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

Episode 2111 · 9 months ago

The Process of Discovering An Emerging Category As a Startup

ABOUT THIS EPISODE

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 dan Sanchez with Sweet fish Media and today I'm here with Patrick clowns who is the director of product management for service now. Patrick is actually a great friend of mine and I've been wanting to have them on the show for a while. We're finally making it happen today. So Patrick, welcome to BBB growth. Hey, it's great to be here. Thanks dan. We've been friends for a long time and somewhere in our friendship, Patrick texted me or send me an email or something. He's like, hey, I have an idea. He pitches me an idea on this business idea. Yet he was working as a, one of the top sales rep set pay scale and had tried to do a lot of different businesses, most of which I was like, I don't know if there's going to be a market for that. I don't know 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 a company and then sold to service now to become what it is today and the category 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 trying to tackle, I was like, oh yeah, that's a problem. And I never even thought about it as a problem. He essentially had the hypothesis that like, hey, people have all these SAS tools, they're everywhere. Everyone is being billed monthly annually for all these SAS tools as big as sales for us, all the way down to like $10 a month, social media management tools. And he had an idea that nobody's really keeping track of how much at all costs This was back in, I think 20 15, like it was early on before it was even really 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 a category, 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 market research portion of, But I'm sure we're gonna just jump into it. So what we're gonna be diving into since this was kind of a fascinating story. And I got to watch it from like, the sidelines as Patrick would keep me up to date, as far as what was going on is the marketing and the category creation around something that's new. Like, it's obvious that a category is firming here because the problems emerged that hasn't been around before saS proliferation created a new problem. And we have just stumbled upon this that there was there needed to be a solution here. So what we're talking about today is kind of like the marketing steps Patrick took as well as his team took in order to make it a thing to get to the point where they're at now, where it's now, it's become a full blown category within the category of I. T. S. That management now, it's kind of a call SAS asset management. A lot of people call it just SAPS management today management. But I'll tell you how it landed there, even though I I debated with the couple of industry pungent that we're trying to give it a label talk about that. I'm sure sure. So in the beginning, like you were trying to figure out how to sell this thing. It was like, as you talked to people, it was an obvious problem, but this like actually maybe it wasn't obvious, right? You talk to people and they're like, no, we had it under control, right? Is that how the early conversations went? It kind of depends who you talk to and, and really also how much they cared about costs. So some people, um, we're just so focused on, hey, we're just trying to go faster with all these tools to just get off my back and let me innovate. Let me build, let me do whatever I'm gonna do quite frankly. A lot of, a lot of marketing VPs that I talked to, they are 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 I need to spend a little bit more money to get a big lift like get off my back about 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 tech stack is as long as I'm delivering on my number, let me do whatever I need to do. Yeah. And so you go to the other...

...side of the business which is more bottom line which is going to be your I. T. Or finance department. And they're typically because they're cross centers you're you're focused on proliferation of a tool, a bunch of tools, some of which need to be rationalized out. Like now all of a sudden you know efficiency matters and it doesn't matter that we have 10 video conferencing tools the company or should we just have one or two? And so there's all these questions that start to come up about the tech stack and we we found different personas would kind of lead us down different rabbit holes. But that was, I mean, just the problem discovery dan was was complicated when you've got multiple stakeholders and you know, and then and then to see that developing our research, you know, kind of let us down. It led us to the conclusion that, well, this is either there's no category for this because no one really cares about it or no one started and created 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 listening to this and you're a marketer, which most of you are. I always think of like the heart of I don't know, you could go either way with this, but the heart of marketing really falls into entrepreneurialism because the heart of what 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 is marketing because you're trying to discover the market, you're trying to get at the heart of what, what are people really bothered by and how can I best serve them? What are they actually willing to spend money on trying to solve for the same problem? That's why usually good entrepreneurs are in essence good marketers and good and probably the best marketers are usually can be good as entrepreneurs To to some degree there is a lot more fastest, you need to be a good entrepreneur of course, but how was it when you were trying to dive in there and like how many different ways that you have framed it to different people? Like you were trying to form this category? What were some of the words you were throwing around to get it to stick in people's minds? Well, I mean if you're doing, if you're doing effective problem discovery, right? I'm trying to figure out what is the problem, You don't go in there with this specific thing that you think is the real problem. So The first question, remember with the first, I think it was 20 people that did some interviews on the question we asked was what is painful or difficult about having lots of staffs products in your business? So again, I'm just talking about your you have a lot of products, what's what's hard I mean really opens, you know, answers more technical people would might bring up Oh yeah, making this integrate with that occasionally. But I started to get after the question, I mean deeper the hypotheses was is it painful for them to renew software? Is it painful for when they're surprised by renewal? How about usage? Are people wasting money? You know, And it turns out, you know, vendor management and renew. Als was not that big of a pain point. But the fact of, you know, big enterprises that have, you know, 10,000 dropbox licenses where half of them haven't been touched in the last six months. That is actually a much bigger pain point that we uncovered. But it came through a really broad set of question about the problem around this market. Yeah. And so from there dan it kind of just again, we started to look up and say, surely someone else is doing this. And the closest thing we could find was was when we typed in because these are software subscriptions, we looked at like subscription management software, you know, and assassin management software. So the two areas we usually would end up in is you know, products that would help you manage the technical underpinnings of delivering a fast product. Right? So a little bit more of devops and how do you keep a service going? And then the other side was actually more for customer customer...

...management teams that would mostly, you know, they're basically looking at their book of business and managing the subscription book from the vendor's perspective. So I said but who's managing the book of all these subscriptions across vendors from the customer side And the closest thing we could find is like a vendor management tool or a contract management tool and that's that's where we, you know dan we were looking at this and we're like, well it's a little bit of vendor, a lot of staff, it's got these other components of I. T. So the more we tried to talk with our key persona which ultimately ended up being you know, I. T. You know, directors and VP s of I. T. At mid market companies um that had a lot of cash products those people were really looking for a tool that was that was the technical kind of repository of all the different products they own. How many interviews did it take for you to kind of figure out who that was? You know, there were initially about 20 to kind of get us going. But quickly beyond that when we started to try to try to actually expand the buckets of presales, We were probably you know 5060 conversations in before we started to like say I think there's something more with these IT leaders. And sometimes the hard thing is when there's not a well defined market or even a well defined problem. Small companies sometimes our buyer was the CFO and the controller because they're trying to control spend and maybe they cared more about it. Um Then the I. T. Manager who might have been an engineer that kind of graduated into leadership and wasn't really that focused on better business management. So so I would say somewhere between about 50 and 100 interviews. And let's be honest those interviews were essentially sales discovery calls. Where were you know early on. We were trying to figure out what your problem can we help you? And that was probably you know our 1st 10 paying customers came from those. You know that handful of conversation. It's interesting how many conversations you have to have in order to really identify it. A nugget that I'm getting out of. This is kind of like, as marketers, why don't we keep meeting with customers, right? Things change markets change. People's fears, worries, priorities change over time. It's like you need to be in front of your customers all the time because that's ultimately what's going to give you the insight as you figure, figure it out. And it's just as true for when you're starting. Probably more critical when you're starting, but it's still true for later on. So, having conversations and hearing you say like, oh no, we were 100 conversations and I'm like, oh my gosh, it's a lot of conversations, but it probably pays off even if now you were doing more interviews later. Do you still meet with customers? You still do? Or is that somebody else's job from where you're at now? No, I mean, so, so fast forward a little bit. Um we'll go back to the middle part of the story, but we're still creating the category. But now I'm actually, I lead the product advisory council for our product suite at service now. So I'm working with um usually kind of some of the biggest customers, all I mean Out of the 20, customers on that, probably half of them are our household brands and names that you would know immediately. So it's impressive that service now has all these existing customers we sell into and we even we'll we'll get them interested and they'll be net new customers because of some of this technology That that we brought in. But there's a much bigger platform play at service now, right that we're selling family of a deal of our service. Yeah, very much so. Yeah, very much so. I think it's 87% or something of our revenue comes from expansion on current accounts, something ridiculous like that. So, but I want to take you back to that challenge dan. We were talking earlier, I think last week there's this challenge we had when it was us and a couple other startups in the space and we 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 everyone differentiating in small little ways to try to say, oh we do more, you know, we have data that's more security focused and someone else saying, well we do data science were more into the financial procurement space and so in our 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 SAS management than just SAS, there's regular soft, there's traditional legacy software, there's other things that I. T. Wants to manage. And so with vendor hawk, we almost actually name the company Chavez hawk, but decided not to because we thought we don't want to pigeonhole ourselves with only staff because there's a lot a lot of other assets of the company that maybe we could get into. So an adviser of ours gave us some tips and said, no, let's just stick with vendor hawk, Watch your vendors like a hawk. And so, um, that did create some problems because because we were more open to talking about 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 and you have to like, no, we're not tracking those things in here. But what it turned out dan, is that some of our competitors were more focused on, you know, SAS optimization and, and fast Discovery and we did those things, but we, we tried to put our corner of the market on fast vendor management to be able to say, hey, nobody else can track the life cycle of the vendor better than we can. And not only, you know, not only bringing them on, but also optimizing and saving money and cutting throughout until you maybe decide you need to retire that. So we, we remember I wrote a blog because some, some folks were, we're talking about this, you know, like, oh, this is, this is our success. Uh, I think they call it a fast optimization platform. So I was like, no. So I pulled up a blog and like this is why we need to call it fast 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 thing that's going to resonate and how do I get, you know, a little bit of chirality behind my brand. And one of the things that we did with this silly T shirt, I'll show you guys here kind of silly, but it's a picture of a sasquatch, the bottom, it says, it said do you have a sasquatch? And so we, we did this whole thing where it's like, hey do you have a Saas squash lurking in your business? And then on the back basically we have all these creative saying related to sacks like you know, get your assassin shape, Are you surrounded by staff holes? That's pretty funny one. So I mean tons of stuff but we were trying to create this this kind of edgy fun brand that people would say, oh man, those vendor hog guys like they have a good time. They realize the irony of the space. And so for us we we tried to make our brand feel a little bit more, you know, relatable. Well yeah, and and now we're talking about like brand marketing as opposed to just, you know, you know, category creation. But it's I mean Categories of the big picture which brand sports especially when you're trying to go after the category. It's interesting to see you and the other two competitors all trying to position for 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 or some other things you do to try to establish you got yourself is like the category King, right? Because usually there's one category one. Yeah. Who else 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 the playbook from my marketing team at pay scale to shout out to those folks who are leading marketing efforts there.

But they had a, you know, they had a compensation best practices report, right? Which is similar to to a lot of the people do like a state of the state of the industry, right? So we had, you know, the state of SAS vendor management, right? So that kind of, it was an annual report and we, you know, it was a bunch of effort to go get a bunch of respondents I think. You know, we had, you know, 50 60 of respondents on the first years report. And we used data from that, you know, sample size and and really just put it into a nice looking, you know, a nice looking report that we're starting to push out there and into the market. The other thing, the unique asset besides just like you know, scott leadership was also um you know, data that we had uniquely that others didn't. And so we had for example, um like the benchmark report that we were starting to introduce to the market which was looking at usage benchmarking right? Like what if you have zoom for example how many licenses zoom get wasted on average, you know, by across our customer base. And so we had done some benchmarking. So if you're thinking about like, you know, a new category, I like to think about what can I uniquely add to the conversation that others can't add as well struggle to talk about. And that was sort of our that was our, you know, I've got to give a big shout out to brian Blackburn who was like critical to getting our marketing. You know, he designed this shirt and he also helped us with that benchmarking report. And he was like an early, you know, marketing higher that we had that really move the needle. And so being able to have that conversation with our customers and with the market to say, look, we know that we know about the state of this market because you've done the research and we also have customer data to back it up. Um what was sort of our first couple punches into the market and shortly after we were making those strides into the market is when um we were acquired and we said, you know what if we're going to go after this, we want to, we want to partner up with a really big company that's already got a brand and now 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 put together the benchmarks report and thinking like, and there was a lot of time and effort back then, I didn't appreciate it for what it was. Now. I have had some taste of B two B marketing then, but obviously being a host 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 how important it can be. Now I'm looking back at the benchmark report of my genius, quite a great way to start it off because it could have been a multi year battle. I mean once you got bought up by service now it became like oak domination right? Because you got plugged into existing infrastructure that made it easy to go and find more business and plug it into a big business. But before then it could have been a multiyear play out and if you would establish the benchmarks early, that would have become clearer and clearer that you would have been able to own the space or easily because you were the one writing the rules by setting the benchmarks of what success looks like exactly. And whoever said by the way, whoever sets up those first benchmarks, the more you get other people that are influential in in, in the general space or adjacent spaces, the more they start to reference that, the more immediately that becomes the thing that people talk about. So the hard part and this is where we were headed was because we need to get a robust set of data and then we need to find people to be able to talk about it in such a way that hey, if you haven't looked at vendor hawks benchmark report for fast, like, you know, you haven't been looking in the right places. And so that was kind of the, that was the strategy early on. But you know, if you're, you know, a marketer and you're thinking about your category, the, you know what the unique insight that you're bringing to your market and then how connected. And then I'm sure you talked a ton about this. How do you amplify that really quickly? Scale it...

...really fast? So, um, I won't even go there because I'm sure everyone listening smarter how to do that. But I am. But I remember you, you were like the sales king of the company. Of course you were the founder, you had your technical co founder and you were doing your Patrick thing, right? You're probably one of the best sales website that I'm friends with as far as like getting in there and don't know, being being persuasive what were some of the marketing things you were doing? Some of the things you were doing to current almost like rita, I guess you've got sales enablement with marketing in order to kind of land your first big customers. Yeah, yeah. So, um, again part of trading the category and the brand, you know, like obviously the, the first, the first call deck, you know, your slides looking uniform. That really helps. But then the leaves behind 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 the funnel, right? You gotta Brandon you get awareness. Um, you're going to get past that awareness level to the kind of consideration stage. Like I never really thought I could use this software into more of the evaluation like I'm comparing and then they get sounded like purchase. Am I going to go with this one of the competitor if there is a competitor? So if you think about that, you know that funnel getting smaller, the content just getting more targeted is what we're focusing on. So we had a couple of assets at the high level, what is this? But then we started to make more assets at recount further into the funnel where the decisions we're getting more technical, it doesn't really sound like a sexy thing to create. But one of the things 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 where where a lot of startups didn't have their stuff together when it came to data security. But our CTO was like, we keep getting asked about the security of our app and how it integrates and he just like wrote out this amazing document looked very well organized. We had some graphs in there and by the time 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, if it's a technical sale. Yeah. Our engineer on the bottom of the funnel content, they're asking questions like that. You have to be prepared to give them answers and the answers are in the content. Yeah. And then the next step right after that is when you figure out how to close customers is probably one of the next most imminent questions, which is okay. Great. I bought this thing, I'm turning it on. How do I use it effectively? And this is the first onboarding implementation guide what the recommended steps on how to get going and that that's a whole another like, you know, 10 podcasts and through on that topic of customer success. But just getting your reps talking in such a way that they're relevant and they're hitting those objections. If you're not on the phone with some of the customers or you're hearing the feedback from the sales reps on the front line, then you got to just jump on some of those calls and say, hey, I want to make sure you have enough of everything that you need to close. And that's been the gap analysis. You know, just say, what if you had one other thing to make the biggest difference in hitting your number? What what would that one asset B I like asked that question and you'll probably uncover a few different answers and and the trends will lead you towards a pretty potent asset. So my last question for you is how are you managing all this when you were just a small team? Did you have a marketer early on or were you kind of the one leading the charge with all the marketing as the Ceo and kind of like the head of sales? Mm Yeah. So early on again I came from a sales and inside sales background. I was selling, you know, and good size deals inside and so...

...being ceo of a startup, obviously I'm over the pipeline and I'm trying to close deals. But I was also that the new thing for me was how do I put opportunities and deals from the top of the funnel? Aside from just, you know, here's a giant list of qualified, you know, people go cold column. Right? So I actually had some help. The two flavors have helped that. I had one was a consultant who was really good at demand gen. It was helping me run in a couple different programs to do more paid marketing. And we even did, we even did a mailer actually mailed some milk and stuff out. And uh, and then the other thing that I had was really helpful was again, are the marketing manager brand I mentioned he he could design which was great, but he could also write and that combination of, you know, the creative side and also the communication side of being strong that let me have something where I just need to kind of mock up the rough idea and he could pretty much execute it, you know, you know, almost to the t, you know, with minimal adjustment, right? So I I basically had those, those two people helping the strategically thinking about legion, but also tactically making it look beautiful and and actually sound like that's and you were kind of operating in the market are thinking about the category, thinking about the content where it needs to fit into the funnel practically because you were talking customers, you're running into the issues yourself, you're like, oh, we should have some content here. People keep asking about it. It's kind of obvious now, right? Yeah. Yeah. And again, 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, listen to recordings, listen to what listen to recordings of how the calls go and what what people say and where they get hung up. Um, and then the hope that those anecdotes will start to, you know, draw a correlation to what, you know, the things that are needed to help move the sail along mid cycle. So good product marketing can be a grease in the wheels of sales if you know how to listen. And uh, it's always, it's always a hard skill patrick. This has been an insightful called love. Learning about how the creative, how that category creation happens when it's early on before. It's clear that the category is formed. I've learned a ton. Where can people go to learn more from you if they have follow up questions. Yeah. Yeah. I've got a couple of different blogs that might be interesting at Patrick rounds dot com. You can just go check it out. I'm sure it will link it in the show notes for something. But I'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 up and 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 baby growth. Yeah, Are you on linkedin? That's a stupid question. Of course, you're on linkedin here. Sweet fish. We've gone all in on the 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 a slide deck and sometimes it's just a regular old status update that shares their unique point of view on B two B marketing leadership or their job function. We're posting this content through their personal profile, not our company page and it would warm my heart and soul if you connected with each of our evangelists, we'll be adding more down the road. But for now you should connect with Bill Reed, R C 00 Kelsey Montgomery, our creative director dan Sanchez, our director of audience growth Logan, Lyles, our director of partnerships and me, James Carberry. We're having a whole lot of fun on linkedin pretty much every single day and we love for you to be a part of it.

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