Monetizing SaaS: Episode 10 with Justin Talerico, CMO of Automox

Justin, it's so good to have this conversation with you. I've known you for what feels like forever, and I'm really grateful for that. You've had such a cool career. You've been a founder, you've been an operator. You founded ION Interactive, you operated it for almost 17 years, I think, before it was acquired. You led Linux Academy through an incredible experience with the acquisition by ACG and then ACG through its acquisition by Pluralsight. And then you've been for the last several years, CMO at Automox. So can you just— you've also mentored me and many founders and dozens of young and career operators. So can you tell us in your own words about your career and, and how'd you get to now?

Yeah, um, probably a web-based software glutton for punishment, I guess. But, um, yeah, you know, you kind of hit it. Um, founder, CEO, with a bootstrap startup from the mid-'90s, which went from tech-enabled services to software as a service in the early 2000s, which we were kind of on the front end of that. That was a lot of fun. Learned a lot about unit economics and how to parlay that into a good business. And so you know, I think that bootstrap background became interesting. I moved to Linux Academy. That was generally a bootstrap business that had a little venture capital in it. And, you know, the company that I founded was all B2B. And Linux Academy and ACG were both B2B and B2C. In fact, B2C sort of being the flywheel for the B2B motion and really getting me into PLG in a big way. Because the validity of that motion and the unit economics of acquiring customers via product-led feeding a sales-led motion was just very high value. And so that experience at Linux Academy, you know, we more than doubled the revenue in 12 months and had a nice outcome there. And then at Cloud Guru, you know, we tripled the revenue in 15 months and had a nice outcome there. Both of those were software as a service selling to tech buyers and using a PLG flywheel to feed the sales motion, which created just an incredible go-to-market engine. And so you know, bringing it to the present with Automox for almost the last 3 years. And I'm reflecting on that later today in an all-hands, and it's been an amazing journey. But this is a business that sells to a different kind of tech buyer, an IT ops buyer, but it has a lot of the same characteristics and really benefits from getting people into the product. And, you know, so I think it's been really instructive over the course of my career to appreciate how people want to buy and how to let them do that, which sounds really basic, but a lot of companies, I think, try and force people to buy the way they want them to buy. And, uh, I think what I've learned over the course of my career is that markets and buyers have preferred ways of buying. And when we align to that, we accelerate growth. And so, you know, Automox, uh, 3x growth in under 3 years. And, uh, despite, you know, plenty of headwinds in the world. And so, uh, it's— I love this stuff. And like I said, glutton for punishment, I think, for software companies. But I guess that sums it up.

I want to come back to that idea of empowered customer. But before we go there, just a bit more on Automox. What's the insight behind Automox? And as you look to the next 3 years, what do you think this company can accomplish?

You know, I came to Automox because I thought the people were fantastic. I thought the product had great product-market fit and, but most critically, that the market opportunity was phenomenal. And that's because you've got a B2B SaaS product that essentially appeals and applies to every company from SMB to enterprise. And it's a modernization of IT that still doesn't exist. And it's a space that's maybe not considered sexy. And as a result, probably is underinvested and underleveraged, which makes it that much more of an opportunity. And so just really a believer in the enormous TAM and the the way to plug a PLG feeding sales motion into that enormous TAM to create good go-to-market metrics, you know, and capital efficient growth. And I, you know, I think we've seen that over 3 years. And I think truthfully for the business is just the beginning.

I'm curious about kind of techniques that you've picked up. That you have found to be most effective to building trust and alignment between specifically go-to-market and product in the context of so much growth and in the context of such speed?

I think it's within go-to-market first, which is trust within the three major functions within GTM. So marketing, sales, and customer success. For me, foundationally, everything is about, you know, transparency and accountability. And I think I have had full-stack growth teams at Automox, at A Cloud Guru, and at Linux Academy, which means I've had essentially an engineering team within marketing, which is not necessarily a very popular position to be in with the engineering org. And so it requires a level of transparency and accountability and trust building that normally, I think, doesn't really exist between those organizations. It also requires, I think, that marketing especially really connects with the buyer, the buyer persona, the buyer behavior, so that engineering trusts that marketing is not just a bunch of hyperbole because that's where a lot of the distrust comes from. And marketing to tech buyers is not a lot of hyperbole. It's a lot of education and a lot of honesty and a lot of transparency externally as well. And so I think you have to show that example internally in order to earn the right to show it externally and really build bridges that are meaningful. Inside and outside the org.

When you zoom out and when you think about building software companies today, are there big market inflections or big changes that you yourself are particularly interested in and thinking about on a regular basis?

Um, that's an interesting question. I think there are a lot of motions that are fascinating that are rapidly changing our environment. You know, obviously the the biggest elephant in the room is AI and the impact on not just go-to-market, but on software in general and on, you know, even broader than that on the world. But when I think of, you know, over the last several years, major movements, part of why Automox is so interesting is because of the move to hybrid work. And the complexity that that introduces into IT. And so, for example, that was a big driver in me coming to Automox in the first place was coming out of— this was, you know, a year out of the pandemic or whatever it was, something like that. And, you know, you see massive change in markets and you say, well, how is the software infrastructure going to respond to that change? How can I be part of accelerating that? And so I, you know, I think since 2020 in particular, we've seen massive changes. I think in SaaS, we have to be honest that for 10 years, it was way too easy to raise money. It was way too easy to sell product, which essentially was just order taking. And now we have to earn it. And so all of those market changes make it more challenging to do what we do. But on the flip side, it also makes it more rewarding when we do it well, because we make more meaningful connections. I think we earn customers for life versus switchers. And, uh, you know, I think those macro influences, uh, economic, you know, think about the headwinds we've had for the last couple of years. We've had wars, inflation, mass layoffs, and yet we still have companies that can grow and thrive and, you know, um, continue to perform. And then we have others that obviously can't, and that's always the way it works. But, um, I really look to broader market influences and really think about what that means downstream for the software market and where the opportunities are and And that's what I love.

One of the things that you've already touched on a little bit is this idea of how the customer has changed, how the SaaS buyer has changed. And I know that many times you and I have talked about how empowered the SaaS buyer has become. Can you elaborate on that?

Yeah. You know, I think it's been probably 10 years as B2B software marketers that we've talked about, you know, 80% of the buyer's journey being before they're willing to identify themselves to us. And so, you know, it obviously informs so much of what we do on the go-to-market side that we know we are marketing in the dark. And so we know we are essentially paving the way for those people to identify themselves. And buyers want control. And generally speaking, A lot of companies try and resist that and say, no, no, I'm going to, I want to keep the control over here and I want you to do it this way. And I think especially with younger buyers coming into markets where they're accustomed to the ease and the frictionless experience of interacting with apps and, you know, properties that are well designed with, you know, top tier UX and coming out of the Apple culture and, you know, you go down the list of how we're creating a generation that wants to consume things the way they want to consume them. And they want that to be easy, honest, transparent, you know, clear. And so when we build a go-to-market engine like that, we meet buyers where they're interested and how they're interested. And we create meaningful relationships from the very top of the funnel. And I think that's different than just trying to meet somebody when they're ready to buy. Like, that's no longer cool. What's cool is to build a universe of people who are like-minded and to then move those, you know, be with them over the course of their journey. And maybe some of them are in college and maybe they're going to be buyers 5 years, 10 years down the road, but you lay that groundwork and that foundation and you just let them buy the way they want to buy. Like for me, Most of GTM at this point is about reducing friction. And when we do that, I think we win.

I love that idea. And for several reasons, I love the idea of reducing friction. I love the idea of creating a long-term conversation with a customer. I also love just how much reliance there is on technology to deliver this type of experience. I wonder if you could start to talk a little bit about the tech stack to support how you do what you just described, which is be what a buyer needs you to be at specific moments.

Yeah. You know, it's interesting. I think 10 years ago, probably the marketing automation platform was the critical piece in the stack. I don't think that's really true anymore. And I think that's partially because most of the maps have not evolved very much and have not really seen where the puck is going on the ice, so they haven't gone there. And so I think they've gotten beaten in terms of their importance in the stack by point solutions that deliver very specific and important functions within the stack that really become critical to engaging the buyer and allowing them to experience as much as possible the solution without revealing themselves. This goes back to this dark funnel, light funnel, you know, they're willing to raise their hand later and later in the funnel. So what are the tools that happen in that dark funnel that really make a difference? And so our ability to see intent signal in the dark funnel by account is critical because then we can target those accounts that are showing intent and we can target them with meaningful educational content that'll really engage them and get them attached to our brand so that when they are ready to buy, we're there for them. So, you know, I guess we don't need to name drop tools, but, you know, we use Sixth Sense for that. We use Terminus for account-based ad air cover and it's It's tremendous in the dark funnel. We use interactive demo tools to put demos into the hands of potential buyers in the dark funnel. They don't register for it. You know, they don't do that. They can experience the product firsthand and really establish that it is or isn't something that they need early in that dark funnel. So I think the tool stack for us has moved more towards you know, a greater preponderance of effort is in the dark funnel than there used to be. It used to be all about, and this is why the MAP is devalued. The marketing automation platform is really about what happens after somebody is known. Well, that's a smaller and smaller and smaller slice of the journey. And so yes, after they're known, we're going to nurture them. We're going to use Marketo or whatever it is that we're using to do that. So that we're present at their seducible moment when they are ready to buy, that we're there. But that's a smaller part of the journey. The more important piece now, especially with tech buyers, which is where I've been for the last, I don't know, 5 years, is dark funnel. And so you see us investing more and more in tools that are essentially blind to who the person is, but the tool does understand what the account is. And then we can focus on that account. So hopefully That's the answer.

That's, that's great. Um, you know, as it relates to the idea of friction, but also tools, pricing and packaging are, are really at the center of the customer experience in so many ways and to the conversation around an empowered customer, um, to the conversation around how, you know, the tools must interact. Um, pricing and packaging is governed by interactions and workflows across so many systems at this point, not to mention the application itself. I imagine you've thought about this, um, and I know you've seen pricing and packaging done really well throughout your career, probably poorly too, but maybe you could start with what are the most important mistakes that you've seen companies make around pricing, packaging, monetization operations?

The first is, um, not a real understanding of how all the pieces fit together. And so, um, there's I have seen now several times, the first inclination is to go and do pricing and packaging research. And invariably pricing and packaging research tells you that you have a whole boatload of unrealized value. Funny how that works. And that's fine. I'm not actually diminishing the value of pricing and packaging research, but this is a perfect example. If you're not ready to action that research, it's worthless. And I'll give you the ACG example. ACG was acquired in— ACG acquired Linux Academy in December 2019. We hit the ground running at the beginning of January, integrating the brands, integrating the products. We had a whole launch plan in place and we attacked pricing and packaging research right out of the gate heavy with an eye for raising price because we had been acquired by our biggest competitor. So we had an opportunity obviously to do that. And certainly the board thought so. But that research was done between January and March of 2020. It was set to be deployed in April of 2020. A little something happened in between. We thought it was going to last a couple of weeks. I don't know, it was this little pandemic thing. And the research was essentially completely invalidated. The market had changed, where people were, how they were working, what their mindset was, everything had changed. And that research couldn't be actioned until, I think we got that in market in April. But right away, we understood that it was out of touch with the reality of the situation that we were actually found ourselves in. And obviously you don't get a pandemic in the middle of your pricing and packaging research all the time, but What is important about that is that if your ducks aren't in a row on pricing and packaging and you can't action it and test it and say, is this better than what I had before? Objectively, truly in the market, not just in theory, then a lot of it is wasted energy and wasted cycles and you could do more damage than good. And so I think the big thing with pricing and packaging is, can I do something about it? And if I can't, and if I can't monitor the data as I'm doing something about it, then I probably shouldn't do it right now because I'm really not ready. And I think that's it. At ACG, we had to build a whole backend engine in the product before we could action pricing and packaging because there was no way to change entitlements. There was no way to build packages and get them in market. So You know, when you're ready, you're ready and you can go and then you can A/B test and then you can prove, you know, with data that you did the right thing or you didn't. You can learn fast, fail fast, please. But like, you know, if you can't pull that all the way through, pricing and packaging can be a lot of wasted energy because it does consume the entirety of the organization. It consumes finance, it consumes product, it consumes sales, it consumes Marketing, it consumes CS, it disrupts customers. It has all these ancillary ripple effects that are dangerous if you can't get it in market and learn from it rapidly. And so I think that's the big thing for me on pricing and packaging.

Yeah, that's great. And to your comment on how all-consuming it is, Maybe what are the best practices that you think companies can employ so that they're constantly improving at what is a practice that requires real intentionality?

The first thing is, and I think you know this, but Automox just went through a pricing and packaging change literally 3 days ago. The first thing is to approach it, in my opinion, from a do-no-harm point of view. You don't have to cause all of that chaos across the organization in order to deploy new packages and new pricing. You can be very strategic in the way that you design them. You can be very strategic in the way that you introduce them so that if customers want to stay on their legacy SKUs, they can. That's a small example, but you would be surprised how many companies try and say, Mrs. Customer, you need to change to this product. Sorry if you don't want to do that, but that's the way it goes. You know, do we have to do it that way? Same thing goes with pipeline. Do we have to disrupt pipeline to introduce pricing and packaging changes? No, we don't. And so I think it starts with a do no harm approach to how we make pricing and packaging changes without blowing everything up because it's the blow everything up that candidly gives you a quarter of two or two of down growth that you just don't need to go through. You can just keep the angle going up. And, but it does come down to, you know, what the executional plan is for how to play with what is, can be a very disruptive lever. And so how do we keep the disruption down? How do we think about reducing friction for all of these different groups, including internal groups like sales and CS and saying, here's something additive that will help in the long run, but it doesn't have to be something that's destructive in the short run.

You mentioned that potentially one of the biggest mistakes you've seen is companies, they'll invest in a study, they'll invest in research, but then they can't action in the product. Can you elaborate on what you mean by that? And maybe, maybe a better way to ask the question is, what are the important operational and architectural constraints that product and engineering really have to be aware of in the context of pricing and packaging?

So when you do good pricing and packaging research, what you learn is which in, in, in SaaS, you learn which features have the most value to both your customer. Usually you're doing both, both customer group and a prospect group. Hopefully those two things line up, but sometimes they don't. You learn first and foremost about packaging, which things have the most value, and then which combination of those, which combinations of those things drive the most potential take rate and value in these packages. So, you know, you learn that and then secondarily you learn how that value translates to price. And so that can only be actioned if you think about this relative value of features, even the order of them. In your presentation, on your pricing page or on your billing page in your product, you know, wherever it is that you surface what's in your plans, even the order of those and the way they're described and everything else is like, there are myriad levels of testing that can and should take place. So if you can't do that, if you can't take the relative stack rank out of the pricing and packaging research and put it into the front end of your go-to-market engine so that you can actually get market feedback in terms of take rate, right? And conversion, not just the take rate on the front end, but do they actually convert to pay? If you can't do that, then you can't really experiment with packaging credibly. Then If you can't experiment with pricing, and pricing is even trickier because if I show you price A and you come back a month later, I still want you to get price A. I don't want you to get price B. And so testing pricing has its own sharp edges that can really get a sales org into a lot of trouble and can kind of make pricing and packaging the enemy of the CRO, which is definitely not what we want. And so when I think about the ability to action a packaging and a pricing study, it starts with, can I manipulate what's in these plans and can I test that? And can I see objectively in the data what's working and what's not? And then can I put pricing alternatives in market without causing destruction around my sales or my, or contraction or churn on my customer side. And so that's what I mean by actioning. And can I do it quickly? Because I get the research. If I do research in Q1 and I can't action it in Q2, I could, you know, maybe run into a pandemic or something and then it all becomes irrelevant.

That's really great. A couple of closing questions for you. What's the experience that has been most formative for you in your professional career?

This is going to go back a long way. We definitely learn most from our failures more than our successes, I think. And I had a business, like one of the first iterations of my digital agency. Yeah, had to basically let everybody go. And That's an experience that's now, I don't know, 25 years in the rearview mirror and still remains probably the most, the strongest learning experience because the mistakes that got me to that point as the founder of that company, I never made again. And, you know, I think that's the, I think that's the whole thing about leadership in this business is can we, can we make mistakes once? And we fail fast and learn and make sure that we document it either in the brain or somewhere so that we don't make the same mistakes twice. But yeah, it goes back a long way. But this, you know, part of the reason I love this stuff so much, and we'll probably do this way, way, way too long, is that it's just constant learning and evolution. Yeah, the movement is the joy in this. It's amazing.

That could be the title of this episode. The movement is the joy. No, I don't think so. Thank you for being so generous with your time. Where can people learn more about Automox, connect with you?

Automox.com, obviously, to learn more about Automox. And you can find me on LinkedIn, probably the easiest way. But I really appreciate this, Fynn. It's good to see you as always. And, uh, really love what you're doing.

Thank you. Thank you for being a part of it.

Okay.