Category Creators Episode 1 Transcript

October 15, 2020, Meg Shriber

In this episode of Category Creators, Gil Allouche kicks things off with serial entrepreneurs Manny Medina, Godard Abel, and Mark Organ.

Gil:
This is the Category Creator podcast. This is the first episode. My name is Gil Allouche. I am the founder and CEO of metadata.io, and I have three amazing martech OGs with me, kind of serial entrepreneurs who have done really well. We have Manny Medina, the CEO of Outreach. We have Mark Organ, the former CEO and founder of Eloqua and Influitive and Categorynauts. And Godard Abel, current CEO of G2. Former CEO of BigMachines and SteelBrick. All of you folks are category creators, successful one to that statement, who created the category and led that category. You’ve come through very interesting experiences. Would love to learn first of all a little bit about your path, get to know you, and then share with the audience the real secrets that you’ve gone through with sweat and tough times as well as some of the romantic success stories.

Gil:
Maybe we’ll start by a brief intro from each. Manny, maybe you can start us off.

Manny
I’m Manny Medina. I’m the co-founder and CEO of Outreach. Unlike these two gentlemen, I’m not a serial anything. This is my only company. Probably my last company, too. I had to start from scratch, so I remember really early on when we were pivoting from our previous fail thing to Outreach I met with Mark Organ in a bakery, and I just took notes. He was just dishing out knowledge in big scoops around how to land and expand accounts, who do you need to talk to, and if you want to land Salesforce you start with data.com, because data.com sucks and if they buy you, they will expand you in the rest of the organization.

Manny:
It was just a wealth of knowledge. I dither a lot, so I’m not going to come out and say, “Oh yeah, I was swimming with the dolphins in Hawaii, and the idea came to me. Then boom, a category exploded.” For us, it was this separation of system of action from system of record that gave us the insight that there was a category here, because it was big enough. That’s when we came up with the moniker of sales engagement as a category. Category is created when an analyst such as G2 crowd, the player’s a category, and then it’s there. The moment that G2 calls it a category, that’s when we’re like, “All right, so we got some momentum. We finally got some experience,” but it wasn’t clear, and it took us about three, four analysis to get to somebody who actually believed what we were saying. And it took a bigger competitive market. It’s been a fortuitous path that got me here by virtue of everybody else helping out a little bit, not by just us pushing it.

Gil:
Nice. That was really good. You made that decision. How many years from that moment until you put on LinkedIn that you’re covered and that you’re a leader?

Manny:
When we got the series A when we got enough cash for us to actually even entertain the thought. Before then, it was just don’t die. Once we had 10 million, then I go, “All right, what are the bigger things that we can be doing?”

Gil:
That’s amazing. Tell us about hashtag fail moment. You’re like you couldn’t sleep at night, that was like total shit show.

Manny:
The most discouraging call is a call that we had with this analyst from Gartner. His last name I think is [Berkowitz] who for an hour he tried to convince us that sales engagement is not a category. How it’s a subcategory of sales acceleration, which is a subcategory of some other shit which is a subcategory of whatever, stop wasting my time and go to something bigger. It was such a disheartening thing.

Manny:
Then 59 minutes into the call they pause him like, “Oh, you should buy some Gardner for your company.” I’m like, “No. The fuck? You just told me how I suck, and then you selling. Is that how you do it?” I don’t know. I don’t know anyone who actually loves the analysts.

Mark:
You know who really loves the analysts is Godard. That’s why he created his company. For the love of Gartner.

Godard:
Well, I love Manny’s story, especially about Gartner and not even wanting to recognize it as a category, because that is what inspired me to create G2. I really started my first company also from the heart, and I think that’s really important as an entrepreneur like Manny said. You want to do something meaningful, and my first company was inspired by my father. My father ran a small family pump manufacturing business. Then ’99 was the first wave of the internet, the dot-com boom. I really wanted to help my father sell his pumps online, and at the time there was no SaaS or cloud software that could help him do it. So I decided to go build it with BigMachines. Frankly, it turned into a very long, arduous journey. At the beginning I was able to raise 20 million bucks, because it was still dot-com and there was all this hype, and people were throwing money at anyone smart with an internet idea. But then I remember a few years later we were almost bankrupt, because we burned through almost all 20 million.

Godard:
We had like a million bucks left, so it was really a hard time. I had to scale the company down from 70 to 20 people, but my co-founder Chris and I, we decided to keep going, because we really believed in what we were building. And then, we did believe we could build a new category, and then I think it took us 12 years to become the leader, that took all the way until 2012, which led Oracle to buy the company, just like they bought Eloqua. To be honest, that was the least favorite part of my job was briefing the analyst. And then the whole game of where you have to pretend that they’re giving you all the insights on your strategy, and all of that. I didn’t like that. And so that was really the idea for G2, hey, let’s give the power to the customer. And let’s do it more like Yelp. They were having a lot of success for consumer reviews, let’s bring that to B2B software, and let’s make it possible to create a category much more quickly. And yeah, I think we’re proud to have supported the creation of sales engagement software. Obviously it was a great work of Manny and Outreach. And then also other entrepreneurs like Kyle and SalesLoft, Chris and Groove. And ultimately, I also learned that with CPQ, ultimately you actually do want to have some competition. You do help each other because you’re all marketing that category. And so, yeah, I love the topic. And glad we’re able to help Manny and other entrepreneurs build these categories much faster.

Gil:
100%. Number one on G2 was what changed us. It’s what put us on the map. Otherwise-

Godard:
Yeah. And you are already a number one on account-based advertising software.

Gil:
Yeah. Yeah. So we need to get that through the platform, through the reviews. A 100% from customers. And so that’s a huge value for SAS that don’t want to play that game, or too early for them to play.

Gil:
I just thought I’d put a small anecdote of how I know you. All three of you. Godard, I know you because I was talking Mark for a while. I was trying to get Mark to coach me for years. But I started by just showing up unannounced/uninvited to his dinners that he used to do, and then I remember saying like, “Shit, I’m significantly like Andrew Leaky. Like everyone here is completely different caliber.” So I hijacked him as my coach, and I think I became his first customer.

Gil:
And with Manny, I remember I met with you in cafe house in San Mateo. I don’t know if you remember that, four years ago. There are a few things that you told me, two things that I’ll never forget. One that you told me is like, I’m unknown. No one knows me here. I’m from this dude from Seattle. No, you go, you’re Israeli. Go find your network and leverage, and get your seed round. Second one was, yeah I rebuilt my MVP four times. It’s okay, do it again. Those two things changed the company. So thank you for the great advice I got from you all. Mark, tell us what… You’ve been laughing a lot, I know you have a lot of opinions-

Mark:
[crosstalk] I’m just, I’m really enjoying it. This is a lot of fun for me. I got my start in the direct to student drug business, in that category. And then I subsequently leveraged my-

Godard:
What kind of drugs, Mark?

Mark:
These were drugs out of my parents’ medicine cabinet.

Godard:
Okay.

Mark:
This is when I was eight or nine, apparently. So I got my start as a drug dealer. And then I leveraged my expertise in that to get into the direct to student pornography business. So I’ve always been an entrepreneur, since I was a kid. But there’s no business like the software business.

Mark:
I mean, a drug business is good. The porn business is good. But the software business is like no other business in the world, with our 90% gross margins and incredible scalability. And of course the internet went and turned that on steroids. So in 1999, I also created a company, or contemporaneously with Goddard, a company called Eloqua. And at the time I was a management consultant at Bain & Company. And that’s really where I saw the need for a piece of software that would help connect salespeople with their best prospects online. Now that was mostly a bootstrap company, I raised the $166,000, I think it allowed me to get, or forced me to get really close to my customer. And that was one of the themes now I’ve heard throughout this whole thing is, the best category creation is actually done when you’re really close to your customer. And it’s actually one of the things I love most about what G2 crowd has done for category creation. Awesome go to market. You make your customers really successful, and they actually build the category for you. But I was very influenced back in the early 2000s by a book called Positioning.

Mark:
It’s an old book in marketing, but it’s a really, really good one. In a nutshell, differentiate. You want to be different in every way possible. A number of my early customers were subscribers to Sirius Decisions. I went to go and visit them, and they were four people and a dog. And the dog actually had an important role in the company. And they were in a rented little office. Eloqua really bet big on those guys and said, okay, we’re going to really work with them. I actually really believe that categories are not created by analysts. I think the analyst just basically take what’s already pretty obvious, and making that a category. I think the people who create your category are your customers. They’re the ones that tell you, hey, this is what you should call it. This is the way you should describe it.

Mark:
And I think Manny’s company is a great example of that, right? The insight that I had, really a few years, even after I left Eloqua. I didn’t even know I was creating a category at Eloqua. I was just following my instinct. And that’s really my life’s work, you know? Oh, I’ve been interrupted. I wonder, what’s in here anyway?

Gil:
What are you drinking? Cheers everyone, happy Friday.

Mark:
Cheers. It’s strong. I’ll tell you that.

Gil:
what are some differentiators that you have that are not product, that really make the difference between you and others?

Manny:
When we came out to the market, and I think this is the same for all three of us. We never had an empty space of like, oh, nobody’s in the category. We have to create it from scratch. When we came into the market, we immediately were competing against, yes, [inaudible] and insidesales.com. And insidesales.com was the 800 pound gorilla. We looked at what, yes, [inaudible] were doing. And we were like, they had… The day we announced a $2 million seed, they had raised almost within the same week, that each of them raised 15, one, and $30 million the other from Battery Ventures and Andreessen.

Manny:
And we’re like, here we are with $10 million competing with people who just raised another big round. We can not compete with them head to head with the same thing, we had to differentiate in the market in a way that was obvious. Meaning, we couldn’t do marketing around that, it had to be obvious from the product point of view. So the two things that we did that were immediately different were the following. One is that we sold workflows. So instead of talking about email tools, we talk about the workflow tool, even though we didn’t have calling at the very beginning, we still talk about workflows.
And the second thing that we did, is that we came out to market charging two to three times as much as they would. And that was differentiating. That is the cheapest way to differentiate because the first question that you get is, “Why the fuck are you more expensive?” “I’m glad you asked that because we’re about workflows as opposed to just email tracking.” And all of a sudden you’re in a completely different category. You see what I mean? So those were the two seminal moments in our differentiating phase. I mean, frankly we did it out of need, because we were sort of like, “Who the fuck are you? You’ve got an accent. You don’t go to Stanford. You’re Hispanic. There’s all the things wrong with you.”

Manny:
But I had to prove myself by taking one thing and make it go up into the right, and that was revenue.

Gil:
I thought it was an ingenious fucking move. I’m sure everyone else thought the same, that it was pretty smart.

Mark:
In terms of differentiation, I think education is huge and I’d take it a step further. The way that I look at it is that my job is to be the number one advocate for this new role.
We became, and I think we were successful at Eloqua, being the number one champion for the demand gen profession. And probably the proudest thing for me was seeing the compensation of these people rise tremendously from around $55,000 a year, when I started tracking it, to now it’s well over $200,000 a year for a good director of demand gen. In the future, people are going to listen to customers and marketers are going to have to do a better job of mobilizing customers to do their marketing. Are you going to see the CMOs of the future coming out of customer marketing?

Godard:
In Manny’s stories I found interesting, was that more luck? Or was that conscious on your part, Manny? And I guess I’m wondering, all you guys, how do you time it right?

Manny:
I think it was all luck. In December, 2014, when Jason Lemkin just put out blog posts talking about the sales stack. And all of a sudden you had a sales that was a stack, and all of a sudden, we’re a thing, and that really created the conversation on what’s in your stack. And what’s in your stack, you need a list. And once you get it on a list, then you’re in business.

Godard:
Who was the first company to talk about sales engagement as [crosstalk 00:39:47]-

Manny:
I am pretty sure we were.

Godard:
And then, I guess to your advantage, you got everyone else to follow you, which [inaudible] the other thing. You had a good timing, and then you do want all your competitors to actually follow you into that term, and they did.

Manny:
True. The question is how do you then claim it as… How do you become the winner? And it’s actually not that clear that you can create a category and then make them become the winner of the category. We freaked out for a little bit of like, “Oh, my God. Everybody just copied a name, and now what?” You know what I mean? Nothing prevents you, if you’re a second, third or fifth, to claim that you’re the leader in the category. You know what I mean? Everybody in G2 Crowd claims to be the leader in the category, because you guys have created such a great kindergarten situation in which everybody’s a winner in their own way, which is great.

Godard:
You kind of slice it a certain way, but obviously… Yeah. Kind of like it’s the investment banks do. They’re like, “Oh, we’re number one in mid-market IPO’s out of Seattle.” But that is true that… SteelBrick. And honestly, that seemed much easier. And then we were a follower, and then we kind of showed up late, but we knew what they were all doing. We’re like, “Oh, we’ll just do a little better.” In a lot of ways that seems easier than being the guy that plows the road, and then you can just kind of build a better car and drive down their road. So I don’t know. But I think that’s how it seems, like, Manny, you guys were first, but you’ve managed to stay at the front of it as well, which is also hard.


Mark:
I mean, I think that was the experience at Eloqua, Marketo, even it was founded more than six years after Eloqua, sort of did run away with the leadership of that category. That said, Eloqua still did go public and still did have a pretty good outcome. So I’m not complaining. And we did because really our customers kind of took us aside and said, “Hey. Mark, you’re bigger than this. Why are you pigeonholing yourself?” And in fact, they are the ones that really pushed us into a bigger category. But there does come a time where you’ve got to probably broaden your footprint.

Manny:
Great point. So I was talking to another CEO and founder, Clark Valberg, the CEO of InVision. You build a piece of software and if that piece of software is innovative enough, you have, I don’t know, two to three years before somebody copies it well enough to make it worthwhile going one step down. You see what I mean? You can go to the copycat and it’s almost just as good. If you were to put a timeframe around it, I think that that’s roughly the timing which you need to go in back and redefine the category. Meaning you have a category that you define, and then the category’s called X. You get the benefits of creating the category. And then a lot of people jump into the category and it eventually starts devaluing the product. The easiest way to compete is by offering the same for cheaper.

Manny:
So then you have to go and say, “Oh, I’m glad you liked that because now we’re this other thing.” And then the other thing is different than the first thing, bigger, encompassing, and then you’re bigger. And then you’re saying, “Yes, you can buy point solutions or you can buy the full category.” And then you have to do that almost every two years. And there’s just no end to it. You know what I mean? That’s the beauty of software. It’s easy to get in, but it’s hard to maintain that corner. You know what I mean? As a king, the only way you can go is down, so…

Mark:
No, I think that’s right. I think every 18 to 24 months is probably right in terms of enlarging the footprint. I think the real unsung hero Salesforce is the AppExchange.

Manny:
Right.

Godard:
Sure.

Mark:
And really, nobody talks about it. And I think that’s the real lock-in is in that.

Gil:
You have to.

Godard:
And I don’t know when you think, and I’d be curious, me and you guys are getting bigger. But how much scale do you need to try to build your own platform?

Manny:
I mean frankly, unless the CEO has committed, there’s no ROI on this until there is. It’s one of those things that it doesn’t matter until it’s all that matters.

Manny:
So by sitting back and observing how the market is laying out, you can actually come up with a better solution. So that’s-

Gil:
Although, you can almost argue that Salesforce AppExchange is a monopoly at this point. You kind of have to, if you want to build.

Manny:
It’s like the mafia. You’re paying for protection.

Godard:
You have to have integration.

Manny:
You’re paying for nobody to break into your store.

Godard:
Yeah. And I think you don’t necessarily have to publicly list on the AppExchange.

Gil:
True.

Godard:
You can just put that in the API, but then you don’t get the credibility of being there. So it is, yeah. That’s a tough one. Thank you, Gil, for sending me the beautiful bottle.

Manny:
I need to know what the wine that you’re drinking, Godard. I’m a big fan of white wine.

Godard:
Yes. It’s a Gruner Vetliner. Can you see it? That Gruner Veltliner?

Gil:
Yeah, you can see it.

Manny:
If you can send me a photo that, I’ll-

Godard:
I’ll send you a photo, but it’s a lovely wine. And I think you’re seeing it more and more now in restaurants all up and down the West Coast as well.

Gil:
Go ahead. Tell us something that no one else knows about you?

Godard:
Yeah. Well, if I’m being edgier, I’d say I spent a night in jail.

Gil:
Nice.

Manny:
That’s really hard to believe, Godard. I have half thinking you’re making this shit up.

Godard:
It’s true. Yeah. And I won’t tell the full story, but it was right as I was graduating college. It wasn’t Philadelphia, Pennsylvania, but [crosstalk] it was an experience I’m glad I had.

Gil:
Very cool. Definitely got to hear the rest of that story some other time. Manny, what about you? Give us something that no one knows about you.

Manny:
Right before I started Outreach, I really got into soap making.

Gil:
Interesting.

Manny:
And the inspiration, I’m not going to lie, was Fight Club. Go watch that movie. And I was like, “Oh shit. You can make soap with people’s fat. Maybe I should try to make soap.” And I didn’t kill anyone to make soap, but I did get into it.

Gil:
Thank you for that.

Manny:
It’s very relaxing.

Gil:
What about you, Mark Oregon? What’s something that is unknown, but true, about you?

Mark:
So I paid my way traveling across Europe by juggling devil sticks. And I don’t know if you know. It’s like you’ve got two sticks, and you’re juggling a third stick. But then to make more money, I said, “Well, why don’t I just light the ends on fire?” And it was great. I definitely made more money. Until when I was in Budapest. I lost control of the stick, and actually set a girl’s dress on fire. So yeah. I had to get the hell out of Hungary.

Gil:
You’re marked. That’s awesome.

Mark:
Yeah.

Godard:
So the story didn’t end with her becoming your wife.

Mark:
No.

Manny:
That would be awesome.

Mark:
That would be hilarious if that were true.

Gil:
Gentlemen, any last points before we end? I really, really enjoyed this. This was like hanging out with friends and really cool people.

Mark:
Last words. I really think that the common thread through a lot of our stories really is about getting close to your customer. So if there’s one thing I would encourage the listeners of the podcast to do is escalate the amount of time you spent with customers starting this week.

Manny:
Yeah. When in doubt, talk to your customers.

Godard:
Well, I certainly agree with Mark and Manny. It is all about the customer, and that’s why we started G2 to get the customer more voice. And I will say, I do think COVID’s actually made that easier, spending time with customers. There’s one beauty of Zoom. You can hop around the world. And I do try to have at least two customer prospect meetings a day. And I think now with COVID, there’s almost no excuse. It’s so easy to hop on a Zoom. You don’t have to hop on the airplane. And I do think if you listen to your customers, then hopefully, like Manny, we’ll all find out a lot. And when you see all those customers heading one way, you can just amplify it.

Gil:
Nice. You’re all on a very humble. Luck is definitely part of it, but then you pushed. You pushed for making this happen so much. You three are setting up a very high bar for the next few episodes to come in.

Gil:
Thank you very much for participating, giving us your great insight. And from your experience as well as showing us a little bit of your character outside of work. So thank you very much. All three of you. Godard, Manny, Mark, have a wonderful weekend. Thank you again.

Manny:
Thank you. See you, guys.

Mark:
Bye-bye.

Gil:
See you later.

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