Paddle CMO Andrew Davies on The First Principles of B2B Marketing

Trying to understand where the gaps were, then stepping back and thinking about what this could look like if we really applied some important, some outside in perspective.

Want to know what always works in B2B marketing? It's not sexy.

In the early days you yearn for some complexity and stability because you just got no cash. And in the later days you yearn for some simplicity because you've got too much complexity.

But it always works. The fundamentals, the story, the strategy, your icp, who you sell to, that is what will always outweigh the growth hacks, I promise. And my guest on this episode took me back to those fundamentals. Andrew Davies is CMO at Paddle. Paddle provides the complete payments infrastructure for 4,000 software companies. And Andrew runs a team of 30 marketers powering their mission of being the most helpful brand in the space. I think that is the best B2B marketing strategy to help your customers win. And I love Andrew and the team's mission of being the most helpful brand in the space. We talk about that, how they do it, how they're execut and just what the life of a high performing CMO looks like. Here's my conversation with Paddle CMO Andrew Davies.

1, 2, 3, 4, exit.

All right, I'm excited to have my guests on today. Andrew, good to see you man. How are you?

I'm very good as well. Thank you for having me on.

And where are you right now?

I'm currently at home, which is in the middle of Nowhere in Ottery St. Mary, a tiny village in southwest England. So yeah, we're out in farmland. It's beautiful down here.

Farmland that's like me. We have a connection. Right now I'm in Vermont in the States and it is definitely the country land. Also I like the. I can tell, I can tell where you're at. I can tell by the beam and the stove back there. It's very lovely.

It's about a 300 year old farmhouse and so maintenance but beautiful place to live.

We've been living here in the country for about two weeks now and every single day something has happened. Like two nights ago, three days ago, I put gas, I put gasoline in the diesel tractor and ruined the engine because we bought the tractor off of the people who sold this house and it ran out of gas and there was a tank in the barn and I think figured it was for that and I put it in and then this didn't start after that, so. So there's that. It's like every time I touch something, something breaks and then two Nights ago we had the big drama in my house was my kids were sitting on the couch and my cat, one of our, we have two cats. And one of the cats came walking down the stairs with a bat in its mouth.

Yeah, lovely.

You tell me, I'll let you say it. But you're CMO at Paddle. What is, what is Paddle? And then what is your role? How do you define, like everybody knows cmo, we're talking a bunch of markers. But how do you define what, what your role is at this company? What are you responsible for?

So if we talk about Paddle first, we're a business that takes care of the complete payments infrastructure for about 4,000 globally operating self serve software businesses. So if you're trying to sell your software via a checkout, probably sell it everywhere in the world almost accidentally. You're born global, you're competing with everyone in the world. And the problem with that is there's loads of local regulations, local sales tax, you've got to deal with local currencies and those are big company problems that you've got to face at the very earliest stage of your company history. And so we take away all of that liability and all that complexity for you process about $1.2 billion a year for those customers all over the world, but particularly in small local economies who are scaling everywhere else. So that's what we do. And we also have a couple of other pieces of our business as well. But that's the dominant part of our. And yeah, I served the business as CMO previously. I was a founder who then got acquired and then ended up running global marketing at optimizely, which was the kind of group that was formed out of the people we sold the business to and walked into Paddle into a business that had grown exceptionally fast pre Covid and through Covid and now needed to put in place some muscle and some foundations to go to the next layer and go to the next level. And so yeah, marketing at Paddle, it covers all the normal things you'd expect. Product marketing, content, it covers demand generation. We have some inbound BDRs and it also includes our self serve revenue portion. So yeah, that's the bit of the business I serve.

How did you land at paddle? What was the path from and how long were you at Optimizely post acquisition?

So we were about a 60 person business. When we sold, we went into an Insight Venture Partners backed asset which was called, called Episerver, which was about 400 people and then we grew to 1600 people in 18 months or 24 months by acquisition. So aggressive M and A to build up that business. That business is now, you know, I think probably 400 million plus in revenue and profitable, going really well. And I, after doing a couple of years there, I wanted to go back early stage. I told my wife I'm either going to start a new business or I'm going to stay with optimized little ipo. And then two weeks later I was doing some advisory work with different clients, different earlier stage customers. And one of those was Paddle. And my series A investor was Paddle Series A investor. So I knew some of the board and Jimmy the coo, now the CEO here at paddle, pulled me in to do a demand gen audit. And I worked for about four or five months behind the scenes just trying to help out. And then they, they dragged me kicking and screaming into a full time role. No, no, no, I'm having, I'm having loads of fun.

Yeah, that's right. Show me the money and I'll go. No.

I love being part of a team. I love being part of a team and that's the big thing, like the advisory. But if you're fractional, you're never part of that team. That makes an impact and that means a lot to me.

Yeah, man, I feel that deeply. I think I was doing the solopreneur thing like running Exit 5 as my solo business after my stint as a CMO. And I was like, this is for about a year. I was like, this is great. I work for no one. It's just me. And I didn't realize until now having a team of five working on things together, collaborating on things together. We had this idea. We got the landing page out, we got 60 people that bought tickets. We're doing this thing, you know, right now during these, during these podcasts, I keep notes in a Slack channel so we can like take them out. Like it makes it easier. And I'm not talking to no one. Danielle on my team chimes in, just said, Andrew, tell him I said hi. You know, it's like, it's fun to be doing things with, with people. So I, I want to talk about the, the main chunk of this interview. I want to talk about like what the marketing org looks like at paddle, what you're doing. But a couple things in there that I want to follow up on. First of all, what was the, what was it like for you going from being founder and a CMO of a, of a startup, selling it to a company and then becoming like head of marketing again? What was that experience like?

It was great. I mean I, I was an accidental marketer at the beginning. I picked up marketing because that was the job that needed doing at the business we founded. And you know, I did a business degree, did a bit of marketing in that, but everything was just taught on the job, right? It was just trying to work out what had to be done and then going and doing it and for our existence as a startup. The business was called Ideo. It was a personalization platform, content personalization. And Ash was our biggest problem. Trying to eke out that next bit of growth, trying to make sure we were a business that was, was going to have a future with a cash balance that constantly needed topping up was our biggest problem. And then when I stepped into optimizely, suddenly you see the other end of the spectrum where complexity is the biggest issue. And I think often, you know, in the early days you yearn for some complexity and stability because got no cash. And in the later days you yearn for some simplicity because you've got too much complexity. And so it was really interesting to see the earlier side, the later side and paddle's kind of right in that middle. You know, we don't have any cash concerns. We're fully funded, we can run all the way we need to a default alive. But also complexity is, is rearing its ugly head as we keep scaling. And so it's fun to be in that mode now between the two. But no, I love, I love variety and so I love the early stage, I love the later stage, but I definitely biased towards a mode where there is a very close connection between action and fact, which is what I really yearn for.

What's interesting. So, so that, that is like. It feels good to hear you say that actually the, the complexity piece because it's like, it's almost like this grass is always greener mindset. Like you might not have the cash, but you'd kill to have the product market fit that optimizely had.

Right.

And, and then when things get more complex, you just want things to be simple again. You're like, man, I wish I had just had a team of five and there was no meetings and no BS and we can just go do. Is that just the ebb and flow of, of business? Like do you think there's some value in there? Like is there value in. If you want to be a leader, whether you're, you know, executive, a CEO, a founder, marketing leader seems to be value in seeing both sides. Unless you're only going to be early stage, you know, person ever. Like, even though that's uncomfortable, it seems to be from people like you and others that I've talked to, even to my own personal experiences. It seems like when you get out the other side of that, you look at it and you're like, you know what? That kind of sucks. But I learned a lot from going through that today.

Yeah. And I think we learn the most from those hard experiences, right? Those difficult experiences, those new experiences. But I think the most important thing here is that you've got to find comfort and peace and value where you are. And if you can't find that, then, yeah, you're going to find a different environment. And so just yearning for the grass is always greener. A different type of company environment. I don't think it's healthy for anyone. You've got to resolve that in yourself to find the value of the moment you're in. And I certainly did that my whole experience. Through optimizing, I learned a huge amount, multi product, multi geo, multi language. The challenge of all these different ICPs as lots of companies got shunted together the two years in a row, three to one Marketo and Salesforce merges that burnt my eyeballs, the amount of rows of data we were looking at. But great fun to work it all through.

Do you know Tom Wentworth at all?

I don't think I do.

Okay, so he's a CMO from where I'm from, like the Boston area. He was CMO at recorded future multiple hundreds of millions of dollars at ARR and then they eventually sold the MasterCard. Anyway, he's a CMO friend of mine we always talk about or he always talks about, there's like HubSpot, like the best kind of top of the funnel plays ever. One of them is like HubSpot's website grader, right. They built a free tool. You go in, you plug your website in, they tell you that's wrong with it and then they happen to have a product to solve that problem. The other one he always would mention to me is optimizely. Like how you could actually go put your URL in, run a no code, like run a no code test, see what Optimizely would look like on your site without having to do anything. And so whenever I hear about Optimizely, that makes me think, it brings me back to that example of great kind of great tools. And he always, it's still to this day he'll be in airport and he'll send me a picture of an optimized lead ad. Do you Think. Do you think being a founder and entrepreneur, like have you embraced that as your, in your role as a marketing leader? Does that, does that help you in any way versus being the. Like, you're not the traditional cmo. You, you didn't, you know, I think My guess is paddle is in the hundreds of millions of dollars in ARR. And you're not like you didn't spend 15 years at Salesforce and now you're the CMO of this company. You've kind of taken the more entrepreneurial path. Obviously we're going to be biased because we believe it's true. But tell me about how you think that's helped you in your career as a cmo.

Yeah, I think there's three things that helps me right now. The first thing is that you have to understand the value chain of your business, your market, the fundamental unit economics of your business if you're on that founding team. And one of the things I often find marketers don't do if they're professional marketers who've never been in a P and L ownership role before is not understanding enough about the market, the value chain they sit in and the unit economics of their business. So that's the first thing I think is, is really important. The second thing I think is really important is that the joy I have right now is that I'm serving my own Persona. Like we are selling to software founders and I've never been in that situation before. I've always been a founder or CMO trying to sell to other people who didn't look like who I was. So it's a real joy to serve our own Persona. And the third thing is like PADDLE is in that beautiful scale up phase where we've got the ability to place some bets on the marketing side and therefore you often are functioning as a bit of an intrapreneur because you're wanting to experiment. It's not just churning out another ebook and trying to get a few more MQLs. This is, you know, we've got a lot of opportunity to try and market make and so bringing, bringing an entrepreneurial kind of view to that I think is really key.

Yeah, it's like you care more about, you have, you're rooted in like the marketing is just the thing that we're doing, but the overall goal is driving success for the company. I'll do whatever inside sales.

Absolutely.

Okay, we're going to get to talking about the marketing team at paddle, I promise. But you mentioned that. So the CEO at Paddle, you came in as an advisor and you did the demand gen audit, what does that look like? What did you do? And obviously the company, that was only two years ago. Ish. Right. So the company already had some, some level of success and scale. What did you, what did you come in and do? Take me through that audit.

Yeah. So I think at that point it was three years ago, so we were probably 160, 170 people. We're probably nearing 300 now. And I learn by doing and by talking to people. I'm not going to download loads of spreadsheets and analyze it for weeks on end and then come up with a magic opinion. And I'm just not smart enough for that. So it was jumping in and chatting to the existing marketing team, the existing sales team, the product leadership, trying to understand where the gaps were, where they saw the gaps were, then stepping back and thinking about what this could look like if we really applied some, some thought and some outside in perspective. So for me there were a few things there, there was an awesome team and there's some leaders in our marketing function who pre existed for me, who have stayed with me on that journey. It's great to see them, you know, have real ownership of parts of our function now. But they were operating on much less resource and they were operating in a very sequenced, we're going to do this and then we're all going to do this and then we're all going to do this fashion. So the first thing I really felt was there was a need to build parallel activity I love in the marketing function. Building brand and attention and building demand by constant, constant lightning strike updates things that a surprising volume of things that are going on that match what the customer needs. And so I felt this real need to increase the volume of activity. Secondly, there was lots of good understanding about our customer, but our ICP was changing as the company scaled. So it was a real need to step back and think about that ICP because we were generating quite a lot of demand, but it wasn't closing. So actually it wasn't a demand kind of a pipeline problem in terms of overall dollar value. It was the quality of that pipeline wasn't the right quality of pipeline that the sales team could go and close and that would turn into revenue fast. And so that was the challenge we needed to go and solve. And then thirdly, there was already the notion of a brand refresh. I wasn't kind of the classic faux pas of a CMO coming in and saying, let's change the palette. On our website. We've got to do everything differently. They already knew that there was a big refresh to come through because they were in the kind of technical blues and cartoony kind of early stage where it's cute for a bit, but you've suddenly got to realize you're managing billions of dollars of people's money and you've got to work out how you build this brand and perception that actually lives up to the level of credibility you hold and statue hold on the market. And so there was a need really to up the game on that front too. So those were a few things that I, that we were picking out. But a lot of it was really about just doing more. Just having the trust to go into the exec room and say we need to do more, we need more budget, we need more headcount. And that's going to enable us to go.

Do you have any overall like guard rails or guidelines for when if you're going to go dig into somebody's b. If your own business or somebody else's business? It's like sometimes I get lost in, in the weeds too much and it, for me it always is like, it ends up being like let's work backwards. Like look at the last three months of new customers. What do the best customers look like? Where did they come from? And you can find a lot from there. Do you have any kind of just like first principles thinking that you, that you rely on for something like that?

Yeah, I mean I agree with what you just said there and then also everybody wants to talk tactics and channels. They want to talk about what's working and what's not working. And for me the first principles approach here do we have a tightly defined market that we deeply understand? And I'd much rather have a difficult conversation with the board that the market size is too small, but we deeply understand them than a difficult conversation with anyone. But the market size is a multi billion dollar one but we don't really know who they are or how to reach them. So firstly shrinking down to as you say, those perfect fit customers who are going to be insanely successful by using us. And we've got proof in previous customer acquisitions that makes sense. Sense. Do we know everything about them? How often are we meeting them? How are we learning from them? And then the second piece is do we have a message that matters? Horowitz says the company's story is the company's strategy. And often in the demand infrastructure. I often find that the message, the narrative is the least optimized piece of what's going on there. And I've yet to see a marketing function that doesn't have a tightly defined market, that has a tightly defined market and has a message that matters. Where the tactics and channels don't just look after themselves. You've got to got to focus on those two main things because if you've got those two things right, anything works. Steak dinners work, running an event in Vermont works, sending people gifts work, running webinars work, a boring ebook works. But if you don't have those two right, then nothing works.

Oh man, I love that. It's so true. But it's so easy to be like, well everybody knows about story and positioning. It's gotta be something else. It's gotta be like the targeting on our ABM campaign. And it's like, no, the, the clearer we can get defined on this, on the story, on the niche, on the who we're selling to. And I'm lately I've been talking to a lot of startup founders and marketers who work at less established companies. And I think especially with the rise of AI, you know what the number one challenge right now I think in marketing is it's differentiation. It is we all kind of sound the same, we're doing the same things. And I think that really comes from lack of storytelling, positioning. And I think understanding that positioning is not just a marketing, it's not a marketing exercise, it's not a what message is on the website marketing exercise. It's a fundamental like company strategy conversation that needs to happen.

So on positioning and that was super interesting as I walked into paddle, it was one of the jobs to be done because they'd just done a piece of work with quite an expensive external consultant and they'd rebranded or re messaged as the revenue delivery platform and they had a whole story that sat behind it. And I didn't understand it because for me revenue delivery sounds like sales tech, sales intelligence. It doesn't sound like core payments infrastructure, which is what we do. And so I listened to Goncourts and I would hear sales reps say things like the marketing team has decided to rebrand as. So let me explain what that means. Or as a company we call ourselves a revenue delivery platform. So let me tell you what difference this makes in your life. So instantly I was hearing feedback, data driven feedback that the message was wrong. And when we did the panel testing, we use winter. When we did the panel testing, the question that people asked when we talked about what we did was what is it? Rubbish positioning. So we changed to something pretty Boring. Quite quickly. Just the complete payments infrastructure for software and suddenly the question that was coming back was how do you compare to Stripe? So suddenly now there's a strong position in the market and I'm super happy all day long having conversations about how we compare with Stripe. Fantastically well run company. They're a supplier of ours. We also compete with them in the marketplace. Now if the question is how do you compete with Stripe, we're in the right conversation. The position is correct.

Yeah. It's like we, we've now, now that's the only thing we have to answer. We now sh. We. You've now like you shrink the universe of objections and you just can focus on answering that one. That's tough because I always struggle with that. I feel like everyone always wants to know how you're different than X. It's like they always going to compare you to a frame, you know, to, to something else. And, and, and that's. But I think when in your point, like if you can shrink it down that that's better. All right, I'll shut up. Take me into paddle. What is the company company size today? How many employees at the company today and then how many people are on the marketing team? Let's start there.

Yep. So I think we're about 280 right now. In the overall company, product and engineering are the dominant function of all of the different teams. And in the marketing function we have about 25, 26 people I think. And outbound BDRs, outbound SDRs sit with sales and so 25 is the central marketing function including a few inbound BDR gen product marketing, content, brands, creative events and the rest. And you know that team is, is based all over the world. We have a hub and hub strategy where we've got hubs in London and Dublin and Lisbon and Atlanta and Austin and we try and hire within two hours of those. We've got a good span across mostly Europe and the U.S. yeah, so that's the, that's the size and shape.

Got it. So is everybody. But did I hear that you have. Hubs are like, are there offices there or. Everybody's remote.

So London has an office. Some of the others have weworks and so yeah, some of them are emergent. We're just putting an office there now and just trying to hire around the area with the main thought that people can work remote. We're remote first but we can bring people into a cross functional hub for an off site or as part of our comms if we need to.

Okay, so That's a fun size. 25 people on the marketing team, 280 people in the company. You still probably can know everybody at that stage. You know, there's not. There's not 15 layers of VPs. You can still get stuff done. That's fine. So how do you have the team? People really like to hear, like, okay, you got a team of 25, you kind of brush through the roles quickly. But people like to hear, like, how do you have the team split up? And then who reports to you?

Yeah, totally. So we've got Jess, who's my VP of marketing. VP of integrated marketing. Marketing. She runs our brand team, which includes communications.