B2B 54 | Category Design

B2B 54 | Category Design

 

If you want to specialize your business, this space will provide you with that path. Today’s guest is John Rougeux, an executive member at Pavilion and a partner at Category Design Advisors. From the failures to their success story, John brings us into the domain of category design and what they do in the market to help others become a dominant player. He also explains why CD matters and why its go-to market relies on word of mouth and referrals. Get to see how category design evolves in their space when you tune in to this episode. Don’t miss it!

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A Marketing Leader’s Journey In Category Design With John Rougeux

In this episode, I have another great guest and a conversation that’s coming up. I have with me John Rougeux who is the Partner at Category Design Advisors. Welcome to the show, John.

Thanks for having me, Vijay.

This is a go-to-market show and this is what it is all about so let’s start with that topic. How do you view and define the go-to-market?

I’ve always used a pretty simple definition. It’s the set of activities that you’re doing to get customers aware and excited about what you’re doing and turn that excitement into revenue.

That’s already a straightforward definition and view. I’m looking at your LinkedIn. You have been a marketing practitioner. You led and built marketing teams. In your capacity, you are working with various companies of all sizes. How do your clients perceive the go-to-market?

For some context, the types of clients that we work with tend to be ambitious startups. They’re companies that are either defining a new space for building a new category of themselves or participating in an emerging category where there’s no clear leader yet. They’re trying to improve their odds of dominating that space and being the go-to solution.

With that context in mind, a lot of what our customers have to do is educate the market on what they are doing, what problem they’re solving, why that problem needs to be solved, and what happens if it’s not solved. Use that as a wedge to then talk about their solution, why that matters, and why it’s categorically different from other things that buyers might have encountered already. It’s much different from a straight comparison type of situation where you stack up a bunch of features next to each other, specifications, or even pricing models. We’re talking about going deeper than that and talking about fundamental differences.

That’s one of the reasons why I’m super excited about this conversation. More often than not, especially when we talk about the go-to-market, the guests that I’ve had so far are like, “The founders are the go-to-market practitioners.” It’s typically around the go-to-market execution engine versus where you and I will be taking this conversation. We’re out to lean on you for your expertise and perspective is how to think about a category and how these go-to-market themes and go-to-market leaders can start thinking about category creation and enhancing their position in the category.

One of the myths that we try to bust is category design always means creating a brand-new category and being the first company to do that. Categories have a life cycle. They evolve. We’ve leaned on a lot of work by an author called Paul Geroski, who wrote a book happily titled The Evolution of New Markets, where he goes in-depth about this idea of categories evolving.

B2B 54 | Category Design
The Evolution of New Markets

I want to explain that and that’ll provide a good lens for thinking about how companies should compete in a category and what their category strategy should be. The research that Paul Geroski did follows as such. Before the category exists, what you have is an unsolved problem that exists in the world. Problems have to be experienced by people for them to be a real thing. You’ve got a group of people who are dealing with some problems and there’s no good solution for that.

Sometimes, this situation persists indefinitely. There’s a solution to these problems where we’ll never have a solution. That doesn’t constitute a category. It’s just a market opportunity if you like. What typically happens, though, is something will change. Maybe a new technology comes about or the problem gets worse enough to where people identify that it’s worth solving. Someone has an insight. They say, “I can build a solution that addresses this issue.” That’s when a startup is born or maybe a new venture within an existing company.

If that inside is valid, then you’ll typically see other companies latch onto that idea. They’ll come up with their attempt to develop a solution for that problem and group of people. In the early days, those solutions may look very different. One company solution might be viable and another company solution might not but they’re trying to experiment and get to a place where they’ve landed on the right solution for that issue.

As that process progresses, typically, what happens, as Geroski taught us, is one company has convinced the market that its design is the best suited for that problem. It’s what he calls the dominant design. When that happens, two interesting things happen next. One is that when customers see that there’s a go-to solution for this thing. They feel a lot more comfortable buying. You start to move from early adopters to more mainstream audiences because people don’t want to risk buying something that’s going to be obsolete, incompatible, or doesn’t work right. When they see that there’s a standardized solution, those barriers come down and the purchase becomes a lot less risky.

When that happens, the company that’s established that dominant design tends to dominate that space. The other players in that market have to either come along with that or exit the category. When that dominant player comes into play, the market cap of the category grows and the number of competitors decreases. I’m trying to condense a couple of hundred pages of that idea into a few minutes. We would like to understand where your category is in its evolution. It’s important for you to figure out what kind of strategy you need to set for yourself.

The company that has established that dominant design dominates that space and the other players in that market. Click To Tweet

Thank you for setting the context and the thought process behind the whole concept of category in the first place. Before we dive deeper into this topic, let’s unwind a bit over here. For me, it’s all about understanding why did you decide to go into this space. What motivated you? In that context, if you can share your career story? What led you to what you’re doing?

The quickest way I can describe it is if you’re a marketer and you’re trying to bring a radically new idea to life using the traditional playbook of capturing market share, your life is hard. That was the journey that I experienced. I spent some time at some early-stage startups early in my career. I was a cofounder of one of them. We were solving problems that didn’t exist before and had some different ideas about how to solve them.

We had some initial traction but everything I’d been taught to that point was how you compete against competitors and differentiate yourself but it’s always in the context of other companies. I started to explore other ways of going about marketing. That led me to business strategy and then discover category design as the framework for bringing new things out to the market.

You did leave an equally exciting part of your journey, which is your backpacker way back. What is that like?

My wife and I decided to hike the entire Appalachian Trail together. We had our first anniversary while we were backpacking. It was that early on. It’s about six months of backpacking solid. It was a lot of fun. It’s much more of a mental challenge than a physical one.

You didn’t go into the tech industry right away but eventually, after a couple of roles, you did move and take the industry and marketing function. You were a CMO. You were a host on the B2B Growth Show. I was not aware of this. I’m an avid listener. That’s fantastic. You went into a marketing leadership role and also were building a marketing strategy at BombBomb, which is similar to video marketing or video sales tools. It falls somewhere in that category.

The broad space is like video messaging. You put a label on it.

Here you are at Category Design Advisors. You did share that journey. What prompted you to make that radical shift? You did touch upon that. In a nutshell, you did mention what you’re doing and how we were taught what you need to do as a marketing leader. It was not paying off or did not die in the right way. Expand on that. That’s a very critical insight that we should dive into.

To go into that a little bit deeper, I didn’t find any good framework for taking something that people aren’t familiar with at all and don’t have any context for. We’re talking to them about that in a way that matters to them and shows why this new business needs to exist. A lot of what I was learning at the time was very tactical, like how to get more traffic to your blog, how you optimize an ad campaign or conversion rate on a landing page, or what the best practices for marketing automation are, tactics that are good but can only move the needle so far if you don’t have the fundamentals correct.

In one of the businesses that I worked for, we were developing a way for local businesses to generate word of mouth on social media. This is in the early 2010s when social media was in a different state than it is in the present. Looking back, I realized that a lot of our customers came through word of mouth and opportunities where we could be on the stage or a show and share the narrative and the story behind what we were trying to do.

One of my cofounders built a product for himself. He was addressing an issue that he faced. Other businesses latched on to that because they were going through a similar situation. When we removed that ability to tell that story and convey that narrative, it was very difficult for us to drive business. That puts a cap on our growth because all those tactics I describe like the conversion rate, optimization, this and that, and the other, don’t address the real issue. I was curious. I said, “How did people go about building businesses before digital marketing?” You couldn’t use paid social and things like that.

When we remove our ability to tell that story and convey that narrative, it's difficult for us to drive business and it puts a cap on our growth. Click To Tweet

One of the books I encountered in the process was The 22 Immutable Laws of Marketing by Jack Trout and Positioning by the same authors. Law number one is to be first in the category. Number two is if you can’t be first, set up a new category that you can be first in. That idea was foreign to me. I was talking to a friend of mine, James Carbary. He runs Sweet Fish Media, the company that runs B2B Growth. He said, “If you like that idea, you should check out this book. It’s called Play Bigger.”

B2B 54 | Category Design
The 22 Immutable Laws of Marketing: Violate Them at Your Own Risk!

This is about 2017 or so. The book was only about a year old at that point. When I read that book, I immediately knew that if I had this framework a few years ago, it would have dramatically changed our trajectory and our ability to grow the business. From there, I started to apply this thinking within the companies where I was working. I did some things that worked. I learned some things that didn’t work and made some mistakes because this was a very new discipline at the time.

What I realized though was I enjoyed the discipline. I started doing some consulting on the side and helping some early-stage founders through the process and found that I was adding some value and wanted to work towards doing this work full-time. I developed a relationship with Christopher Lochhead. He’s been a great mentor of mine. I ended up getting to know my partners at CDA and we started working together full-time.

Play Bigger is one of those books especially for founders and go-to-market leaders who are thinking about building big markets and number one position in the industry. Play Bigger is a must-read for those people. You read the book. Essentially, you connected with that mindset and the principles that are stated in that book. You were a mentor and in touch with Christopher Lochhead, who is one of the co-authors.

When I started the B2B Growth Show, it was my friend James. He challenged me. He said, “John, I know you know very little about category design. Go start a series on my show about it.” He was the first person to interview Christopher Lochhead.

What is the hook? How did you manage to get Christopher on the show?

I asked him just like you asked me.

Let’s get deeper into what is CDA. What do you folks do? What is your go-to-market?

Our go-to-market is pretty reliant on word of mouth and referrals. Frankly, it’s different than probably how our customers operate but we’re pretty selective on the number of clients that we work with in a given year. We’ve done closing on 45 engagements with companies over the years. We’ll do 6 or 8 a year around networks and the content we’re producing. Kevin, the co-author of Play Bigger, brings a lot of credibility and interest to what we’re doing. It’s not super complicated. Build relationships with good people, produce content that adds value to people, and the rest pretty much follow suit.

I’m on the website. I was looking at projects and engagements that you do with these companies. It’s very impressive. You folks work from early-stage startups to pre-IPO and even companies that are public enterprises. As a startup, it’s a big panda. That’s one of the case studies that you have in there. Your pre-IPO is Sprinklr, and then companies that are big and large like LinkedIn. It’s a very impressive roster. For each of those stages, what is the need? What is driving them to engage you folks in their go-to-market?

I mentioned the word ambitious and that’s a good word to capture how our clients are acting. If you think about athletes in the Olympics and they’re 4th or 5th in the world, their goal is to be that gold medalist. They will invest every resource they have to make that happen. That’s how our clients are thinking there. They have their ambitions set on not just bringing something new to life and establishing a new space but dominating that space and emerging as the equivalent of the Salesforce as that space matures. That’s why they’re bringing us in to help them realize that goal and improve the odds of being that dominant player.

When you talk about category design and when I start reading more into the concepts on Play Bigger, the first story that all of us, including the readers can relate to is, what Marc Benioff did with Salesforce. That was a huge eye-opener. For the benefit of those readers who are not aware of the story, which should be the minority of this, Marc Benioff came out from Oracle and Sable in the CRM space. He realized, “All of those were perpetual licenses versus why should anyone even own a license. Kill the software concept and have software releases and improvements daily word. You don’t have to worry about the maintenance of the software as such.

We take it for granted that that’s the normal way of doing things. At the time, I remember the Wall Street analysts didn’t even know how to value their revenue because it was all this recurring revenue model, which was foreign to them.

He’s shifted how all the software companies have to think about and go-to-market with this new concept and business model. That’s a classic example. For the readers who are not aware of category design, connect with the story of what Marc Benioff did with Salesforce. That’s the entry point. Thank you for sharing that context.

It was super helpful to why category matters and coming back to the keyword that you mentioned, how the ambitious founders and go-to-market leaders should think about and why they should pursue category design or category creation. With that as a context, it’ll be helpful if you can share with our readers a go-to-market success story and failure story around the category.

The way that I’ll describe it won’t be around the go-to-market mechanics and the things that a CRO or a CMO might cover. The way we look at it is if you get your fundamentals around your category straight as you write, then whatever go-to-market engine you build has a much greater chance of being successful. Whereas if you have some misses on your category strategy, then you might have the most finely tuned GTM engine in the world but it’s not going to get you where you need to go.

Why don’t I start with a failure first because that makes success a little easier to describe? One of the things that we try to look at when we help a client develop their category strategy is focusing on the problem that they’re solving and making sure that it’s a valid problem, the problem causes enough pain, and enough people are experiencing it. In other words, it needs to be a problem worth solving.

That sounds obvious. Why would you build a company around a problem that you hadn’t validated? This happens all the time. I’ll share a pretty high-profile example. There was a company called Quibi. They made a valid observation initially. It was that people were consuming more media on their phones while they were on the go. That’s a valid insight. They took that idea and built a whole company around this notion, like a mobile-first video platform.

In case you’re not familiar with them, the idea was that they would create original content. The content would be very suited to this on-the-go-on-my-phone type of behavior. Episodes were about ten minutes long. They had this interesting technology where you could rotate the phone and the video would look good in portrait or landscape mode.

They have some smart people. Jeffrey Katzenberg and Meg Whitman were two of their big investors or board members. They raised $3,750,000,000. They had a huge marketing campaign. Retrospect is so easy to see but the miss was that there was already a pretty good solution to the problem identified and it’s called TikTok and YouTube. They weren’t providing enough of an incremental benefit to be worth paying a whole other subscription to. On top of that, I’ve heard their content was pretty bad so that didn’t help but even if their content was decent, they would have run into all the same issues.

The company folded within a year and a half of being launched. This is a great example of a company not understanding that this category of mobile or first video platforms was already pretty well established. There were already some pretty good options there. They’re trying to come in, redefine that, and dominate in a way that didn’t provide orders of magnitude of benefits. It’s a losing proposition. No amount of money, advertising, or marketing could save them.

That’s a failure. I can share a success. It’s one I didn’t work on myself. I don’t want to take credit for it but my partners Dampen and Kevin did. They work with a company called Sprinklr. For some background, Sprinklr broadly plays in the customer experience space. There are already some established players there. Call tricks are one. The way they are perceived in the market was they were another me-too customer experience tool, of which there were dozens.

At the same time, their CEO knew that they had something different and they were building something special but the market couldn’t see that. We have a term for that. We call it Category Jail. It’s when the market misses mentally and miscategorizes what you do. What they did was use the category design process to build a narrative that captured what they were doing as categorically different and set the stage for them to build on a different trajectory going forward.

They call it unified Customer Experience Management or unified CXM. It was more than just a label, though. It was a way to identify all the problems that happen when you use a hodgepodge of point solutions and try to cobble them together. There are all sorts of gaps that still happen in the customer experience when you do that. That was an aspect of the problem they honed in on.

They went through that exercise right before their IPO. When they did that, it changed the way that investors perceived them. It went from a me-too solution to, “This is something different.” They not only have a different take on what they’re doing but the opportunity is much greater because this isn’t just another set of point tools. Their IPO is successful.

They’re a multibillion-dollar company. Making that IPO successful for them was key. That’s an example of the end stage. That same process still unfolds whether you’re at series C or even if you’re very early on. If investors don’t see why you matter, they miscategorize what you’re doing. They’re either not going to invest or undervalue you, and you want to get the valuation you deserve.

That’s a great story, for sure, especially the term. Customer experience management is so overly used. A lot of the CRM companies are positioning themselves as CXMs. The cool story about Sprinklr positions itself as CXM but it looks like a niche within a unified CXM. That’s what sets them apart. Once the market and the investors see the story and see them as a player in a much bigger or different category than the existing players, the valuation will go up, and that will show up in their stock price.

The takeaway is that when you do category design well, you are controlling the narrative. You’re not using a narrative set by somebody else or building your narrative around points of comparison to other tools.

Two questions that come to my mind from that success story. At what point in time is it right for the founders and the leadership team to think about category creation and category design?

The answer is day zero. What the process looks like for a very early-stage company, a couple of guys in a credit card versus pre-IPO, is different. We did an interview with Craig Rosenberg on Scale Venture Partners on our show. This is one of the things we were talking about. When you’re in the formation stages of the company, picking a problem that no one else has addressed or a radically different approach to a problem that is far different from the status quo is very powerful in terms of creating a business that can do something meaningful and can get people excited about them.

When I say the process looks different, there’s a lot more conviction you have toward the tail end around what that solution looks like and what partnerships and the whole ecosystem might look like. You’re putting those thoughts into stone at that point and pushing hard into the market about specific language you’ve built and specific aspects of what this category needs to look like.

When you’re early on, you have some hypotheses around this problem. You’re trying to validate your ideas as quickly as possible. You might have a good handle on the problem. Your solution might be wrong and you’ve got to iterate on that. You’re more like writing in pencil but still going through the process and thinking about the problem first and the solution second is something every early-stage company should be doing in my mind.

It’s easier said than done. In the early days, the founders and investors were all like, “How quickly can we get from problem validation to product market fit?” The path that they take to get to that point may not necessarily be thinking about category creation or educating a market about a new category or product that they should invest in and buy at this point.

If you do it right and you can show people that there’s a problem that hasn’t been sold, that’s a very powerful way to gain traction. The other path you have to take is you’re competing in a space that’s already established. You’re trying to come up with a better, cheaper, or faster solution or maybe have a niche that you can serve better than someone else. I’m not saying you can’t do that but that’s not an easy path either.

If you do what you're doing right and show people there's a problem that hasn't been sold, that's a powerful way to gain traction. Click To Tweet

The second question that came to my mind when you were sharing the GTM success story is slightly controversial but interesting. I’m sure it must have been debated a whole lot. There were mobile phones even before Apple came out with their iPhones. It was an established market and category. What did they do? Everyone knows what they did. They didn’t have to create a new category but they’re leaders by a far distance in the smartphone category.

Do you remember when we were talking about the evolution of categories and had played over time? At that point in time, the dominant design was the Blackberry. The Blackberry was more geared toward business users. It wasn’t something that your grandma would buy. There was still this unmet need of people wanting to browse the internet and people wanting to listen to music on their mobile devices to make phone calls and texts on a single device. The Blackberry wasn’t suited for that for the market at large. It was a good dominant design for that niche business user space but it didn’t address what the broader world needed.

B2B 54 | Category Design
Category Design: The Blackberry wasn’t suited for the market at large. It was a good dominant design for that niche business user space.

 

Apple was a genius at understanding the problems that people had with the way Blackberry worked and traditional mobile phones or things they couldn’t do. They use that to inform what this new design or this new take on a smartphone should look like. As you know, that is established as the dominant design. Even if you have an Android phone, it still has a similar industrial design. It still has an app store, which is a key component of that dominant design. It still works and feels the same way as an iPhone.

The main takeaway is the point that you mentioned early on, which is the category evolution. Apple was the first player in that category evolution like step zero. They created a whole new bump in the category. It’s just not the business users of the Blackberry users. Now, it’s a much larger market. They’ve expanded the market a whole lot and they are one leader.

They didn’t create this smartphone category but they designed it in their favor and expanded what that category represented into something much larger.

I appreciate the insights and the thought process around category design, category creation, and category evolution. Switching gears, coming back to more of the story behind John. What are 1 or 2 skills you are known for in the industry of the market? When someone thinks, “I’m struggling with design. I need somebody to talk about this so I should reach out to John,” what are those 1 or 2 topics that people reach out to you for?

As category designers, what we tend to be good at is critical thinking and assessing things more objectively. I’ve run into this challenge myself. It’s very easy to lose sight of the forest for the trees when you’re in a startup or even any company. When you’re so close to it, you can’t see things objectively. Our ability to look at things dispassionately and assess what needs to happen from a business perspective is something that we find tuned pretty well over time.

It's easy to lose sight of the forest for the trees when you're in a startup. Click To Tweet

Instead of talking about me, let me talk about one of my partners, Kevin Maney. He’s arguably one of the best people in the world at articulating difficult-to-explain technology in a way that everybody can understand. Jeff Bezos used to even call on Kevin to help him unpack some ideas he was thinking about. I’m lucky to work with someone like him.

It’s not very often that many people get a chance to work with such industry thought leaders or category creators in this case. I’m sure you must be excited and grateful to be working with Kevin and others at CDA.

It’s a good group. There’s a lot of fun.

The other question that keeps coming up is, what are the resources or the exciting topics that you research or lean on? You mentioned the fact that you host a podcast. You must be listening to other podcasts and reading books, I’m sure. What are the other resources that you lean on or people you lean on?

I read a lot of things that are not pure marketing or pure business books because I like to get inspiration from unexpected places. One of the books that I’ve read a couple of times is called The 33 Strategies of War by Robert Greene. It’s pretty dense. It’s not like a bedtime story or anything. He uses a lot of historical examples to talk about how different countries or militaries have engaged with each other. Many times, he explores the dynamics of different competitions, which is useful when you think about businesses and how they interact. That’s one.

We have a community that we started called Category Thinkers. It’s about 600 folks in there who are all thinking about or working on category design in one capacity or another. That’s a great place for us to fuel our thinking as a group. I’d like to share what I’ve learned. I learned things from other people from other corners who are thought of as something I haven’t discovered. That group dynamic and community have been valuable too.

I recall you saying about that community. I did join. If I did not, I’d be part of that. It’s cool to understand. More than coolness but it’s about how other people are thinking about category when it comes to that go-to-market. That’s my perspective and what I’m curious about. We’re going to be part of that. Shout-out to that group. For the readers, join that group.

If you’re not there, let me know when you join. I’ll make sure I say hello to you when you pop in.

The final question I have for you, John, is if you were to turn back the clock, what advice would you give to your younger self on day one of your go-to-market journey?

Look for input from others more readily. One of the mistakes I made was thinking I knew more than I did and not knowing what I didn’t know. You can only discover that by getting perspective and feedback from other people. I would have been even more proactive about reaching out and finding people who were ahead of me or came from different disciplines who could share a perspective that I didn’t have.

B2B 54 | Category Design
Category Design: Reach out and find people ahead of you or from different disciplines who could share a perspective you don’t have.

 

Thanks for sharing that. That’s something that I grew up with as well, almost on a daily basis. More often than not, we think that we know and we have to be sure. We are confident. We believe that this is what it is, what my stands are, and what I will be doing. I wish I started earlier in building that personal board of advisors and having them as a sounding board or even giving them the comfort and the luxury of saying, “Vijay, you’re wrong. You’re going to screw up on this.” Creating that space is important. Thank you so much for a wonderful conversation, John. Good luck to you and the team at CDA. We’ll be rooting for your successes.

Thanks for having me, Vijay. It was a real pleasure.

 

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Many marketing leaders and entrepreneurs stumble into the space by sheer discovery. For Reid Genauer, that is from starting a rock band all by himself, which eventually led him to learn the vocabulary and skills to go and transition into the marketing world. In this episode, he joins host, Vijay Damojipurapu, to share with us that colorful and bright career journey and the lessons it taught him that shaped his thinking as a marketing leader. Notably, he dives deep into the go-to-market that companies need to utilize. Reid also answers some key questions that are often faced by many leaders in the industry. How do you manage that debate between product finance and marketing? What are your goals for the next six to twelve months, especially with the COVID-19 pandemic going on? All of this and more in this insightful conversation.

Listen to the podcast here

 

The Go-To-Market: From Rock Bands To Marketing With Reid Genauer 

I’m super thrilled and excited to have Reid Genauer on the show. As a way of introduction, Reid has a very colorful and bright career that started off in a rock band or music band all by himself, and then transitioned into the marketing world. Reid, welcome.

Thank you. It’s great to be here. My friends and family would describe me as colorful as well.

You have a very distinct bio in the sense that you didn’t start off in the marketing career. You started off doing your own music and rock band, but something triggered you to get into marketing. Can you share your thoughts on what led you to this journey?

As a teenager, I had a passion for music. There was no question in my mind that’s what I was going to do. I was going to go out and play in a rock band. I started writing songs in the seventh grade. My future is like this question mark. If that canvas was painted black waiting for the color, it was like a point of light that I headed towards. There is a whole side story about my musical life that’s interesting in achieving and chasing that certainty. I was supporting myself and then at the age of 22, 24, there was ten of us full-time doing this as bottoms up, DYI, which is the norm these days. This was in late ‘90s. We were a little ahead of the curve. I wouldn’t have called it this then, but looking back we needed strategy, positioning, infrastructure and go-to market.

What was fascinating is we bootstrapped it and learned these things as we went. After nearly ten years of doing that, I went to business school. I was like, “That was called strategy, positioning, product-market fit, go-to market in the forms of direct mail, newsletters and such promotion, etc.” We recorded our own records, produced them, distributed them ourselves. We were vertically integrated. It was a very painful transition for me personally, but in regards to my personal and professional growth, it was transformative in that I had all this raw material and all this real-life experience. All of a sudden, I had the context, the vocabulary and the skillset to not only describe it but replicate it in another setting.

I don’t think of myself as a marketer. I think of myself as an entrepreneur. That go-to market happens to be the piece of the puzzle that I was trying to impart. I have to be honest coming from this life as a songwriter and an entrepreneur. At the time, I did brand marketing, private equity/finance or consulting. Part of the reason I don’t want to be in a band anymore is I played in 48 out of 50 states. I’ve been in transit for the last several years.

For the benefit of the audience, are you talking about your time at Cornell Johnson School while you’re doing your MBA and you’re trying to figure out what next?

Yeah. I was evaluating the three main rounds. Consulting for me was a deal killer that you had to be gone all the time. I wish I knew more about venture capitalism and private equity. What it comes down to was my dad was a commercial banker. He wore a gray suit every day. I was like, “No, check that one off.” I felt closest to the creative process. There’s the behavioral science part of marketing, which is interesting. It’s like being an anthropologist. That was how I landed on that channel. Ultimately, I wanted to get to where I am, be part of a leadership team, and guiding the direction of an organization.

This is something that I’ve seen especially with the various product or even marketing leaders and even entrepreneurs. It’s all about the opportunity or what they need to do to get to the next stage. In your case, when you are trying to build up the rock band and trying to increase awareness, bring the audience, create publicity and get to the channel or the customer segment, you need to figure out all the various pieces, which you refer to as the positioning, the messaging, the marketing strategy, the various channels and so on. I see a single thread running across even with the various entrepreneurs, which is “I’ve got this cool product, but is this product serving the customer segment?” Even if I step back, who is the customer segment? What is the pain point? It’s a constant circle of questions, insights and hypothesis, which leads you to a natural good market state of thinking.

I have two responses to that. One is that tends to be the way that I approach assessing a company, whether or not I want to be a part of it or if I want to create it. Where I extend my energy and where I need to focus as part of the executive team is to look at what the critical path is like, what’s the blocker here? That’s an interesting way because many times throughout a company’s growth, you hit a roadblock. It’s understanding what that roadblock is and what the “medicine” is for that particular pain point. It might be across any one of those. It’s not always in historic marketing definition.

That’s why I like to use the term go-to market because it could be somewhere else in the company’s DNA. What you said is important to focus on. I came to these two roles ago at Magisto, which is an automated video editor. It’s the notion of product-market fit. Part of what drew me to marketing is the behavioral science part, the anthropological part. It’s not a criticism. It’s an observation even of myself. I think there’s an abundance of technology in Silicon Valley and technologists. There’s an abundance of good ideas. There simply is not enough focus on product-market fit and on what that means, that it’s not a destination, it’s a journey.

An overt example of that is oftentimes companies are going, “Why aren’t we growing?” In effect, they’ve met the edge of their addressable market and they have to expand. You have to go through a very aggressive product-market fit cycle. There are other more nuanced ways. I spent a lot of time in video. If you look at all the video applications out there, many of them deliver the same basic gain or solve the same basic problem, which is I need to create a go-to market video. Little things like how you described the benefits, the UI and getting at those features can make all the difference. That’s a nuanced part of product-market fit. It’s like, “Do I have to become a video editor or is it very intuitive on how to kick something out that’s high quality?” If you listen to the customer in almost anything you do and it’s just not enough. Tony Hsieh is like the Dalai Lama of customer-centric go-to market. I aspire to be as one with it as he is. That’s what it comes down to.

It’s all about listening and empathy.

Related to that, the other observation I have is that in the absence of valuing that, holding that as sacred, because everyone says it’s one thing to say it. It’s a spectrum, but it’s another thing to do it as a core competency, as an organization. If you don’t, what you tend to wind up doing is burning valuable cycles on product iteration that may or may not be going down the right path. There’s a bunch of reasons that it happens. It’s somebody’s personal pet project. You’re looking at what competitors do. Sometimes it’s not an apples to apples fit. You do it because they did it, but for your business, it’s not right. I’ve been guilty of this before, sometimes by my own motive and sometimes because there’s pressure to do it. Driving more traffic to a product that doesn’t have fit is like putting a band that stinks in front of a huge audience. It doesn’t matter how big the audience is if the music isn’t any good. It’s a lot of that where it’s like more traffic, better traffic. If the drummer can’t keep it timed, you can put a bigger audience as you want and the lead singer is up, it’s not going to work.

Notionally and in principle, leaders across the company, the C-Suite or even one level below get that. You hit upon a very important point, which is due to the various pressures either from the top leadership or from the board or from the investors, there’s this pressure of, “We don’t care, you need to deliver results.” There’s the irony and circular dependency of in order for you to deliver the results, you need to understand the market. It’s like, “It doesn’t matter. Keep pumping money and deliver the results or drive traffic.” At what point in time would you step up as a leader? I’ve seen that personally. I’ve struggled at various times. I’ve seen others struggle as well.

That’s a complex question because the other reality, it’s easy to sit and pontificate about this stuff generally. It’s harder when you’re in the tag of war. We all make the same mistakes over and over. It’s like a trip around the sun. You learn something each time. For me, either if it’s in a new role or if I’m at a company that you can feel and seeing the numbers is plateauing, that’s often when the realization hits me and I need to take a step back and look at the bigger problem or the bigger opportunity, and why we’re not capturing. We go through an audit almost of how we’re structured, what we’re offering, and what the market trends are.

There are three stools, the company itself, your current, future and past customers in some cases, and the market itself. You should be doing it in a very awake fashion all the time. You get sucked into execution and it’s unavoidable because as a startup, you have to live to fight another day. It’s the George Washington thing. Sometimes you have to compromise on doing things that are short-term and inherently flawed to keep the patient healthy enough to get to the emergency rooms.

As a startup, you have to live to fight another day. Click To Tweet

Looking back at your journey, after the MBA, you started in brand marketing at Snapple, and then you grew in the ranks. You moved a bit into the consumer and the B2B space. What would you say are the real inflection points or how did that journey shape your thinking as a marketing leader?

Once I made the decision to stop doing music full-time, I was doing a product-market fit evaluation on myself. I realized that part of it was rational and part of it was gut that I wanted to be at the intersection of technology and media. I wanted to be an entrepreneur because all of those things have creative components. I tended to work at companies that deal with mass creativity, eMusic which is independent music, Fox Mobile where I launched over the top television, and Magisto which is social singing.

B2B 2 | Go-To-Market
Go-To-Market: Many times throughout a company’s growth, you hit a roadblock. It’s understanding what that roadblock is and what the “medicine” is for that particular pain point.

 

There’s been the literal creative and then there’s the broader definition of creative. Auto mechanics and accountants can be creative in how they approach their jobs. Company building and entrepreneurship is a creative exercise metaphorically and literally. You’re building a company. It’s like building a tree fort. I always loved doing it, but what do you do once the tree fort is built? You sit in it for a day and then you go and build the next one. Larger companies for me were never attractive. It’s equivalent to sitting in the tree fort or making slight improvements to it.

I knew this is where I wanted to be. The tech industry has changed so much since I went to business school in 2000. There was no Google. There was no on-campus recruiting. I had a job offer from Unilever. I chose Snapple over Unilever because it was less traditional and a better fit for me. I looked at it as part of almost like finishing school for my MBA. It’s what you do and I’m glad I did. First of all, even though I took data-driven marketing and entrepreneurship at school, it’s focused on brand management. I went and put the skills that I learned to use.

I acquired other ones. I took that into the tech world. It’s been an interesting journey. The first company I went to work for was eMusic. I knew them because I had been distributed by them when digital music first hit. I forget what the other one was. It’s like Audio Lunchbox or something. There were two of them. I was like, “This is an interesting company. This space is going to grow.” When I went there, digital music was like 6% of the market. I don’t know what the stat was then, but it’s the bulk of them. It was fascinating. What was very clear early on were two things. One was, there was no role for me long-term and no career path without doing data-driven marketing, growth marketing.

That’s where I got my ninja skills for that component of go-to market. I’d say there were three big takeaways. Two is that those companies need strategy positioning and branding like any other company. At the time, they didn’t realize it. Interestingly, they are leading the way in terms of how you deliver that to the consumer because of the digital disruption. When I started working at eMusic, the word brand was almost a four-letter word. I was like, “Don’t even utter it in my presence.” It’s because people didn’t understand what it was.

You turn around and X-teen years later, they’re the ones that are defining it. A lot of consumer-packaged goods and physical products are looking to digitally native companies to understand how to articulate a brand, and how to position a company in a digital world. It’s a different exercise. The last thing I was going to say is that the power dynamic is very different. As a brand manager, you are a GM more or less. You’re a little king in a way. If you could have seen me two years, I’m not sure you would have given me this responsibility.

First of all, the technology, not that they’re holding anybody ransom, it’s just the nature of these businesses. The technologists are the power center. If the band can’t play, then there’s only so much the marketer can do. They tend to have more of the resources depending on the business. If you have a product that has any technological sophistication, you’re going to have more of the employees there. The ways that the functional departments interact is distinctly different than traditional companies. It’s better and leading the way. It’s still flawed within tech companies, but it’s much more integrated than traditional.

You hit up on a couple of key points, one which is very relevant to the audience and to this show is the balance between product, which you refer to as a technologist, and the data that the marketing team, be it brand or product marketing, or even other like data-driven marketing operations. That data which they had to bring to the table and justify budget are investments. This is a constant challenge. I’ve seen that play out at the C-Suite level as well. Do we allocate more budget and resources to engineering, which is incremental or new features, versus dedicate X amount of dollars for investing in a new brand? If not a new brand, what are the campaigns that we need to run? This is a constant struggle. How do you manage that debate that goes on in the C-Suite between product finance and then marketing?

I’d go back to my original answer. It’s imperfect because there are things like personal ego. I’ll talk to some of the forces that often drive us to make the wrong decisions on that front. The core for me is looking at critical path. Let’s say a company is more mature and the basic infrastructure, because the pace of innovation is so rapid, Moore’s Law, it may be that you have such institutional debt in your infrastructure. That’s your critical path. You can’t do the things you know you should do because the code base is either so old or Millennium Falcon-like. In that case, as a marketer, you have to do this balancing act.

I would argue to give up some of my marketing budget to fix that so that we can then take a step back so we can move forward. If we take an honest assessment of saying the onboarding experience, we look at the numbers and we say, “We’re driving tons of traffic.” They seem to be qualified and they’re falling off at this point, then I would argue for a product. If it’s something stupid like the onboarding process and the UI is confusing, I would argue for that. If we have this amazing band that’s been practicing for ten years in the basement has invented a new style of music, the world loves it and it’s just a matter of bringing it to them, then I would fight for more budget on my side.

It’s never that binary because you have to live to fight another day. You tend to focus on your needs and wants as a department head. If it’s truly a technology company and/or product company, the core activity of what you do is invent. Oftentimes, I’m tempted to say an injustice because it sometimes feels that way with me, but it’s not an injustice. It’s a bias. There’s a second reason for this. One is this is what we do. We don’t have to justify the budget. We’re in the business of inventing things so we have to fund that.

When you have to live to fight another day, you tend to focus on your needs and wants as a department head. Click To Tweet

The second is true customer or product-market fit is very inter-departmental. It can be fed by mid-level employees, but it has to be driven from the top. It’s uncomfortable. You have to be able to distill all different forms of the quantitative and qualitative information. You need to toggle between TED-like 100,000-foot observations and ground level observations to find it. Either the leadership doesn’t have the time to do it because they’re running the company or they don’t like it because it’s not as binary as some of the other functions.

Lastly, advertising is the most binary at least in the short-term. You spend a dollar and you see the return. What you don’t see is the lifetime value. That is hidden in the product-market fit. It’s hidden in the product execution. It’s hidden in the institutional debt. It’s much harder to read. It’s why we tend to focus on the head of the funnel. In general, my thesis is listen to the customer and focus on the end of the funnel first. What are you truly selling before you dump? It’s not a way of getting out of my job. I look at that as part of my job, as part of our go-to market to say, “We can go out and start spending money, but what are we selling it to who? What is the core value?” It’s often not even in what you’re selling.

Tony Hsieh is a genius. He’s selling happiness. The product happens to be shoes. Most companies are like that. There are some exceptions. Network routing, I’m not sure you would argue. You could say you’re selling stability, but there’s an emotional benefit to most products, B2B and B2C. You have to start with and then say, “What’s the functional benefit after that?” There’s a path to market that starts with, what’s the core of what we’re selling? Do we understand that? Oftentimes when you unpack it, you don’t or the company doesn’t. Maybe 2 out of 5, or 5 out of 5 of the leadership team does, but there isn’t good middleware to communicating that to the rest of the company. They’re not sure why they’re executing every day. They just come in and march.

You touched upon several points in what you covered. One point I’d like us to deep dive into further is the challenge area that you mentioned, which is the go-to market is not owned by one single function. It’s a cross-functional initiative. Most often what happens is the mid-level people would see it like a director of product or sales, or even director of customer sales and marketing would see that. Their views and effort or impact that they can make is very siloed within that one function. It has to boil up to the C-Suite, the top-level leadership, who has a broader view or come from it.

In early-stage companies, it does by definition. As the company grows, it gets harder for the leadership to do it and/or they never loved doing it in the first place.

Everything in motion, it happens. The go-to market motion continues to go on. As long as the results are delivered, it’s not a pain point.

When you hit some plateau or snafu, you start to ask the question of, what is it here? Is it we’re not bringing in enough people or we don’t qualify the leads well enough? The value proposition isn’t strong enough. The pricing structure is wrong. There are all questions you start to ask. It’s a nuanced, but powerfully different answer depending at what stage company you’re in. The question is still the same which is, what is our process for gathering that information, distilling it and executing against it? I don’t think there’s one single answer, but here’s something that I propose. If the leadership team agrees at something critical ideally in the ongoing DNA either in the inception of a company or an inflection point, which is a generous crisis, what’s the process for doing this?

I also think it’s a lot to ask of middle management to do on their own because it takes some pattern recognition or helps to have it, and it’s not so much the seniority as the way the individual’s mind works. What product-market fit is you have to be able to watch seventeen televisions or more like read five articles, watch seven televisions, listen to nine podcasts and talk to 100 people at once. That takes a certain type of brain to be able to find the signal to noise in that. What I would recommend for any company is that there’s a pyramid where there’s an agreement on these are the things we need to know and these are the ways we’re going to gather the information. That information gets packaged and sent to a central owner and even the content itself in a central repository so it all lives in one place.

There can be a hypothesis and observations presented to either senior leadership or presented by senior leadership to a CEO. At some point though, the senior leadership and the CEO has to get their hands dirty at not only in synthesizing the end outcome but listening to at least one radio station, watching 1 or 2 television shows so that you have your own sense of the market and your own touch by which to assess the larger data sets that come in. If you don’t, it lacks context. Not that I’m genius about it or anything, but I’ll see something different than somebody else will.

B2B 2 | Go-To-Market
Go-To-Market: Driving more traffic to a product that doesn’t fit is like putting a band that stinks in front of a huge audience. It doesn’t matter how big the audience is if the music isn’t any good.

 

There are a couple of thoughts running in my head. One is someone like a GM or a COO, depending on the stage of the company and size of the company. There’s someone central who is viewing all these seventeen television channels, who is reading all these magazines, listening to the podcast and then synthesize it, boiling it down to 3 or 5 insights. Who is that one person and how often does it need to happen?

The hard truth is the CEO should be running it. It depends where many tech companies are challenged that the CEO is not doing the job they should be doing, which is being a CEO. They’re still busy being head of a product or technology. If the company is mature enough that the COO and the various department heads, or if the CEO is being a CEO, he or she should be able to do that, raise money, have a vision, understand the market, translate that vision of the company and hire the right people. That’s your job.

For some reason, we cannot generally say all these things, but will you say that this is an opportunity for an outside person or a consultant to bring in and build that muscle? It’s more of reminding or bringing in that outside perspective for the CEO to make the decision.

I was starting by pointing out what should be, but what you’re saying is that’s not probably the reality and I tend to agree with you. My bias is not to lean on a consultant to do that because it has to be part of the company DNA. Maybe to get you oriented and help you jumpstart, maybe as one of those voices. My experience is a consultant can’t come in and do that work for you because they’re not part of the company. They can come in and maybe hold up some blind spots that you have or be one of those many sources of information.

The 1 or 2 times that I’ve been most successful at it, there have been consultants who have lent various positioning like broad generalists who deliver information, focus groups or survey companies, third-party data, consultants who come in and work with you to sort through it all. There are roles for consultants. To put that in a consultant’s hands would be blasphemy in my opinion. That would be like handing the car over to my fourteen-year-old to drive. That’s not responsible. The short answer is the CEO has to be involved, to what degree is questionable, and in the absence of that, it can be a CMO, a head of product, a chief strategy officer, these relatively new CXO or Chief Experience Officer. That one strikes me as the most obvious CMO or CXO working in tandem with product. That’s how I think of that.

As we move more towards closing, I’ve got last few questions for you. One is what are your big goals for the next 6, 12 months? How are you going about prioritizing from a go-to market perspective? If you had an extra budget, which area or where would you invest your resources, either in key hires or bringing in external experts?

I know the nature of this question is more tactical, but I’m going to answer it with what I call a Bill Clinton answer, a politician’s answer. It’s partly what interests me most right now is that even prior to COVID, there’s a disruption that’s going on globally in more than marketing. What sums it up for me is the medium is the message. Any of us in marketing and media refer to that phrase. I went back and read it because I wasn’t 100% sure I understood it. The notion is that media messages and stories are an extension. It’s an ecosystem and an extension of the human nervous system and human psychology, sociology and market.

The medium is the message. Click To Tweet

It’s deep observations that came from this guy before things like the internet even existed. His point is that there are two ecosystems. One is the nature of the message and the medium. My message might be talking about customer development. If I were to deliver that in a written, scripted pen and quill message on parchment paper, that would be different. It would affect you differently receiving it than if I typed it on a typewriter, than if I telegraphed it to you or if I called you on the phone or if we did a video. The nature of the medium affects the message, the richness of it and the quality of it. With 50% of the world not just on digital but also on social, it means we are connected to each other in a way we never have been.

The medium is social and it is video. It’s not to say there aren’t others, but that’s the central one of our time. The message is the individual new narrative. It’s me. Look at what we spent an hour doing, telling you my individual narratives. That is inherently different than the history of humankind, which has been top down narrative. Here’s the story, consume it. To the extent that you want to debate it, you do it as water cooler chatter that’s perishable. It’s not a body of media. Nowadays, it’s the largest body of media and it’s the largest dataset in the world, personal opinion. When you think about go-to market, you have to think about that. I would call it a crisis for anyone who needs to deliver a message to a large group of people. That’s one.

The perception is that there is not a Unilever, and to some degree there isn’t a Unilever playbook exactly. There is a tool chest. Where it’s interesting as it’s being defined from the bottom up. It’s native digital companies and it’s companies run by Millennials that understand how to do this. It has to be synthesized and adapt it for larger organizations. That’s one. Two, part of that playbook is redefining how we conceptualize knowledge. When I was a kid and you wanted to learn about George Washington from home, you opened the Encyclopedia Britannica and there were four paragraphs, and that was knowledge.

Now there are new findings and new information being added at such a staggering rate that part of the playbook for any go-to market, any company has to be that learning is the new knowing. There are certain static things that we can depend on. Here’s how we deliver brand. First of all, let’s make sure a company understands what the difference between corporate ideas and branding. There are still concrete truths. A large part of it, the tip of the sphere has to be learning what is now and adjusting.

This applies to both the B2B as well as the consumer companies.

I would say as much because companies for the first time in history are competing with consumers for attention. Let’s say you’re a CTO looking for a CRM solution. You’re the CRM provider. You think of all the information that’s bombarding the CTO both directly business related and otherwise. You’re fighting all of that noise to land your signals. How do you do it?

You raised a very important point. People tend to forget that even though you’re doing a B2B marketing and sales program, at the end of the day, the receiving indigent is the customer.

We talk about LTV, retention and users. We should use the word people more and consider them. At some level, there’s still this hangover from the industrial revolution where go-to market was advertising. It’s not. Marketing is more of a sales cycle than it is an advertising exercise.

Marketing is more of a sales cycle than it is an advertising exercise. Click To Tweet

Have you heard of this book Scientific Advertising?

No. Do you recommend it?

Absolutely. This was written way back in 1920s and I was reading it. It says the exact same principles that we as go-to market organizations try to implement as best practices. It’s 100 years old. It’s the same repeat. They’re still trying to do the same thing.

It’s the same with McLuhan. He said, “The medium is the message.” That was 1917 or something. It’s still relevant now. I appreciate that.

B2B 2 | Go-To-Market
Go-To-Market: Media messages and stories are an extension. It’s an ecosystem and an extension of the human nervous system, psychology, sociology, and the market.

 

One final question, any shout out to 2 or 3 go-to market leaders who you see or you look up to as role models or peers that you use them as a sounding board or speak with them?

I don’t know Tony Hsieh well. I’ve met him once or twice but I look up to him. He understands this and the reason I call him the Dalai Lama is because you have to be able to hold some of this woo-woo looser ideology to execute the tactical part. He does. The guy is selling happiness. He’s convicted and he’s succeeding. He’s a great example. Another one is the guy who started SaaStr, Jason Lemkin. He wrote a blog post on how he goes to market. It’s fascinating to read because in it he says, “I honestly can’t tell you what works, but I can tell you what I do.” What’s so interesting is he does what I was pointing to. It’s all bottoms up and it’s almost all him. He goes and participates as an individual in the attention economy, within the tribe that he is speaking to. He’s built a healthy business and the largest community of SaaS-based B2B organizations on the planet by doing exactly what I was describing. That’s how it translates. I got inspired myself by answering that question. It’s a great read if you can find that blog post.

Thank you so much, Reid. It’s a wonderful conversation. You shared a lot of insights into how companies, individuals and leaders should think of a go-to market. As a wrap-up note, if someone wants to reach out to you or learn more about you, where can they find you?

It’s at Reid@ReidGenauer.com or LinkedIn is another decent one. It’s like my fifth inbox of the day to check. I’d start with my email.

Thank you once again. As always, you showed practical insights and thought leadership material for people to think about and up-level their go-to market. Thank you.

 

Important Links

 

About Reid Genauer

B2B 2 | Go-To-MarketEntrepreneur, Leader & Chief Marketing Officer (CMO) with deep experience in product market fit, data-driven growth, branding. Proven track record of scaling early-stage tech companies. Industry thought leader for mobile, social, video, music & media.

I’m a new bread of marketing executive and support a new definition of marketing that spans disciplines and cross-functional teams. One that marries the power of story with data-driven insights and agile product development. Consumer sentiment is no longer perishable water cooler talk but rather the largest living body of media the world has ever known. Digital culture is defined by a nuanced set of social norms, unfathomable velocity, and oceans of information. My “superpower” is finding the signal amidst the white noise of the Attention Economy and translating that into product-market fit, corporate strategy and high impact execution. I’ve successfully launched and scaled B2C and B2B products by leading with customer needs, hearing their voice and answering it.

LEADERSHIP STYLE:
I’m energized by leading diverse personalities, interdisciplinary teams and inspired digital businesses. I help my teams succeed by fueling a culture of curiosity, passion, and possibility. With a high degree of emotional IQ and interpersonal trust, I help my teams deliver focused strategy, decisive tactical execution, honest analysis and iterative scale. I live at the cross-section of data, technology, and imagination. I love what I do.

COMBINING CRITICAL THINKING AND IMAGINATION:
I value decisive decision-making informed by a combination of analytics and conviction. The entrepreneurial sense of possibility inspires my belief in vision and imagination as a driver of value creation. Business intelligence, data analytics, and insights supports that belief and informs my actions.

MARKETING EXPERTISE:
(B2C, SMB, B2B2C)
-Scaling Start-Ups
-Product Market Fit
-Branding/Positioning
-Go-To-Market
-Customer Acquisition, Retention, and Revenue
-Product Marketing and CRM
-Business Development, Partnerships, and Sales Enablement
-Analytics & Customer Research
-Earned, Owned and Paid Media at Scale
-Paid Media
-Media Relations,
-Content Marketing
-Social Marketing
-SEO/ASO 

 

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