If you’re in a business that is all about catching lots of small fish, you should be using nets. That’s just going to be more efficient. Whereas if you’re a business that’s going after really big whales, you should be using spears.
Jon Miller is Co-founded Marketo and is now on his second SaaS Startup, Engagio, Account Based Wverything Marketing and Sales Software In this episode of The SaaS Revolution Show, Jon tells us what Account Based Everything means for your SaaS.
Alex Theuma: Welcome to the SaaS Revolution Show. I’m your host, Alex Theuma.
And super excited to be joined today by co-founder of one of the most well-known SaaS companies and marketing automation platforms in the industry that’s now on his second SaaS startup that’s shaking the apple tree of marketing platforms and part of the wave of account based era that we’ve entered right now, welcome to the show, Jon Miller, co-founder and CEO of Engagio.
Jon Miller: Thank you very much. Hi there.
Alex Theuma: Hey, Jon. How’s it going in San Francisco?
Jon Miller: It’s pretty good. We’ve had a very good summer so far. So I’m a little sad to think that it’s almost over.
I mentioned that you’re a co-founder of a very well-known SaaS company. I didn’t mention the name but I think most people know that are probably listening to the show and that was Marketo. And now you’re on your second SaaS startup, Engagio.
Tell us a little bit more about you. Who is Jon Miller?
Jon Miller: Well, if I had to sum it up in a sentence, I’d say I’m a marketing tech entrepreneur, a thought leader and a dad. Almost my entire career has been in marketing technology. I studied physics for my undergraduate degree but then very quickly ended up working in consulting and then technology at a company called Exchange Partners. They spun out a tool called Xchange which is arguably the leading marketing technology of the mid-90’s.
After that I went to business school and went to Epiphany, which was probably the leading marketing technology of the internet bubble. And when Epiphany got sold in 2005, that’s when Phil Fernandez and I started Marketo. Arguably the leading marketing technology in that last 10 years.
I stayed with Marketo for almost 10 years and started Engagio about 16 months ago to do it all over again. Definitely, it’s themed at marketing tech there.
Alex Theuma: You’re doing it all over again with Engagio. Is it going to be easier the second time around?
Jon Miller: Undoubtedly it’s easier the second time especially when you have a success at your belt. And it’s easier for two reasons. The first is just you have a proven reputation which just makes it dramatically easier to raise capital, hire great people, all that kind of thing. Of course, the bar is higher as well. But the second reason it’s easier the second time is because you know what you’re doing. I like to say we’re all trying to figure out how to get to the end, the only difference is I’ve got a map. I’ve done it before. That helps a ton.
Alex Theuma: Tell us about your new startup then, Engagio. What is it? .
Jon Miller: Well, one way that’s good to sort of think about Engagio is to actually make an analogy to Marketo or the other kind of marketing automation platforms. What I mean by that is if you think about the kind of marketing that you’re doing when you’re using traditional marketing automation, I like to say that that’s kind of like fishing with a net. And what that means is you run your campaigns and you don’t care which fish you catch. You just care did I catch enough total fish?
In contrast, though, there are lots of companies out there that are going after named accounts, typically larger enterprises, maybe in a specific vertical. Maybe they’re going after the current customer base to do cross-sell and expansion. What those all have in common is you don’t want to wait around just to see if the right person from those right companies happen to swim into your net. But you’re going to reach out to them proactively. So instead of fishing with nets, it’s more like fishing with spears.
The idea for Engagio is that whereas the current marketing automation tools support net fishing, we want to build the platform that’s all about spear fishing.
You started the company about 16 months ago. And within that space of time, you’ve raised, well, recently raised $22 million on a Series B. I’m not sure how much you’ve raised in total but I guess a large part of that is based on what you’ve done before plus the market opportunity. Right?
Jon Miller: Yeah. So we raised a total of $32 million. We did a $10 million Series A right off the bat. Which again, that does reflect my background and our reputation. And it also reflects the fact that the category is really hot. People are excited and are talking about account based marketing, account based selling.
We’ve built a good product. I mean, like it works, people like it, they get value from it, they want to advocate it. And then we’ve done a nice job on the thought leadership side in terms of building our buzz and our reputation as one of the companies that are really helping to teach people about the new account based road and how to do it. I think if it goes together, it’s really kind of helped to drive our extraordinary fast growth.
Alex Theuma: And this fast growth, I read somewhere, and this was I think data probably from back in May, that you had around 50+ customers at the time and an ARR of $675,000. That was in TechCrunch. That’s really good going for just being over a year old.
You mentioned thought leadership and I guess you’re in this exciting, exploding category. What else have you done to achieve attaining 50 customers and getting to that level of ARR?
Jon Miller: Well, I got to say here we are a few months later and ARR much higher than that which is a good sign of growth. You know, I sold all of our first 30 customers or so myself. And that’s part of an early stage startup. A lot of our customers, they came to us through various inbound channels because they’re looking for ABM and AB solutions. I think we’ve started to build out our sales team pretty recently so we’re now up to four account executives. And we’re trying to put in place the hardcore machine for really driving growth.
Alex Theuma: Would you say, in your opinion every SaaS startup should have their CEO leading sales in the beginning?
Jon Miller: Well, it depends on so many factors. So no, I’m not going to say that universally. Although that’s pretty common that the CEO is the initial salesperson. And even if the CEO is not doing all the selling him or herself, they’re certainly highly involved. In our case, I’m the “business founder”. My background is in product and marketing, sales strategies, those kinds of things. And I have a technical co-founder. Almost all of our early employees were technical. So it just made sense for me to sort of take responsibility for sales in the early days.
Alex Theuma: You now have a team of four in sales and you’ve just hired your, or just announced your VP of Sales as well?
Jon Miller: Yeah. We have a total of actually seven people in the sales organization now. Four AEs, a VP of Sales and then SDRs.
Alex Theuma: Moving to the topic of account based sales and marketing, which is very hot right now. Two years ago, I probably never heard of it. This year, I’m reading about it all the time. Where does it come from and are Engagio pretty much leading the way here, one of the vendors leading the way in this category?
Jon Miller: Well, I think where it comes from is really centred in the fact that it just makes sense. At the end of the month when sales rings the cowbell or writes the name on the whiteboard, they don’t write a person’s name, they write a company’s name. And salespeople never talk about how many leads they’ve closed, they talk about how many accounts they’ve closed.
Sales has sort of always been account-centric. But what’s happened was marketing, and some degree sales development, we’re living in a lead-centric world. And partly tools like Marketo and the other marketing automation managers are kind of driving that because the marketing tools are lead-centric. We’re in this world where marketing and sales development were lead-centric, sales was account-centric. There’s a disconnect there. So partly, it just make sense for everybody to focus on accounts in a B2B context.
I think the other reason why we’re hearing account based taking off is because account based is really deeply tied, as I said, to the idea of reaching out, fishing with spears, going outbound. And I think people are rarely recognizing that the inbound model, which can be so powerful and so effective, has its limits and is in some way saturating. There’s so much competition for content and awareness now that you can’t just put up a blog post or publish an ebook and expect for the inbound to start happening. And so people are looking for new ways to grow.
Account based marketing has been around for a while. The ITSMA started using the term over 10 years ago. But if they used it, they were really focusing on just big companies, going after mega-companies, really treating each account as a market of one. And I think in the last two years, the emergence of technologies like us and some of the other new players have really unlocked the idea to be something that’s relevant to more companies and more levels of target accounts. So you combine that together, that’s what’s kind of created the whirlwind that’s driving ABM now.
I think looking forward, we’ve talked about this a lot in our blog and so on, that account based marketing is actually the wrong name to describe this whole idea of fishing with spears. The reason, because marketing by itself has a limited ability to really reach out and connect to target accounts. Like marketing by itself can buy ads, they can hold events, they can send direct mail, but if you really want to connect to a decision maker at a target account, you need a human to reach out, to call them, to do a social touch, to write them a personalized email. And that’s really the world of sales and sales development.
What we see happening going forward is less of a focus just on account based marketing and more of a focus on what we call account based everything. The whole process of orchestrating your marketing and your sales development and your sales and your customer success together to really achieve your goals of your target accounts. We think that’s what’s going on.
Alex Theuma: A couple of points to touch on from what you just mentioned. One point was around sort of inbound, the world of inbound becoming a little bit saturated in terms of the content that is out there. So would you advise that… I mean, I speak to a lot of SaaS startups and SaaS companies that many of them still predominantly or almost only do inbound. Would you advise to them if they’re listening that, hey, now is the time to actually probably start thinking about applying some outbound or applying more account based strategies? I guess that’s the first question before I get onto the next point.
Jon Miller: Well, I think it has everything to do with your average contract values. Your deal sizes. If you’re in a business that is all about catching lots of small fish, you should be using nets. That’s just going to be more efficient. Whereas if you’re a business that’s going after really big whales, you should be using spears.
I think, in general, if you’re less than $25,000 U.S. of average contract value, you’re probably going to be primarily in an inbound model. If you’re bigger than $100,000 then you’re probably almost exclusively should be focusing on the outbound account based model. And if you’re in between, well, you’re going to use probably kind of a blend or a hybrid.
And even in one company, you may end up that you find you’ve got some deals because you have a small business segment of your business that relies more on inbound and you have an enterprise section of your business that’s going to rely more on account based outbound.
It’s really not an either/or, it’s more just a recognition that there are different ways of driving them in and you want to find the right strategy to the right situation.
Alex Theuma: You’ve used the analogy of fishing with spears to describe Engagio. And just talking about the average contract values, so if Engagio is fishing with spears then is it really for companies that are aiming for the larger contract values, the larger corporate accounts?
Jon Miller: Well, I just gave you some ACVs kind of to think about it. But I think regardless, the core principles that we haven’t really talked about, but the core principles of focusing on a smaller list that you can be really relevant and really personalized driving maybe all the way to a one-to-one interaction, like those ideas are going to apply to any complex sales. Even all the way up to kind of B2C, complex B2C situations.
And so I would encourage people to think of it as a spectrum. The bigger the deal, the more you should invest to be really relevant and really personalized. Then just find the right place on that spectrum that makes sense for your business.
Alex Theuma: Are you at Engagio dogfooding or drinking your own champagne? And, if so, can you share I guess a use case of where Engagio has used account based everything to land one of the 50+ customers that you have today?
Jon Miller: Sure. I’m glad you talked about drinking your own champagne because I always find that much more attractive than dogfooding. The answer for us is it’s kind of a yes-but. What I mean by that is our average contract values have been between $20,000 and $25,000. Even though we’re an account based marketing company, the deals we’ve been selling arguably are more efficient through an inbound model, as I said. And actually most of our deals, most of our 50+ customers, have come inbound to us through our content and through our thought leadership.
As we built out our sales team, because now we have four AEs, we have identified 800 accounts and we’ve grouped them into tiers. So we have 20 Tier 1 accounts, 5 per rep. We have another 180 Tier 2 accounts. And then we have a 600 Tier 3 accounts. We’ve defined very concretely what does it mean that an account is in Tier 1, or Tier 2, or Tier 3 in terms of what kind of sales they’re going to have, what kind of marketing support they’re going to have.
I can’t give you directly one example where we’ve used account based marketing tactics ourselves to drive an account, but as we try to sell larger deals and more strategic deals ourselves, obviously we’re going to be incorporating our own methodologies.
Alex Theuma: Moving from contract values into pricing models. I read that you run an annual subscription model. If that’s correct, why annual and not monthly?
Jon Miller: I think two reasons. The first is that account based everything is not a campaign you’re going to try out. It’s not an initiative for this month. Account based everything is a fundamental way of running your go-to-market strategies across sales and marketing. And we provide the core infrastructure, the guts you need to have an account-centric lens to orchestrate activities, to measure if it’s working.
And so if somebody can’t even commit to a year then they’re probably not committed to the account based everything strategy. I think that’s the first piece in terms of the customer side of things.
And from the vendor side of things, annual cash collection is a hugely important thing for cash flow. If you’re really trying to build and scale a SaaS business, you want to try to get your customers to pay you upfront if you can.
Alex Theuma: Let’s look at the challenges and opportunities for Engagio. If you’re happy to share, what’s the biggest challenge that Engagio faces right now?
Jon Miller: Well, this whole account based everything market is evolving and moving way faster than marketing automation did. Shockingly so in terms of the how quickly things are coming together and coalescing. And so yes, it’s great that Engagio has moved so fast. We’ve hit 50 customers in 10 months of selling. It took Marketo over 2 years to see the same milestone. We’re moving really fast and have a great leadership position.
But the biggest challenge is how do we keep that when everything is moving so quickly? And the biggest reason why we took the Series B of $22 million, because we didn’t need the cash. We have plenty of cash in the bank. But the reason we did it was so that we could light the afterburners. And just take advantage of our position to grow faster than the competition.
That’s what I’m thinking about the most, is how do we keep our leadership position.
Alex Theuma: And the biggest opportunity?
Jon Miller: You know, I think if you look back to the beginning when I talked about my career, which is in marketing technology, I’ve seen multiple generations of marketing tech. I saw Xchange come about. And then I saw Epiphany come along and, frankly, replace Xchange as the leading technology. And then you saw Marketo come along and used new tech like Software as a Service and email, for example. We replaced the Epiphany generation of marketing technology.
I think today, all the leading marketing platforms are all on the order of 10 years old. Technology has changed a lot and marketing has changed a lot in that time period. And I think that the opportunity for a company like Engagio is to really be the marketing platform of the future, the next generation of marketing technology.
Alex Theuma: Should all SaaS companies be looking at adopting account based sales and marketing or account based everything?
Jon Miller: Well, I think that goes back to the point I said earlier around ACVs. I think the bigger your ACV, the more you should be kind of embracing this point. The bigger you need to be reaching high into companies, the more you should be embracing ABE. The more you need strategic deals as opposed to just quick tactical column fodder type deals, the more you should be embracing ABE.
I think it makes sense for a lot of companies certainly.