B2B Growth: Your Daily B2B Marketing Podcast
B2B Growth: Your Daily B2B Marketing Podcast

Episode 2111 · 4 months ago

The Process of Discovering An Emerging Category As a Startup


In this episode, Dan Sanchez talks with Patrick Lowndes who is Patrick Lowndes who is a Product Management Director at ServiceNow. They dive deep into Patricks journey as a startup founder navigating and fighting for the emerging category of SaaS asset management before being acquired by ServiceNow.

Yeah, welcome back to BB growth. I'm danSanchez with Sweet fish Media and today I'm here with Patrick clowns who is thedirector of product management for service now. Patrick is actually agreat friend of mine and I've been wanting to have them on the show for awhile. We're finally making it happen today. So Patrick, welcome to BBBgrowth. Hey, it's great to be here. Thanks dan. We've been friends for along time and somewhere in our friendship, Patrick texted me or sendme an email or something. He's like, hey, I have an idea. He pitches me anidea on this business idea. Yet he was working as a, one of the top sales repset pay scale and had tried to do a lot of different businesses, most of whichI was like, I don't know if there's going to be a market for that. I don'tknow if there's a market for that. And then out of the blue one day he's like,hey, I have this idea and it ended up being an idea that was, he built into acompany and then sold to service now to become what it is today and thecategory of Icty asset management. Remember when he first told me about it,I was stoked because I knew it was, I knew once he told me what he was tryingto tackle, I was like, oh yeah, that's a problem. And I never even thoughtabout it as a problem. He essentially had the hypothesis that like, hey,people have all these SAS tools, they're everywhere. Everyone is beingbilled monthly annually for all these SAS tools as big as sales for us, allthe way down to like $10 a month, social media management tools. And hehad an idea that nobody's really keeping track of how much at all costsThis was back in, I think 20 15, like it was early on before it was evenreally a category. You were thinking about it, right? Yeah. And you know,the hard thing is the there wasn't even really a because there wasn't acategory, I was I was literally saying, you know, like staffs for your staff,what do I type in to even see what's in the market? So yeah, the the marketresearch portion of, But I'm sure we're gonna just jump into it. So what we'regonna be diving into since this was kind of a fascinating story. And I gotto watch it from like, the sidelines as Patrick would keep me up to date, asfar as what was going on is the marketing and the category creationaround something that's new. Like, it's obvious that a category is firming herebecause the problems emerged that hasn't been around before saSproliferation created a new problem. And we have just stumbled upon thisthat there was there needed to be a solution here. So what we're talkingabout today is kind of like the marketing steps Patrick took as well ashis team took in order to make it a thing to get to the point where they'reat now, where it's now, it's become a full blown category within the categoryof I. T. S. That management now, it's kind of a call SAS asset management. Alot of people call it just SAPS management today management. But I'lltell you how it landed there, even though I I debated with the couple ofindustry pungent that we're trying to give it a label talk about that. I'msure sure. So in the beginning, like you were trying to figure out how tosell this thing. It was like, as you talked to people, it was an obviousproblem, but this like actually maybe it wasn't obvious, right? You talk topeople and they're like, no, we had it under control, right? Is that how theearly conversations went? It kind of depends who you talk to and, and reallyalso how much they cared about costs. So some people, um, we're just sofocused on, hey, we're just trying to go faster with all these tools to justget off my back and let me innovate. Let me build, let me do whatever I'mgonna do quite frankly. A lot of, a lot of marketing VPs that I talked to, theyare funny because a lot of them, if you're listening to this show, I mean,I mean you're all about top line growth. How do I get top line growth and if Ineed to spend a little bit more money to get a big lift like get off my backabout how much I'm spending because look at look at the scoreboard right?But that's the attitude of a lot of sales and marketing VPs over their techstack is as long as I'm delivering on my number, let me do whatever I need todo. Yeah. And so you go to the other...

...side of the business which is morebottom line which is going to be your I. T. Or finance department. And they'retypically because they're cross centers you're you're focused on proliferationof a tool, a bunch of tools, some of which need to be rationalized out. Likenow all of a sudden you know efficiency matters and it doesn't matter that wehave 10 video conferencing tools the company or should we just have one ortwo? And so there's all these questions that start to come up about the techstack and we we found different personas would kind of lead us downdifferent rabbit holes. But that was, I mean, just the problem discovery danwas was complicated when you've got multiple stakeholders and you know, andthen and then to see that developing our research, you know, kind of let usdown. It led us to the conclusion that, well, this is either there's nocategory for this because no one really cares about it or no one started andcreated one yet. And fortunately it was the latter. No one had started it yet.So we were right at the cusp. You know, what's interesting is you're listeningto this and you're a marketer, which most of you are. I always think of likethe heart of I don't know, you could go either way with this, but the heart ofmarketing really falls into entrepreneurialism because the heart ofwhat a marketer does is trying to discern what the market wants, right?You can say it's been the reverse you at the heart of entrepreneurialism ismarketing because you're trying to discover the market, you're trying toget at the heart of what, what are people really bothered by and how can Ibest serve them? What are they actually willing to spend money on trying tosolve for the same problem? That's why usually good entrepreneurs are inessence good marketers and good and probably the best marketers are usuallycan be good as entrepreneurs To to some degree there is a lot more fastest, youneed to be a good entrepreneur of course, but how was it when you weretrying to dive in there and like how many different ways that you haveframed it to different people? Like you were trying to form this category? Whatwere some of the words you were throwing around to get it to stick inpeople's minds? Well, I mean if you're doing, if you're doing effectiveproblem discovery, right? I'm trying to figure out what is the problem, Youdon't go in there with this specific thing that you think is the realproblem. So The first question, remember with the first, I think it was20 people that did some interviews on the question we asked was what ispainful or difficult about having lots of staffs products in your business? Soagain, I'm just talking about your you have a lot of products, what's what'shard I mean really opens, you know, answers more technical people wouldmight bring up Oh yeah, making this integrate with that occasionally. But Istarted to get after the question, I mean deeper the hypotheses was is itpainful for them to renew software? Is it painful for when they're surprisedby renewal? How about usage? Are people wasting money? You know, And it turnsout, you know, vendor management and renew. Als was not that big of a painpoint. But the fact of, you know, big enterprises that have, you know, 10,000dropbox licenses where half of them haven't been touched in the last sixmonths. That is actually a much bigger pain point that we uncovered. But itcame through a really broad set of question about the problem around thismarket. Yeah. And so from there dan it kind of just again, we started to lookup and say, surely someone else is doing this. And the closest thing wecould find was was when we typed in because these are softwaresubscriptions, we looked at like subscription management software, youknow, and assassin management software. So the two areas we usually would endup in is you know, products that would help you manage the technicalunderpinnings of delivering a fast product. Right? So a little bit more ofdevops and how do you keep a service going? And then the other side wasactually more for customer customer...

...management teams that would mostly, youknow, they're basically looking at their book of business and managing thesubscription book from the vendor's perspective. So I said but who'smanaging the book of all these subscriptions across vendors from thecustomer side And the closest thing we could find is like a vendor managementtool or a contract management tool and that's that's where we, you know dan wewere looking at this and we're like, well it's a little bit of vendor, a lotof staff, it's got these other components of I. T. So the more wetried to talk with our key persona which ultimately ended up being youknow, I. T. You know, directors and VP s of I. T. At mid market companies umthat had a lot of cash products those people were really looking for a toolthat was that was the technical kind of repository of all the differentproducts they own. How many interviews did it take for you to kind of figureout who that was? You know, there were initially about 20 to kind of get usgoing. But quickly beyond that when we started to try to try to actuallyexpand the buckets of presales, We were probably you know 5060 conversations inbefore we started to like say I think there's something more with these ITleaders. And sometimes the hard thing is when there's not a well definedmarket or even a well defined problem. Small companies sometimes our buyer wasthe CFO and the controller because they're trying to control spend andmaybe they cared more about it. Um Then the I. T. Manager who might have beenan engineer that kind of graduated into leadership and wasn't really thatfocused on better business management. So so I would say somewhere betweenabout 50 and 100 interviews. And let's be honest those interviews wereessentially sales discovery calls. Where were you know early on. We weretrying to figure out what your problem can we help you? And that was probablyyou know our 1st 10 paying customers came from those. You know that handfulof conversation. It's interesting how many conversations you have to have inorder to really identify it. A nugget that I'm getting out of. This is kindof like, as marketers, why don't we keep meeting with customers, right?Things change markets change. People's fears, worries, priorities change overtime. It's like you need to be in front of your customers all the time becausethat's ultimately what's going to give you the insight as you figure, figureit out. And it's just as true for when you're starting. Probably more criticalwhen you're starting, but it's still true for later on. So, havingconversations and hearing you say like, oh no, we were 100 conversations andI'm like, oh my gosh, it's a lot of conversations, but it probably pays offeven if now you were doing more interviews later. Do you still meetwith customers? You still do? Or is that somebody else's job from whereyou're at now? No, I mean, so, so fast forward a little bit. Um we'll go backto the middle part of the story, but we're still creating the category. Butnow I'm actually, I lead the product advisory council for our product suiteat service now. So I'm working with um usually kind of some of the biggestcustomers, all I mean Out of the 20, customers on that, probably half ofthem are our household brands and names that you would know immediately. Soit's impressive that service now has all these existing customers we sellinto and we even we'll we'll get them interested and they'll be net newcustomers because of some of this technology That that we brought in. Butthere's a much bigger platform play at service now, right that we're sellingfamily of a deal of our service. Yeah, very much so. Yeah, very much so. Ithink it's 87% or something of our revenue comes from expansion on currentaccounts, something ridiculous like that. So, but I want to take you backto that challenge dan. We were talking earlier, I think last week there's thischallenge we had when it was us and a couple other startups in the space andwe kind of had like these little startup battles to try to define what,what the heck do we call this thing,...

Right. And of course everyonedifferentiating in small little ways to try to say, oh we do more, you know, wehave data that's more security focused and someone else saying, well we dodata science were more into the financial procurement space and so inour our stake in the ground was the vendor space. So we, we tried to say,hey, will, you know, there's more to solve because there's more to SASmanagement than just SAS, there's regular soft, there's traditionallegacy software, there's other things that I. T. Wants to manage. And so withvendor hawk, we almost actually name the company Chavez hawk, but decidednot to because we thought we don't want to pigeonhole ourselves with only staffbecause there's a lot a lot of other assets of the company that maybe wecould get into. So an adviser of ours gave us some tips and said, no, let'sjust stick with vendor hawk, Watch your vendors like a hawk. And so, um, thatdid create some problems because because we were more open to talkingabout other stuff than fast, we would get pulled down the road a little bit.Like why can't you help me track all my random stuff that like paper cups andyou have to like, no, we're not tracking those things in here. But whatit turned out dan, is that some of our competitors were more focused on, youknow, SAS optimization and, and fast Discovery and we did those things, butwe, we tried to put our corner of the market on fast vendor management to beable to say, hey, nobody else can track the life cycle of the vendor betterthan we can. And not only, you know, not only bringing them on, but alsooptimizing and saving money and cutting throughout until you maybe decide youneed to retire that. So we, we remember I wrote a blog because some, some folkswere, we're talking about this, you know, like, oh, this is, this is oursuccess. Uh, I think they call it a fast optimization platform. So I waslike, no. So I pulled up a blog and like this is why we need to call itfast vendor management and it's not like it got a million views or reads,but what's interesting as a marketer and you're looking into the struggle is,you know, entrepreneurs are often times trying to create what is the thingthat's going to resonate and how do I get, you know, a little bit ofchirality behind my brand. And one of the things that we did with this sillyT shirt, I'll show you guys here kind of silly, but it's a picture of asasquatch, the bottom, it says, it said do you have a sasquatch? And so we, wedid this whole thing where it's like, hey do you have a Saas squash lurkingin your business? And then on the back basically we have all these creativesaying related to sacks like you know, get your assassin shape, Are yousurrounded by staff holes? That's pretty funny one. So I mean tons ofstuff but we were trying to create this this kind of edgy fun brand that peoplewould say, oh man, those vendor hog guys like they have a good time. Theyrealize the irony of the space. And so for us we we tried to make our brandfeel a little bit more, you know, relatable. Well yeah, and and now we'retalking about like brand marketing as opposed to just, you know, you know,category creation. But it's I mean Categories of the big picture whichbrand sports especially when you're trying to go after the category. It'sinteresting to see you and the other two competitors all trying to positionfor what the category is going to be when the category is not clear yet.Right? But the winner is going to emerge out of the three somewhere orsome other things you do to try to establish you got yourself is like thecategory King, right? Because usually there's one category one. Yeah. Whoelse gets the scraps? So what were what were some of you are doing to do that?Some of the things I was just basically borrowing a page from out of theplaybook from my marketing team at pay scale to shout out to those folks whoare leading marketing efforts there.

But they had a, you know, they had acompensation best practices report, right? Which is similar to to a lot ofthe people do like a state of the state of the industry, right? So we had, youknow, the state of SAS vendor management, right? So that kind of, itwas an annual report and we, you know, it was a bunch of effort to go get abunch of respondents I think. You know, we had, you know, 50 60 of respondentson the first years report. And we used data from that, you know, sample sizeand and really just put it into a nice looking, you know, a nice lookingreport that we're starting to push out there and into the market. The otherthing, the unique asset besides just like you know, scott leadership wasalso um you know, data that we had uniquely that others didn't. And so wehad for example, um like the benchmark report that we were starting tointroduce to the market which was looking at usage benchmarking right?Like what if you have zoom for example how many licenses zoom get wasted onaverage, you know, by across our customer base. And so we had done somebenchmarking. So if you're thinking about like, you know, a new category, Ilike to think about what can I uniquely add to the conversation that otherscan't add as well struggle to talk about. And that was sort of our thatwas our, you know, I've got to give a big shout out to brian Blackburn whowas like critical to getting our marketing. You know, he designed thisshirt and he also helped us with that benchmarking report. And he was like anearly, you know, marketing higher that we had that really move the needle. Andso being able to have that conversation with our customers and with the marketto say, look, we know that we know about the state of this market becauseyou've done the research and we also have customer data to back it up. Umwhat was sort of our first couple punches into the market and shortlyafter we were making those strides into the market is when um we were acquiredand we said, you know what if we're going to go after this, we want to, wewant to partner up with a really big company that's already got a brand andnow we can kind of leverage that power to build out the ecosystem further,make them do it three years later. Looking back, I remember when you puttogether the benchmarks report and thinking like, and there was a lot oftime and effort back then, I didn't appreciate it for what it was. Now. Ihave had some taste of B two B marketing then, but obviously being ahost on GDP growth and interviewing all these B two B marketers all the time.I've grown to appreciate what category design is and how hard it is and howimportant it can be. Now I'm looking back at the benchmark report of mygenius, quite a great way to start it off because it could have been a multiyear battle. I mean once you got bought up by service now it became like oakdomination right? Because you got plugged into existing infrastructurethat made it easy to go and find more business and plug it into a bigbusiness. But before then it could have been a multiyear play out and if youwould establish the benchmarks early, that would have become clearer andclearer that you would have been able to own the space or easily because youwere the one writing the rules by setting the benchmarks of what successlooks like exactly. And whoever said by the way, whoever sets up those firstbenchmarks, the more you get other people that are influential in in, inthe general space or adjacent spaces, the more they start to reference that,the more immediately that becomes the thing that people talk about. So thehard part and this is where we were headed was because we need to get arobust set of data and then we need to find people to be able to talk about itin such a way that hey, if you haven't looked at vendor hawks benchmark reportfor fast, like, you know, you haven't been looking in the right places. Andso that was kind of the, that was the strategy early on. But you know, ifyou're, you know, a marketer and you're thinking about your category, the, youknow what the unique insight that you're bringing to your market and thenhow connected. And then I'm sure you talked a ton about this. How do youamplify that really quickly? Scale it...

...really fast? So, um, I won't even gothere because I'm sure everyone listening smarter how to do that. But Iam. But I remember you, you were like the sales king of the company. Ofcourse you were the founder, you had your technical co founder and you weredoing your Patrick thing, right? You're probably one of the best sales websitethat I'm friends with as far as like getting in there and don't know, beingbeing persuasive what were some of the marketing things you were doing? Someof the things you were doing to current almost like rita, I guess you've gotsales enablement with marketing in order to kind of land your first bigcustomers. Yeah, yeah. So, um, again part of trading the category and thebrand, you know, like obviously the, the first, the first call deck, youknow, your slides looking uniform. That really helps. But then the leavesbehind documents, like the first couple of documents that you're leaving behind,I'm sure those of you who do content marketing all the time. You know,there's different stages, different content for different stages of thefunnel, right? You gotta Brandon you get awareness. Um, you're going to getpast that awareness level to the kind of consideration stage. Like I neverreally thought I could use this software into more of the evaluationlike I'm comparing and then they get sounded like purchase. Am I going to gowith this one of the competitor if there is a competitor? So if you thinkabout that, you know that funnel getting smaller, the content justgetting more targeted is what we're focusing on. So we had a couple ofassets at the high level, what is this? But then we started to make more assetsat recount further into the funnel where the decisions we're getting moretechnical, it doesn't really sound like a sexy thing to create. But one of thethings that helped us close deals was not just our side by side comparison,but actually like our data security practice. Like we were in a space wherewhere a lot of startups didn't have their stuff together when it came todata security. But our CTO was like, we keep getting asked about the securityof our app and how it integrates and he just like wrote out this amazingdocument looked very well organized. We had some graphs in there and by thetime we put that in the hand of our customer, it sounds a little bit boring,like, oh, you're, you're marketing with a, with a security document. Well, ifit's a technical sale. Yeah. Our engineer on the bottom of the funnelcontent, they're asking questions like that. You have to be prepared to givethem answers and the answers are in the content. Yeah. And then the next stepright after that is when you figure out how to close customers is probably oneof the next most imminent questions, which is okay. Great. I bought thisthing, I'm turning it on. How do I use it effectively? And this is the firstonboarding implementation guide what the recommended steps on how to getgoing and that that's a whole another like, you know, 10 podcasts and throughon that topic of customer success. But just getting your reps talking in sucha way that they're relevant and they're hitting those objections. If you're noton the phone with some of the customers or you're hearing the feedback from thesales reps on the front line, then you got to just jump on some of those callsand say, hey, I want to make sure you have enough of everything that you needto close. And that's been the gap analysis. You know, just say, what ifyou had one other thing to make the biggest difference in hitting yournumber? What what would that one asset B I like asked that question and you'llprobably uncover a few different answers and and the trends will leadyou towards a pretty potent asset. So my last question for you is how are youmanaging all this when you were just a small team? Did you have a marketerearly on or were you kind of the one leading the charge with all themarketing as the Ceo and kind of like the head of sales? Mm Yeah. So early onagain I came from a sales and inside sales background. I was selling, youknow, and good size deals inside and so...

...being ceo of a startup, obviously I'mover the pipeline and I'm trying to close deals. But I was also that thenew thing for me was how do I put opportunities and deals from the top ofthe funnel? Aside from just, you know, here's a giant list of qualified, youknow, people go cold column. Right? So I actually had some help. The twoflavors have helped that. I had one was a consultant who was really good atdemand gen. It was helping me run in a couple different programs to do morepaid marketing. And we even did, we even did a mailer actually mailed somemilk and stuff out. And uh, and then the other thing that I had was reallyhelpful was again, are the marketing manager brand I mentioned he he coulddesign which was great, but he could also write and that combination of, youknow, the creative side and also the communication side of being strong thatlet me have something where I just need to kind of mock up the rough idea andhe could pretty much execute it, you know, you know, almost to the t, youknow, with minimal adjustment, right? So I I basically had those, those twopeople helping the strategically thinking about legion, but alsotactically making it look beautiful and and actually sound like that's and youwere kind of operating in the market are thinking about the category,thinking about the content where it needs to fit into the funnelpractically because you were talking customers, you're running into theissues yourself, you're like, oh, we should have some content here. Peoplekeep asking about it. It's kind of obvious now, right? Yeah. Yeah. Andagain, if you're, if you're not hearing those customer calls and maybe you can,if you feel like that's awkward or your team doesn't watch you. I mean, listento recordings, listen to what listen to recordings of how the calls go and whatwhat people say and where they get hung up. Um, and then the hope that thoseanecdotes will start to, you know, draw a correlation to what, you know, thethings that are needed to help move the sail along mid cycle. So good productmarketing can be a grease in the wheels of sales if you know how to listen. Anduh, it's always, it's always a hard skill patrick. This has been aninsightful called love. Learning about how the creative, how that categorycreation happens when it's early on before. It's clear that the category isformed. I've learned a ton. Where can people go to learn more from you ifthey have follow up questions. Yeah. Yeah. I've got a couple of differentblogs that might be interesting at Patrick rounds dot com. You can just gocheck it out. I'm sure it will link it in the show notes for something. ButI've got a couple of different blogs there. You can check out and uh, yeah,other than that, that's the main place to find me or on length and hit me upand yeah, it's been fun, fun chatting about this dan, appreciate it. Awesome.Patrick, thank you so much for joining us and thank you for listening to babygrowth. Yeah, Are you on linkedin? That's a stupidquestion. Of course, you're on linkedin here. Sweet fish. We've gone all in onthe platform. Multiple people from our team are creating content there.Sometimes it's a funny gift for many other times. It's a micro video or aslide deck and sometimes it's just a regular old status update that sharestheir unique point of view on B two B marketing leadership or their jobfunction. We're posting this content through their personal profile, not ourcompany page and it would warm my heart and soul if you connected with each ofour evangelists, we'll be adding more down the road. But for now you shouldconnect with Bill Reed, R C 00 Kelsey Montgomery, our creative director danSanchez, our director of audience growth Logan, Lyles, our director ofpartnerships and me, James Carberry. We're having a whole lot of fun onlinkedin pretty much every single day and we love for you to be a part of it.

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