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Why just a build a company when you can create an entire new category? Category creators grow revenue 4x faster and grow market cap 6x faster than category entrants. In this Dreamforce keynote talk, serial entrepreneur discusses how he created the cloud marketing automation category with Eloqua, his new advocate marketing category creator Influitive, and some other great category creators like Salesforce.com, Tesla and Keurig. A new framework for category creation is proposed, featuring a transformational experience and revolutionary business model underpinned by disruptive technological change.
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Creating the billion$ SaaS category:Zero to IPO secrets from a serial entrepreneur
Mark Organ, Influitive, CEO
@markorgan
@influitive
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Cloud-basedMarketing Automation
Advocate Marketing
Nasdaq IPO$871M
BILLION$ (TBD)
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4
5
6
List, AttentionSpoilage
DeliverabilityAvailability of
Deep Knowledge
7
Ideal Reality
8
9
2006 2010 2014F0%
25%
50%
75%
Dependence on knowledgeable peers in the buying process(B2B software buyers)
3.5X increase
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What does it mean to create a category?
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0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6
-20%
0%
20%
40%
60%
80%
100%
Revenue growth (2004-2005)
Salesforce.com
Oracle(incl. PeopleSoft)
SAP
Siebel
Amdocs
Note: Relative Market Share is each company’s revenue divided by the market leader; the market leader’srevenue is divided by the 2nd place company’s revenue. Source: Gartner (http://www.gartner.com/newsroom/id/493005)
Salesforce.com’s status as a category creator enabled rapid growth several years ago
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0.00 0.20 0.40 0.60 0.80 1.00 1.200%
10%
20%
30%
40%
50%
60%
70%
Salesforce.com
Oracle
SAP
Microsoft
IBM
SugarCRM
Note: Relative Market Share is each company’s revenue divided by the market leader; the market leader’srevenue is divided by the 2nd place company’s revenue. Source: Gartner (http://www.gartner.com/newsroom/id/2459015)
This led to a dominant market position today
Revenue growth (2011-2012)
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Tesla currently is small vs luxury vehicles
Tesla Lexus Audi Cadillac Mercedes-Benz BMW0
50,000
100,000
150,000
200,000
250,000
300,000
Source: Business Insider (http://www.businessinsider.com/tesla-is-not-really-outselling-bmw-audi-2013-5)
US unit sales, 2012
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Tesla has shown dominance of US vehicle sales in its specific price range
Tesla Model S Audi A8 BMW 7-Series Mercedes-Benz S Class0
1,000
2,000
3,000
4,000
5,000
US unit sales, Q1 2013
Source: Business Insider (http://www.businessinsider.com/tesla-is-not-really-outselling-bmw-audi-2013-5)
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Tesla’s category creator status and rapid growth drive valuation multiples far higher than other carmakers
Tesla DaimlerBenz BMW VW Ford GM$0K
$100K
$200K
$300K
$400K
$500K
$600K
$700K
$800K
$714K
$60K $39K $13K $12K $6K
Market capitalization per vehicle sold
Source: Yahoo! Finance, Corporate filings, Analyst reports
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Transformational experience
Revolutionary business model
+
Driven By Disruptive Forces
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Missionary
MercenaryVS
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Overall (20) Category Creators (10) Non-Category Creators (10)
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$3.40
$5.60
$1.20
Incremental market capitalization per $1.00 of revenue growth
CNN/Fortune top 20 fastest growing companies (2010)
Category creator premium
Category creators enjoy a valuation premium
Source: Cambridge Partners in HBR Blog, 09/2011
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= ≠
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= ≠Hypothesis-driven, iterative approach
Vertical niche market dominance
Focus innovation on the emergent hero
Drive the company on mission, vision and values
Invest early in customer success
Iterated MVP is insufficient: emphasize design & quality
Expand your productization and monetization models
Build for the billion.
Drive leads to achieve profitable, efficient growth
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= ≠
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Use a hypothesis-driven, iterative approach to quickly find
product-market fit
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Pick that niche you want to serve,
document why, and test it.
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It’s OK if your hypothesis is
wrong.
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Pivot quickly!
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Eloqua started with the wrong
product in the wrong market
1.0 2.0
Marke
t
F.I.R.E.(Financial, Insur-
ance, Real Estate)B2B Tech
Product
ChatMarketing
automation
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Vertical niche market dominance
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The narrower the better.
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Your first job as an
entrepreneur is not to die
I PROMISE I WILL NEVER DIE
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Focus innovation on the
emergent, under-served hero
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Drive the company on
mission, vision and values …from day one!
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Drive leads to achieve profitable, efficient growth
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Treat lead gen as a
strategic imperative
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CEO must help choose
customers strategically
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Ensure the lead flow is increasing in
quality & quantity
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Use a marketing mix of
seeds, nets and spears
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Invest early in customer success
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Build happy customers:
they scale really well
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If you have $1 to spend on
marketing, consider spending
$0.75 on customer success
Need new pic
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= ≠
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Iterated MVP is insufficient:
emphasize experience,
design & quality
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Expand your productization
and monetization models
45
Build for the billion.
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More long-term focus: design a
business with multi-billion potential
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Raise money earlier, but use
disruptive tools like AngelList for a
higher shareholder count
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Build a more ambitious
product footprint
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Hire a stronger executive team
early, but with room to grow.
50
Hire a stronger executive team
early, but with room to grow.
Creating the billion$ SaaS category:Zero to IPO secrets from a serial entrepreneur
Mark Organ, Influitive, CEO
@markorgan
@influitive
