company offers subscription-based software, priced depending on company headcount, that helps fast-growing businesses buy and manage enterprise SaaS. In short, the product cuts the human out of the sales process, allowing companies to purchase or upgrade software using software. The goal isn’t to eliminate the sales profession, rather to put an end to “persuasion driven” sales, Neu explains, and to make enterprise software purchases as easy as consumer product purchases.
Boston-based Vendr graduated from the Y Combinator startup accelerator earlier this year
“We see software sales actually going away because most people are tired of being sold to, they are tired of being persuaded, they want to transact,” Neu, who previously led sales at HubSpot, tells TechCruch. “Vendr was created to allow people to transact software without actually having to talk to people.”
Founded 14 months ago, Vendr has reached $1 million in annual recurring revenue, which, for context, has historically been amongst the benchmarks necessary for a SaaS startup to raise its Series A. Neu says the company is growing 15% month-over-month with monthly recurring revenue currently sitting at $96,500. Already profitable, Neu says they want to put themselves in a position in which they don’t have to raise any additional outside capital.
“I can’t imagine looking at the bank account every month and watching it deplete,” Neu said. “We want to be in a position where we can control our own destiny.”
Vendr currently operates with a team of six employees and 19 customers, including Canva, Grammarly, GitLab, Brex, HubSpot and InVision. The company is also backed by Okta’s general counsel Jon Runyan, AppDynamics’ COO Dan Wright and YC partner Aaron Epstein.
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Veteran enterprise exec Bob Stutz is heading back to SAP
Bob Stutz has had a storied career with enterprise software companies, including stints at Siebel Systems, SAP, Microsoft and Salesforce. He announced on Facebook last week that he’s leaving his job as head of the Salesforce Marketing Cloud and heading back to SAP as president of customer experience.
Bob Stutz Facebook announcement
Constellation Research founder and principal analyst Ray Wang says that Stutz has a reputation for taking companies to the next level. He helped put Microsoft CRM on the map (although it still had just 2.7% market share in 2018, according to Gartner) and he helped move the needle at Salesforce Marketing Cloud.
Bob Stutz, SAP’s new president of customer experience (Photo: Salesforce)
“Stutz was the reason Salesforce could grow in the Marketing Cloud and analytics areas. He fixed a lot of the fundamental architectural and development issues at Salesforce, and he did most of the big work in the first 12 months. He got the acquisitions going, as well,” Wang told TechCrunch. He added, “SAP has a big portfolio, from CallidusCloud to Hybris to Qualtrics, to put together. Bob is the guy you bring in to take a team to the next level.”
Brent Leary, who is a long-time CRM industry watcher, says the move makes a lot of sense for SAP. “Having Bob return to head up their Customer Experience business is a huge win for SAP. He’s been everywhere, and everywhere he’s been was better for it. And going back to SAP at this particular time may be his biggest challenge, but he’s the right person for this particular challenge,” Leary said.
The move comes against the backdrop of lots of changes going on at the German software giant. Long-time CEO Bill McDermott recently announced he was stepping down, and that Jennifer Morgan and Christian Klein would be replacing him as co-CEOs. Earlier this year, the company saw a line of other long-time executives and board members head out the door, including SAP SuccessFactors COO Brigette McInnis-Day; Robert Enslin, president of its cloud business and a board member; CTO Björn Goerke; and Bernd Leukert, a member of the executive board.
Having Stutz on board could help stabilize the situation somewhat, as he brings more than 25 years of solid software company experience to bear on the company.
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Lookiero closes $19M led by MMC Ventures to be the Stitch Fix for Europe
Lookiero, the online personal shopping service for clothes and accessories, has closed a $19 million funding round led by London-based VC MMC Ventures, with support from existing investor All Iron Ventures, and new investors Bonsai Partners, 10x and Santander Smart. The company will use the backing to expand in its main markets of Spain, France and the U.K. In June last year it closed a funding round of €4 million led by All Iron Ventures.
The startup applies algorithms to a database of personal stylists and customer profiles to thus provide a personalized online shopping experience to its customers. It then delivers a selection of five pieces of clothing or accessories curated by a personal shopper to fit the customer’s individual size, style and preferences. Customers then decide which items to keep or return (at no additional cost), allowing Lookiero to learn more about the customer’s taste before starting the whole process again.
By generating look-a-like profiles and analyzing previous customer interactions with each item, Lookiero says it can predict how likely a user is going to keep a certain item from a range of more than 150 European brands from a warehousing system that will ship more than 3 million items of clothing this year to seven European countries.
It’s not unlike the well-worn Birchbox model. Lookiero’s main competitor is Stitch Fix (U.S.), which has upwards of $1.5 billion in annual revenues and IPO’d in November 2017.
Founded in 2015 by Spanish entrepreneur Oier Urrutia, the company says it now has over 1 million registered users and has grown revenue by more than 200% from 2017 to 2018.
In a statement Urrutia said: “This investment round provides us with the necessary capital to further increase the accuracy of our technology, which is really exciting. It will allow us to offer the best possible experience for our users and to continue expanding across Europe.”
Simon Menashy, partner, MMC Ventures, said: “The migration of fashion brands online has improved consumers’ access to clothing, and there is now an almost overwhelming amount of choice. At the same time, it can still be really hard to find exactly what is right for you, especially with High Street retail stores in decline. Lookiero provides the best of both worlds, giving every customer a hand-picked selection from their personal stylist.”
Ander Michelena, co-founding partner of All Iron Ventures, said: “Even if what Oier and his team have achieved to date is remarkable, we believe that Lookiero still has great potential to continue expanding internationally and to become a player of reference in a market segment where there is still a lot to do in terms of innovation and user satisfaction.”
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