SaaStr AMA: *Really* Aligning Sales and Marketing with David Cummings and Craig Rosenberg

Hey, Saster fans. I'm Gretchen Coo here at Saster. Excited to welcome you to the third installment of our webcast series, Ask Me Anything, which we're calling Lunch with Every Other Week. Ish. We bring in the best in SAS to talk about the questions that you care about most. We've got some great guests today. We have some great ones coming up. If you missed the one last time with Brendan Cassidy, who is the VP of Sales at EchoSign, it's got 6,000 views on YouTube, so I think it's pretty awesome. Got David Ulavich, who just sold open DNS to Cisco, and Your second favorite SaaS VC Jason Green of Emergence coming up. So make sure you subscribe to the calendar. Today we are going to dive into aligning sales and marketing, which is like a lot of maybe just lip service or is it actually real? We've got some great guests today to help answer this and more, but it is an ama, so make sure that you tweet in your questions, whatever you want to talk about using the hashtag sastorama, but you guys always wait till the last minute and then you send them in and then we can't answer all of them.

So tweet.

Now.

Without further ado, let's introduce our great guests today. So first up, of course, we have the newly monikered godfather of sas, Jason Lemkin, joining us.

All right, thanks for having me, Gretchen.

I love that name. And then two very, very special guests. The first is David Cummings, who is a serial entrepreneur and an investor. David co founded Pardot in 2007, which is a marketing automation company. If you're not into this in a super, super competitive space, and then sold it to exact target in 2012, I think for just under 100 million. And then eventually Exact Target was by Salesforce, in case you're trying to connect those dots. And then David's done a number of other companies, and most recently he's doing a partner at Atlanta Ventures, which from what I can tell, is doing everything in the world to support the entrepreneurial community there. From investing to running an accelerator to an actual physical building. The Atlanta Tech Village, that's like this amazing hub. It's like the biggest thing going on in the Southeast right now. So talk to David about that too, because it's pretty awesome to give back to the community that way. And then another awesome guest, one of my favorite people, Craig Rosenberg. Craig is the chief analyst and co founder of Topo. Topo is a research and consulting firm that really will help you come in and align sales and marketing.

Topical.

Right. And really rock out your revenue targets. But if you guys have been paying attention in sales and marketing, I don't know, anytime over the past decade, then you know Craig better as the Funnelholic. He's been blogging about this stuff since 2006. So what's really great about having him here today is that not only does he have the perspective of time to offer us, but he's also got a view offer over like a hundred or even maybe thousands of companies. So we'll kick things off now and then I'll hand it over to you guys. So, Craig, you've been writing about this for like 10 years, right? Almost. So what's changed beyond the tools? Is there something that's fundamentally shifted in the human dynamic and that's solved by the tools, or is it basically the same with better measurement?

I feel like there's a setup. I feel like there's a bit of a.

It might be. I'm just trying to get you to be your normal, candid self.

I am. And I just want to say one thing on. It was funny in the intros. You're like, we got the godfather of SAS and then we got David Cummings and then we got this guy just standing. He's here too. Wait, what's Craig Rosenberg. He's a blogger. He's great. Well, look, if we're going to. I think here's my view of kind of what's happened. I'd love to get everyone's take because I think I'll just start with this. We all talk about sales and marketing alignment in the blogosphere from the vendor perspective, like from a high level perspective. But then when you meet in a room with a VP of sales or a VP of Demand gen, we're still not there yet. And that is qualitative and it's real. Right. And I think we still see breakage. We have this new breakage with the rise of sales development. When we polled sales development leaders, how would you describe your relationship with sales today? And 60% or so said there's still lack of alignment with sales right there. So it's like we still look. I think we're a lot farther along, which I'll get to in a sec. But I don't believe that. I still think it's a holy grail, like full sales and marketing alignment. Like I said, we're seeing now we've added this new. It's old sales development's been around for a long time, but it's clearly this Massive emerging practice. And now we're asking them and they don't feel like they're aligned. And then you ask them are they getting the right leads from marketing. And they're saying they're not getting the right leads from marketing. Look, when you put people in the room, I don't believe that sales and marketing alignment is there quite yet. Here's my feeling though as looking at the market, I do believe that in a broad target market, particularly against SMB and mid market type of targets where you sell to a lot of people, a wide ICP or ideal customer profile, I do believe we see highly efficient, highly scalable, relatively aligned, let's call it very aligned revenue machines. We absolutely do. Demand gen is running Pardot marketo whatever that might be. They're out there on the Internet, they're procuring leads, they're flowing through sales development, they're passing to inside sales in a really predictable manner. They've created very predictable growing teams that work really well. Where I see the breaks today is, and it sort of coincides with the rise of account based marketing is when the targets get tighter. This sort of industrial strength demand gen breaks down. An example of tighter might be, well look, we can look at the target market but really we only sell to these specific targets or enterprise or whatever that might be. We still have sort of we've created like a monster because there, it's like demand gen. Now today a good demand gen person can say to the organization I've created thousands of leads but when we're still misaligned on who the buyer should be and who we need to feed, that's where I still see a major breakdown long rant. I'll just let you guys react to what I just.

Well, let me, I want to hear from David. But Craig, let me ask you out of that. Since it's December, do you have a New Year's resolution or two to get more alignment in sales and marketing? I was literally at a 2016 planning meeting yesterday of a SaaS company I'm on the board on and they're planning to do 15 million next year. And we just went through our own version of. We called them KPIs but you could call them New Year's. What are your resolutions? What are some takeaways?

Well look, I think the big thing here is this. I think we would all agree when I mentioned ideal customer profile and target market, the recommendations change based on who you sell to. But I think ideally as we want to create alignment and have these very predictable revenue Machines. I think you've got to look at two things now. One is look the past couple of years we have seen industrial strength, predictable revenue machines against wide small mid market teams. You have to be able to look at your organization and say is the inside sales team. If I add this person and I add this amount of leads, how much more revenue will I get? We have to get there because we have proven that works. Yes, but for 2016 and Jason, I'd love your perspective on this. Here's what we're hearing is like company x gets to 50 million and the board says how do you get to 100 or 150 million? And they say we got to get bigger clients. They go hire field reps and that industrial strength demand gen process is broken. We solve it by outbound that serves a little bit. I think the big thing here is there's this new emerging practice in demand gen. Everyone is calling it account based marketing. I believe in it. We need a new organization within marketing. We used to call it field marketing. I think we're going to call it account based marketing. And these guys are tasked with a number to deliver opportunities to these big targets or these very isolated targets that is key to 2016. You got to believe it because I'm telling you Jason, like right now, go in and they're like they've been to every marketo summit, they've read everything they could spit off MQL's, SQL's, all these things are doing lead nurturing, they love scoring, they do all this stuff and sales is like what the hell? Like you're delivering 10% of the revenue to my big money guys. And that's like okay guys you are doing a good job like keep feeding the, this, the machine down here. But we have this new machine that's going to deliver massive amount of revenue. We have to look at the world a little bit differently there. And so for me that's the movement.

David, what are your thoughts? I mean it's funny when we had and David's the first investor in Coke. Can you guys all hear me or are we. David, can you hear me?

Yep.

Just double checking. When Kyle from Salesloft was on the other week, he was talking a lot about SDR based account management account and we've got. Account based management is a buzzword today. Everyone's thinking about this. John Miller, who he knows new startup is all about account based management. So is there something, what are you seeing? Is there something new in this concept about more strategically attacking it? And Craig talked about doing it when you get bigger. Right. I want to do these big deals. And this misalignment, is this something you've been thinking about at all? Yeah.

One of the hottest companies here in the tech village and in our Atlanta ventures portfolio is a company called terminus.com.

That'S right. All right, so you are all about account based management.

I'm all in.

Besides the promotion. Tell us the learning.

I forgot about that.

Yeah.

Terminus is the original name.

Step back for one minute. You founded Pardot, Right. And actually you, among other things, you basically co founded or first invested Terminus and Salesloft. There may even be a third or fourth one I'm missing. Right. And a lot of that theme is about specialization around these systems. So talk about Terminus and then talk about the themes that you've learned too. Right. Because you're teasing into all these things that Craig talked about.

Exactly. So for Terminus, the original idea of impetus came from seeing the announcement that Facebook and then Google and LinkedIn, we're allowing direct targeted advertising based on a unique email address. So in the consumer world, you don't usually have emails or if you do, it's too broad or too macro. But in the business world, if I can show a specific ad to a specific person based on their email address, that's super powerful. And then of course, I want to use technology to automate that, serve up a more targeted, more specialized ad. Terminus evolved over time and it's focused directly on account based marketing. It's complementary to John Miller's Engagio. And the core offering right now, it's going to expand over time. But the core offering right now is the idea that just like in the consumer world, you'd go and you'd look at a watch on a website and then you'd go to CNN.com and you'd see a retargeting ad for that watch that you just looked at. And retargeting has been around for a long time and it's been very successful, very powerful, taking that same principle, that same concept, and applying it to the business context and business advertising. So going in, taking your data out of Salesforce, out of Pardot, and saying, okay, I got 100 opportunities in the pipeline. Here are the 10 most common job titles that I sell to. Here are their email addresses, or here are their usernames and different systems, and then showing targeted ads based on where they are in the buying cycle and then the idea of tracking it and of course showing the contribution to that sales process. So what's the roi? Shorter sales cycle Bigger deal size, higher win rate and then using that from a technology point of view. So yeah, I'm super excited about account based marketing. I think it's going to be huge.

Got it. And so just to step back and Craig add too, because I'm a little bit. I'm learning here too. Right. So when a customer goes to buy, it's bought by the VP of marketing, director of Demand Gen. And going to Craig's point, they've sort of segmented the tools that they want to buy and they buy something like this to target the higher end accounts. Right. Versus managing whatever using another system like Cardot or whatnot to manage their typical inbound flow for more velocity. Is that the segmentation that they're tapping into?

We look at it at least from the terminus point of view as really on the nurturing. So it's really at this point it's display ad nurturing of prospects that are already in the pipeline or named accounts that you're already going after. At least right now in the terminus world, we see it as more of a nurturing tool.

I got it. Let's step back because Craig brought up some good points for the founders, which are our core audience. I'm just getting to a couple million in revenue or a million in revenue. I'm starting to figure out that my customers are segmented. They're small, medium and large. Now I'm realizing and I just figured out what marketing automation is. Let's say I'm a salesforce customer. I'm using Pardot. Right. And use Terminus as an example. Am I adding this to my toolkit for my larger customers? And how should I think about bifurcating my customers from a marketing perspective? And then we can talk about how that impacts sales, right?

Yeah, absolutely. So I'll defer to Craig. He's more on the strategic side. I'm more tactical as this is how we see it and this is how we do it. This is the value we get from it. So I want to hear it from the strategic side from Craig.

Well, yeah, by the way, I don't know if I froze before. I apologize for that. I did.

Okay, we can accommodate dial up here. Don't worry.

This AOL account does not seem to work well with Google hangouts. So look, here's what I would say is I believe that every company should start with a baseline foundation of marketing automation content and create that cadence and that flow of. Sorry, I was worried I froze there. It's the first thing I'm going to do in my opinion. The first thing you do is you begin to, after you understand your buyer, you begin to start with industrial strength demand gen, especially if you're small, medium and large. Because look, there's only benefits. I think we've all seen it and we know from creating and distributing content. So a lot of the playbook that we've seen over the last three or four years from the Pardot marketo HubSpot, that thing is still in play. And especially if your market, even if it's segmented, it has small and medium. That's a place where you can have a real measurable impact. Everyone should do that. The question is which you bring up, which is, well, where does Terminus and these folks that are saying that they're account based, where do they play in? For me there's lots of applications for Terminus which I could give David my perspective on. I am a big fan as well of that account based retargeting market. For me there's this second exercise which is okay, well you know, who are the key accounts that we have to go get? It's one thing to say we sell to everyone. 10 who has a marketing director who does this. That's great.

You should do 7,000 startups like that. We sell the 10 plus to a marketing director, we sell the 100 plus. Now there's only 6,000 startups. Let's just take a pause for all of us. That's the fundamental. Let's take a breath. There's 6,000 companies today trying to sell the marketing directors with 10 or more employees, right? So how do I use these processes and tools and systems to break through that? Because now everyone's going to go. If you're not everyone's already using something like Pardot, right? And then they'll learn more about abm. So how do I even.

So keep going.

But how do I break through the noise right there. That's step one.

Let me give you a quick targeted example. At Pardot three years ago when we sold the business we had a very, very specific segment that we went after. We went after companies that had 20 to 200 total employees of which 5 to 50 of those employees were in sales and marketing, of which they had one full time in house marketing manager and they did Google AdWords for direct response lead gen and they had SalesPeople listed in LinkedIn because they had a consultative sales process and they had a newsletter sign up box on their website showing that they did some form of email marketing.

Got it. And how big was. Do you remember how big that universe was? Going back in time, it's well segmented, that's for sure. Right.

So we were super segmented and it was fabulously successful. We focused from a universe size. The way we talked about it back then is we said back then salesforce.com had 125,000 paying customers. Sugar CRM had 14,000, Netsuite had 8,000. And so we said the universe of currently paying modern web based CRM users that were in that 20 to 200 people. So we called it 20,000 companies at the time. But growing super fast was our audience. And when we sold the business, we had about 1,000 customers.

You took Salesforce plus Sugar plus Netsuite and you did that segmentation about a tenth of them. What you thought was your sweet spot, right. And you targeted them with human outbound as well as marketing automation, all that. You just had the kids pick up.

The phone and almost all sdr, AE process. So tons and tons and tons of cold calling. We wrote a little bit of software to sprinkle websites and automate some of that process of building segmented lists based on our ideal customer profile. And it was super successful.

So let's talk about that just for a minute and then Craig, we can talk about how the world has and hasn't changed. So going back in time, you identify the 10% of the sales force plus NetSuite plus sugar ecosystem. That's your sweet spot. It makes sense. 20 to 200 with the director of demand gen already in an email signup. And to get to those first couple million in revenue, was that primarily by hiring very inexpensive kids in Atlanta to pick up the phone and call into those accounts?

Exactly, exactly. And of course over time we got a bunch of second order revenue and we ramped up our marketing side. But targeted cold calling to that ideal customer profile was phenomenally successful.

All right, I'm seeing some of the inspiration for Salesloft right there, which was to product some of that work.

And then of course the book Predictable Revenue came out, modified it all and it was like, oh my gosh, take what's in the book and just make software to support what's in the book.

Yeah, what's that?

What's the name of the new book? The one that you and Aaron are working on.

Impossible to Inevitable.

Exactly, exactly. So I'm sure there's some lessons learned in there that might turn into a software product as well. I don't know, I haven't read the book yet.

So Craig, do you think that. So that's a great story right there. If I was founding pardot today. Pardot 3.0. When there's so many more tools, can I still do that strategy that David just described?

Does it work?

I mean, sometimes. Clearly it does, but in these more crowded segments. Right. Can I target that director of Demand gen that gets 8,000 calls and emails now to seller tools?

Man, it is hard. You could use that example. I'm sure your companies that sell to it just laugh hysterically as well. Right. I don't know any part of the organization anymore that doesn't get 1,000 calls, considering what all the different companies we're creating here in Silicon Valley because we've.

Gotten better at Outbound, which we can chat about. Right. And so that just drives up the volume. Right. As well.

Well, if you don't mind me leveraging what David just said. So, first of all, one of my favorite stories that everyone, when we talk about Outbound is, you know, I always tell them, well, guys like the marketing automation guys who are telling you that you could get all these leads from marketing and do all this nurturing, those.

Guys were doing Outbound.

Right. And so. Okay, got it. It's like, well, we want to do the HubSpot model. I'm like, oh, well, they have the most Outbound callers in the Northeast. But if you take what David just said years ago, building Pardot, which is an incredible story, there's a lot of blood, sweat and tears in the Pardot story. And it's like, we could go on for. You should write. The book is really interesting on how David and Adam did Pardot, and I respect that. So now you take it, and now you take some of the things David's doing today instead of just one is I do believe you isolate the icp. This is a really big deal, and it depends on where you are as a company. But I'll give you a different example. A company that's a Marketo reseller Lead MD in Arizona, they used to just say, well, we'll sell to anybody with Marketo. And then they took a step back and said, well, wait a minute, who really buys from us? They did a lot of work. They used EverString to go look at thousands upon thousands of different data points. And what they learned was something similar to what David just said is actually the most predictive thing that will tell us someone wants to buy from us is if they have Vidyard on their site. They have Marketo Salesforce, they have Vidyard. And then they said, by the way, it's not just the vertical, it's whether they have, like David said, X amount of marketers, whatever that might be. You got to isolate the icp because trying to sell to everyone from an outbound perspective, I think we're all seeing. We told everyone, go outbound, go outbound. And it's like that's hard because as you said, there's 8,000 vendors calling into the direct demand gen. We've got to make a commitment to who we think is really going to buy from us. We got to put a stake in the ground. The second part though is to take what David just said. The idea of account based marketing is it's not just outbound. Now we can use the terminus, we're calling into someone and we can start to influence them via retargeting over time or we use personalization so that when they come to the website they see that it's them. When we isolate the icp, we can start to use multi channels to get to these people and to be delivering the message not just from calling. I'm a big believer in outbound, so don't get me wrong. But as you just said, look, it's hard. Everyone's hitting them. We need to take a multichannel approach for that. You do have to isolate the ICP because you want to make this commitment to these people and say, I'm going to run terminus, I'm going to do these things. The last thing I will say is the way you get above the din today is the next wave for me is scalable personalization. That's to me, one of the things that we are going to see more and more because you just cannot go with scripted.

All right, let's chat about that because that is an important theme. So explain that a little bit more to the audience. People almost understand that. Right? We've been sending out the same friggin emails to 10,000 people for years and that was great before we had that. Right. So what is scalable? Personalized for reals? What is that?

Yeah, so for me it's that in the touches that we make to a particular account or lead contact, however you want to think about these people, can we deliver a message that's relevant to them and do it at scale? I'm trying to put it in simple terms and I'll give you two examples. Example number one is an outbound email. Even 20% of customization off three minutes of research to just give someone something relevant to them is going to make a huge difference in your conversion rates to conversation. If you do run terminus, one of the things that's really cool. When you talk to Sangram and you start to dream big, it's like, well look, let's say you segment your ICP and there's a vertical story here. Well, you got to tell that story. Come and retarget. You want to say Terminus, where directors of marketing for tech companies do X, whatever that is. We continue to personalize this and the web personalization is really interesting to me because that's just, I mean that's like a, that's happening kind of with demand base. We're going to see more and more of this, which is okay, you do get them to the website. We try to build these catch alls for everyone. Well, how about not a catch all for everyone. How about a catch all for that person who comes in? So when I think about personalization at scale, I'm thinking about all the touches and how can we in a scalable way be able to deliver a message that makes it feel like this is not just one of the 8,000 products but like I get you personally, I get you and I can help you solve that problem. So that's how I think about it. And that's the game changer for me over the next couple of years. It's the only way to rise above the din, in my opinion.

Yeah. Let me ask a related question to both of you and Craig, you probably thought about strategically with the companies you work with and maybe David more tactically. But these are interesting questions. How to target more carefully, how to use more tools, do it, account based management, Other topics we've talked about a more meta issue is your startup gets just big enough that you hire your VP of demand gen or director of VP of marketing or whatever. And they come with a set of learnings and experiences and biases because that's the way the wore up or that's the way they did it at pick your company pardot or box or wherever. In my experience, sometimes some folks are totally bleeding edge sales, marketing, hackers and they're all over this. But how do you drive these conversations and especially if they haven't had deep alignment with sales and marketing. And maybe it's an amorphous question, but what's the counsel, right? And how do you get folks to start thinking about 2016 in these new things?

Well, going back to the previous question, I would say if you would have asked three years ago, what's the weakest part of Pardot? And I would have said it's our marketing. So we're a marketing software company developing marketing software Selling to marketers. And from a company point of view, we really took the German approach to marketing, which is go hire a bunch of salespeople and forget about marketing.

Yeah. What's the Uber learning? Looking back on that or reflecting on that, what do you tell your companies to do now earlier, from that experience?

Uber learning, number one, would be the biggest challenge that we had, at least call it five years ago, maybe four years ago, was a lack of market awareness. We were running around doing all these cool things, adding all these value to customers, but nobody was searching for the term marketing automation. You can go to Google Trends and see the volume of the search term, and it's just dead. There is no market awareness for this thing that we were offering because there's no market awareness. SEO is not going to do much. PPC is not going to do much. And so we literally had to hire an army of SDRs and just start banging down doors.

But isn't there a chicken and the egg situation? Because if the Google SEO is so great, that means there's already 10 great players in the space. Right. So is this. I mean, I hear founders with angst about this. I'm not in a big enough category, but it's not all bad. Right. And so your hack there is. You had a natural predilection for outbound. Right? That's your DNA.

Yes. And it wasn't beneath us to do outbound. A lot of entrepreneurs, even entrepreneurs in Atlanta that I know, they don't want to have any salespeople. They're selling a B2B SaaS product and they don't want any salespeople.

They don't. They want to be Atlassian or Basecamp. Right.

Or mailchimp. Mailchimp in Atlanta is the most.

They all want to be mailchimp.

They're doing insane amounts of revenue and growing fast. And they have not a single salesperson.

They were started in 1984 or something like that. Yeah. It takes time.

They have over 500 employees in Atlanta and no investors.

No investors.

Other entrepreneurs see that and they're like, I want a SaaS product sold to marketing, and I don't want to deal with salespeople. And it's like, okay, if you don't want to deal with salespeople and you're going into a market that has no market awareness. Yes. That's tough.

Right, let's chat about that just for a minute to help other folks. So, David, you're super charismatic and seemingly outgoing. Right. But you are an engineer by training. Right. So how did you decide you had a passion for outbound sales. Where did that come from? Did that come from your paper route as a kid or where does this come from? From an engineer turned CEO. Where did you learn that?

It was really out of necessity. Back in 2003 I built a web content management software company targeted towards the mid market universities and colleges. So I did the whole field of dreams, built a cool product, hoped that customers would come. No customers came. It was a semi defined market, website management, web content.

So you had your own little mailchimp dream back then that you'd build this great product and that they'd knock on your door?

Yes, and fell flat on my face. And so I started reading sales books and all the sales books were talking about how to cold call, how to beat down the doors. Here's the script, here's the activity based type, sales functions. And so I hired two interns from Emory here in Atlanta and essentially the interns, it wasn't called that back in 2003, but they were essentially SDRs. They would call up and they would call up webmasters at schools and they would call up directors of IT at universities and they would set up demos and I would do the demo. So I was the product manager and the sales engineer and the senior sales rep giving the demo. And I had effectively invented a simple type of an SDR process. And so having that success more than a decade ago, when I came down, when it came time for Pardot, I was like, okay, that's the same route we're going to go. Because that's the route that worked for me before.

Yeah. And when I meet founders and they talk about Mailchimp and 37signals and Atlassian, I wish them the best and show them the door. It's nothing personal, it's just I think the odds of them getting to nine figures in revenue, usually at least, unless it's something uniquely developer centric or otherwise, I think it's hard, right?

Those founders did not study their ICP and they should not have even walked into your office.

Jason, there's plenty of. I mean listen, you can build a Twilio with very little sales team till 100 million. You can build an Atlassian. Sometimes it takes longer, but I don't think it works as well with true B2B. And David, when you meet folks like that, because you brought it up, do you give them advice? Do you kick them in the ass like your experience? That was my experience. My old boss kicked me in the ass when I was in this. He said, dude, you Got to get out there, get on a jet was my simple version of your story. When we started EchoSign after eight months, we had 1,000 customers and great logos, but we didn't have enough revenue. I don't know what. We had 500k or something. It seemed horrible. It actually wasn't bad in eight months. And my old boss, that's not bad at all, he just took his boot out and nice, scan the world, and metaphorically kicked me in the ass. He said, get on a plane. So what do you tell founders?

I tell founders how. I'd like to put it in really simple terms. How well is your SEO working? Because everybody does SEO. They say it sucks. It's just not working. I'm not getting any value from my SEO. I'm like, why aren't you getting any value? Well, because there's nobody searching for my terms. Why isn't anybody searching for my terms? Because there's no market awareness. Well, if there's no market awareness, then why are you doing all these B2B marketing things? And so I try to paint the path to. You need to pound the phones and get after them.

Yeah, yeah. And Craig, tell me about it, because I do this really simple. I'm doing this now this whole month with the companies I work with. I do this really. I try to make things excessively simple because that's my shtick, right? But I break the plan for next year into really three buckets. The organic A leads. These are folks that have heard about your product, and they actually come in. And some of them will buy. They come in through the door. Eventually you do get those. Eventually. Pardot's been around long enough that a few people have heard about it. And brand ultimately builds everything over the long term. Right? So that's the A lead.

Pardot is nine figures of recurring revenue now.

Now. But it takes time, Right? So that's the a lead. 8 years old have very few. Right. Then you get the B leads are usually generated by demand gen. You pay for them, and usually at least they have longer lead times and at least the CAC is higher. And then the next category is outbound. You have the folks, you have the A leads that come to you, you have the B leads you generate. And what's your target for next year? 18 million ARR. Include upsells, which is really category D. These are your four buckets. Is that too simplistic or. Craig, how do you advise folks, and do you do anything along those lines or generate alignment around it? Because sometimes when I do that people are just shocked. To me, these three categories plus upsells.

Is all there is.

Right?

Yeah. No, I think that actually I was very excited. I didn't want you to see me writing it down so I couldn't steal it. That's how good I like. Look, I too think that if we could simplify things, I think it'd be a lot easier. I like those buckets. I would just say that category one is what David's talking about. It depends on the stage of the company and category one and the dividends that you will receive from category one in the early stages of your life cycle. When you're doing your planning, I would focus on category two and three three probably most heavily. Yeah, I like that because then you can just talk in simple terms and big buckets. So actually I'm all in favor of it but like I said, I mean look, it depends on your market and who you are. The other thing I thought that right when you were saying that I thought was really interesting was have we seen the reemergence of the importance of PR these days? When you talked about number one and I think we would all agree that these next legs up the brand accelerates you when you reach point X to get to point. Yeah. I'm sure your portfolio companies come back and say well we're going to hire all these sales guys but you have to create this huge sucking sound where people are buying. Not always because you're sales guys, they're buying because they believe in the brand and they want to come in and knock on your door. It's just interesting. When you're talking about number one, I'm like the digital demand gen age, we kind of poo pooed the soft marketing stuff. We poo pooed brand a little bit, we poo pooed pr. But when you said that when you look at all these companies that are flying off the table, is there a reemergence there? The importance of the old school soft marketing plays here to fill bucket A in your list.

I'll tell you my learnings. But David, what do you think? What do you think of good old fashioned PR in the age of 50,000 startups and 140 per YC class?

I hate PR. I'm not a PR guy at all. I'm just hardcore blocking and tackling. Hit the front lines, grind it out. I'm not a PR guy at all and it's frankly because I haven't done well with it historically and so I'm just following the same playbook that's been working.

Yeah. I'll tell you my learnings. I share almost everything, as you know. I'll keep a few secrets. But I will tell you that almost every company I've invested in in San Francisco, if you walk around, there's billboards, I will tell you if they didn't perform, there are reasons that there's Rainforest and Top Desk and Algolia and other billboards. But the learning from billboards as an example is you have to know what you're doing. It's so easy on PR and soft marketing and corporate marketing to flush your money right down the toilet, right? But the more it can be a second or third touch, the more your ACV is higher, right? And the more that you have a product where affinity with the CEO and the brand is important, you can get a huge lift. It's tough at five bucks a month, right? But my secret sauce on the billboards and the radio ads is the five figure ACV going into six, right? And I've even learned now that we backed into this events business by accident. I learned about a booth, right? Like take a booth. Like it's not quite pr, but we can shout it. A booth at the Sasser end of this year is like 25 grand. Like when I was a founder, I'm sure David was the same that seemed like we want $25,000 to show up at Dreamforce. That's what they wanted from us in 06. And so I convinced Bluewolf to let us go in the booth where my co founder did for free. And the next year it was agony, right? But you know what? At a company I invested in and they were tiny last year, this afternoon it was Rainforest qa, right? They had a booth, they didn't know what they're doing. They closed two 50k customers from it, right?

Boom.

So scale matters. And I think now that there's more startups, finding the brand you want to affiliate with, right? And that you want to buy from earlier has more advantage because there's not as much time for this discovery, right? There's just too many. There's too many products in the marketplace. But it's also changed because back in the day, if you were like on tech, TechCrunch, we launched Echoes on TechCrunch 1-1-06. If you tack back leads, we probably got half our revenue from that. We got Qualcomm, bt, ge, Brooks, Eckard Pharmacy, which is now cvs. It's not they bought that day, but you could track it back because you would be on TechCrunch in 06 and the market was tiny, but you'd be on for like four days on the homepage now there's 1,000 articles on TechCrunch a day, right? It's big business. Yeah.

Yeah. Well, one of the things that I love that Jason talks about frequently, that I think a lot of entrepreneurs don't appreciate because they haven't seen it firsthand, is really around that second order of revenue, right? Having the mini brand and then going to the brand, it is so unbelievably valuable. But you know, to an entrepreneur that's never done it before and it's got 500k of ARR or a million bucks of ARR, they've just never seen it. But once you hit 5 million of ARR or 10 million of army, that second order revenue is so amazing. It's so powerful.

PR, it's a great point because PR is many benefits. It can do that. Imagine I was telling my friend about Terminus or Rainforest and I'm saying it's great. And you drive up the 101 and the rainforest or Terminus billboard is there and then you go to some event and the co is there and you read TechCrunch. All of a sudden you've got your third or fourth touch and then you.

Go to CNN.com and you see a Terminus app, Google search, right.

And my other learning from Saster is what I didn't know is because if you're going to do this B2B stuff, it's a long term commitment. I didn't realize in the Power of Long Tail pr, we did this series, we've done this experimental thing on Saster called Get in early where we profile SaaS, startups between 1 and 10 million growing 10% a month, more over more with CEOs that we love. Those are the criteria. And the idea is it's for, for hires that there's so many startups here in San Francisco, which one do I join? And we give you a few ones that are hot and they have to do a video and the day it goes up they get a few leads. The first order leads. But then later the power of having that collateral to reinforce the decision is epic. I know. Maybe, Craig, it wasn't what you're getting at.

No, that was great.

VR is more powerful than ever. But the Uber learning with all this noise is the Uber learning has to be more authentic than ever, right? In the old days we were told to just blog.

Right?

And then the change a couple years ago is everyone Hired a content marketer, right? Everyone in the world hired some kid, another kid may be 80 or they may be 18, I don't know, some kid to then write mediocre blog posts, right? Or back in the day, everyone wanted to have.

What is it?

What's the term? Guys, help me. I'm sure you tried this, David. You wanted to be the oracle of your space. This is what HubSpot and Marketo tried to do.

You want to be the thought leader. Thought leader.

Everyone was needed like four years ago. Everyone in the world needed to be a thought leader, Right? And just how many thought leaders do we need in erp Exactly.

The really sexy space to be a thought leader.

But the thought leader thing worked for a while. Then there were 10,000 vendors and then it didn't work. Right.

But going back to your point about being authentic, you read the Saster blog and Jason has a certain tone and a certain style and a certain wit about his writing. Then you go to my blog and I have a certain sort of straight, narrow and quick and to the point style about the writing, but it's authentic. It's to the person. And we both have good sized audiences and we both have our own sort of flavor and brand about it and it's authentic.

By the way, I got to get one last thing in because we're going to run out of time and as usual we get to about 3% of what we wanted to do. But there's one fun topic, David, that you're great on. And then, Craig, I want to hear your thoughts, right? Is stuff outside of the Bay Area, right? And so, David, you've had obviously huge success in Atlanta both as an entrepreneur and then you bought a skyscraper. How many startups do you have in there? Like 40 or 50 or something.

Not exaggerating. 260.

Okay, 260. Okay. But you've also thought through these issues, right? In terms of scale, right? And so talk about the pros and cons in general. If I'm starting a company in Atlanta, right? And then, Craig, even though we'll run out of time, I want to hear any different advice you give to folks about this topic, especially if they're selling into tech and have tech partners. If your partners are salesforce and whomever and they're all here and you're in Atlanta, but it costs half the price. What are your top few learnings there, David? For us, we could do a whole hour on it.

Oh my gosh, tons of learnings. Learning number one is that if you're in a Business that needs salespeople and engineers. Atlanta is amazing.

Right?

So Atlanta is the capital of the Southeast. And so we have thousands and thousands of sales offices, not just for tech companies, but for all kinds of companies. So Atlanta has an insane number of salespeople servicing the Southeast. So we got huge amounts of sales talent in town. And then we have unbelievable engineering. Georgia Tech's one of the top five academic schools. It's one of the 10 largest in the country. We produce 2,400 engineers a year that graduate just out of Georgia Tech.

Okay. That's more than Stanford.

So 2,400 new engineers a year and then 10.

You're not counting like mechanical engineers or anything, right?

It counts. Mechanical engineers. But I have mechanical engineers that write code. Right. You know, all the engineers nowadays have.

A little fun with the mechanics. Okay, keep going. Yes, okay, I hear you.

So what I'm getting at is you have a business, you need sales people and engineers. Atlanta is amazing. So that means It's a B2B tech company. If you're doing a consumer startup and you need media and PR and you need stuff that's outside of salespeople, plus just hardcore engineers, not going to be necessarily the best place from a talent point of view.

And what about going more true enterprise? What about when you need to learn how to do account based management and field sales and enterprise sales for six figure and up SaaS deals? You don't think there's any disadvantage to being in Atlanta?

Atlanta's Great. We have 12 Fortune 500 companies, the third largest concentration in the country. We have the world's busiest airport, so we can take direct flights anywhere in the world.

Okay, I'm not going to get you to take the bait on this one. Let me ask you one last one. But it's good. It's good, right? Okay, let me ask you. Okay, so you don't think that, but this is good. Challenging, right? You don't think there's any sales or engineering disadvantage to being in Atlanta? It's good to challenge, to challenge some traditional beliefs. Right?

You don't see any disadvantage on the engineering side. There's a lot more specialized experience in the Bay Area. Like if you needed machine learning or you need something that was really detailed. If you just need an awesome full stack developer, Atlanta is amazing.

Okay, one last question and Craig, I'd love to get some of your higher level thoughts on it. So let's. We had a great team in Atlanta.

I can build it.

Right. And then my competitor, who also partners with Salesforce is In one market, right. And they're there every week and they're bringing them cookies and they see them in the elevator. Right. And how should I worry about that? Should I not worry about that? Should I move out here and leave my team in Atlanta? Like, I'm worried because they're also in one market. Right. And I see on Twitter they're bringing cookies to everybody. Any thoughts on that one?

Well, are you trying to get me to say something that will hurt David's love of Atlanta?

No, I think it's a great. It's an endlessly interesting topic. Entrepreneurship, more distributed globally. Right. And I think actually in my experience, where it bite you is at the management level, which is kind of what we're talking about. Right. Everyone finds a way. Right. And ultimately it's kind of this. We started with alignment of sales and marketing, but it's really, can you get the executive talent you need to get from 10 to 50 or 5 to 15 or 50 and beyond, is the big question to me.

Yeah, I hate to say it. I do believe that you can get to 10 million in Atlanta and in South Dakota and wherever. But can you get to 100 million without having in tech, without having Silicon Valley based executives, without having sort of scientific evidence against it? Except for the big ask companies that we've built in this place? I've just seen it where you've got to have a presence here. And in particular, if you're in sales and marketing and you're working with Salesforce and these types of. It's like, David, I want Salesloft. They gotta have someone here. They just do. I know you sent some of the guys. In my opinion, this is where it's all happening and where we find the best talent and we have the best relationships and we've got access to the king makers. I think you can grind. I think you can grind. We've seen it enough. David Pardot, everything you can grind to a certain point. But when you've got to make that next leg up in tech, it just having experienced executives and the ability to work the 101 here is to me invaluable. That's my opinion, totally biased, 100% biased.

It's an endless discussion, Right? It's an interesting one. Right. And the last one I learned. And then we should wrap it up. Although I'd love to go longer. It was funny when I did this event with Ryan Smith, who's the CEO of Qualtrics in Utah. Right. And they've crossed 100 million. And we chatted a lot about this topic because I did it when I was in London this summer with Euro founders and my insights from Ryan, for what it's worth, was twofold. One, the salesforce, like walking in one market, is not as important for his business. It's important, but it's not as important. Two, what he did as the company went through, in his words, Five different phases as it's gone from zero to 100, never took any venture capital until they were at nine figures in revenue. That'll sound familiar to David is actually he agreed with the VP level thing as they got bigger and he convinced them all to move out the holes that he couldn't get. And Utah is a great. You've got on the trigger, you've got all this stuff, the folks that he couldn't get, he just said, listen, I'll pay you twice as much and I'll give you 100 great people to manage. You don't have to have the bullshit that you have at your company in the business. So come move. It's just a version of the story and obviously it's a big success story. I'd love to chat about all this stuff more and dig in, but Gretchen, I think we're out of time. So just a couple things to note that are coming up. Craig has his inaugural sales summit in April. Right.

Thank you.

600 sales leaders from across every continent except Antarctica will be here in April. It's going to be pretty epic. So please come with that and check out more and we'll link to it on the Twitter and the website when we get this up. David and hopefully Craig too. But I know David will be at the Saaster annual February 9th, 10th to 11th, and you'll get to meet him. And we're going to. We'll get David up on stage too in some fashion, which will be fun. And then the next one of these we're going to do is December 17, which is that the day Star wars comes out or is it the day before? Do we know this is going to be tough competition with David Ulovich. David was one of the most popular speakers at the SASTER annual last year. Just a CEO and co founder of OpenDNS which went from freemium to B2C to B2B to B2 7 and Eight Figure Enterprise. And then right after that he sold the company to Cisco for almost a billion. So this will be a really fun update. And he's just one of my favorite founders. So that's December 17, BB8day and David and Craig, thank you. This was terrific. We really appreciate the time.

Awesome. Thanks for having me.

Bye.