Episode 11: Cody Lee of Summit Partners
On What You Need to Know About Marketing in Portcos
On this episode
Shiv Narayanan interviews Cody Lee, Vice President in Summit Partner’s Peak Performance Group.
Cody and Shiv discuss why marketing is a function no portco (and no investor) can afford to ignore, and what you need to know about portco marketing in the current environment.
Learn about a realistic approach to data-driven marketing strategy, common areas where portcos are wasting their dollars, and how to find the right person to lead a marketing function.
Cody Lee’s commentary presented herein reflects the views, experience and opinions of Cody Lee and no assurances are given that the strategies referenced herein will achieve any particular result. Further, the content provided herein is not an offer or sale of any security or investment product or investment advice.
- Why more firms are including marketing experts like Cody on their operating teams - 1.44
- Why a marketing focus is becoming essential for companies of all sizes - 5.24
- The importance of the ‘dark funnel’ in B2B customer journeys - 9.10
- How to make informed growth decisions when attribution metrics don’t tell the full story - 12.33
- Understanding pipeline through both campaign-level data and the buyer environment - 17.22
- The value of campaigns where impact is unmeasurable - 20.38
- The areas of marketing inefficiency where companies are wasting most money - 24.26
- How Cody's approaches finding marketing efficiencies - 33.09
- How to audit the marketing maturity of a company 34.57
- 2 approaches to finding the right marketing leader for a portco - 37.09
- Cody's marketing book recommendation - 48.36
- Learn more about Summit Partners
- Connect with Cody Lee - LinkedIn
- Influence, by Robert Cialdini
- Resources from Summit Partners:
Click to view transcript
Shiv: Okay. All right, Cody, welcome to the show. How's it going?
Cody: It's going great, Shiv. Thanks for having me.
Shiv: Thanks for being on. We're super excited to have you. Obviously, we've been connected for many years now. And one of the things that we connected on was just marketing in general and how it can be a growth driver for businesses. And in your role at Summit, I know that's a focus area. So why don't we start there by giving an audience a background about your role about Summit and then we'll take it from there.
Cody: Yeah, absolutely. So I work for Summit Partners. We are a global investment firm in growth equity. We invest across technology, healthcare, growth products and services, which includes consumer fintech, things like that. I'm on our operational advisor team. So I lead our marketing support function. We've got about 120 portfolio companies that I support across those industries and globally.
Basically, I exist to support all of the marketing leaders across the portfolio, or if there aren't marketing leaders yet, help management teams create their marketing teams and create their marketing strategy. I'm involved in diligence as well as value creation planning and execution, and then kind of ongoing support, trying to create more of like a scaled model.
Really exciting to be here. I've been here for about four years. I was a marketer before then, which is kind of atypical to come to a private equity firm as a marketing background as opposed to, you know, investment banking, things like that. But it's been a great role and I'm privileged working with some awesome marketers and trying to share learnings across the portfolio.
Shiv: Yeah, it's interesting, right? Because I think if you looked at private equity firms and the people that work there, about 10, 15 years ago, you wouldn't have found a Cody inside a PE firm like Summit. But with the rise of how much PE firms are investing in companies, and they're growing their own operating teams, you're now noticing that marketing is an area where they're bringing on some expertise in-house to work with a portfolio company. So why don't you talk a little bit about that, like the mandate itself? And how deeply are you getting involved with the businesses that you're working in?
Cody: Yeah, it's a great question. I think for a lot of years, the model was more kind of generalist former marketing or former management consultants, right, in roles like mine? I think over the last four or five years, it's become a little bit more functional. So PE firms investing in sales capacity, investing in marketing, investing in technology, investing in engineering and things like that. And it's really to help our companies see around corners, right? And, you know, we built the roles to try to match the challenges that we're seeing our companies have in the market. And so I think, you know, you've seen it too, right? The growing importance of marketing and to go to market and the changing buyer journey, especially in SaaS. Like there's a lot more self-service. There's a lot more online education research being done prior to talking with the sales individual.
And as a result, more important for marketing to go right, but also more upside if marketing goes right. And so my involvement is helping when we're looking at new companies, like what are the risks and opportunities for that company? And then how can I help them action them quickly in the first 180 days of an investment to get off to the right foot? So it's been very exciting to work across these different companies and see these new challenges and try to figure out what's the right solution for them and see the patterns in the market as well.
Shiv: Yeah, and are you seeing companies in the portfolio where marketing's role or importance is increasing as well? Like obviously there's a general market trend, but one of the things that we've noticed in the clients that we work with is initially when we started the business, it was the firms were bringing us into more transactional sale type of companies where it's more inbound and low ACV, but as we've grown over the years, like we're playing across the board, enterprise B2B and large deal sizes as well, where you have enterprise sales teams, but they need more support from marketing. So question for you would be, are you seeing that in the Summit portfolio, as well as the role of marketing evolving, are you seeing there being a need for more marketing involvement, even in those kinds of companies?
Cody: I think it's absolutely yes. I mean, we even just did a recent kind of benchmarking report. One proxy for this is what's the level of spend towards marketing versus sales, right? A lot of companies, if you look at a P&L, sales and marketing is put together. But actually looking at the breakdown of how much is going to sales and how much is going to marketing, and we're seeing a much more balanced approach, right? And it depends on your go-to-market model, as you mentioned, right? Transactional, lower ACV, more inbound - you'd expect a higher percent to go to marketing. But we're seeing, even our enterprise businesses, a greater percent going towards marketing out of that sales and marketing budget, which I just think is a realization of the market that a more balanced approach is a more healthy approach, right. And I always think of, you know, people ask me about, you know, marketing in a B2B role. Like, what do you think about marketing? Like I think about marketing being a multiplier, right? Some people will call marketing sales at scale. And it's so I think there's a lot of network effects that you can do with marketing that makes sales easier. And you're really better off by having a balanced approach. And we're seeing that in the market which I think is a great thing, and it's exciting for marketers as well.
Shiv: Totally, I think there's like a data point out there, which is like 70% of B2B buyers are interacting with content and information online, and oftentimes multiple sources of content or touchpoints before they ever interact with a salesperson. And so if you think about it from that standpoint, well, you may have all the perfect SDRs and AEs ready to talk to those folks, but they're self-serving their way through a sale even in the most enterprise markets. So if you're not investing in producing that kind of content to get in front of those people, well, somebody else will, whether it's a competitor or a different type of vendor in the market. And so it's really important to be in front of those people.
Cody: Yeah, I think that Gartner, I think, came out with that, right? It was like, you know, 60, 70% is done before they talk to a sales person, which has increased from like 30% 10 years ago. And also the number of touchpoints too, right, that are required before the sale occurs has like doubled in the last five to 10 years, right? And so it's really hard to have that many touchpoints with a human, right? You can create one piece of content and have that piece of content touch a lot of people simultaneously and at scale. And I think that's the, you know, the balance, you know, you have more personalization, obviously, in a one-on-one conversation, more empathy, things like that, but a lot more scale in marketing. And with new technology, a lot more personalization in marketing too.
Shiv: Yeah, and touch on that a little bit, which is this idea of a dark funnel in the modern B2B journey. So like - and also you have some background where you used to be one of the employees at Software Advice and you actually helped build that side of the market out too. So just in terms of the dark funnel and those different touchpoints, how should companies be thinking about the interactions with the modern B2B buyer?
Cody: That's a great question. I think just for the audience, you know, the dark funnel or the dark journey, right - it's one of those touchpoints that, you know, typical and historical software-based attribution can't see, right - that are growing more and more important, right? So, you know, 10 years ago when digital was first starting, it was like, you can see everything, in a way, and journeys were much faster and you could tie spend and impressions directly through to a sale.
For a variety of reasons - privacy, Apple policies, cookies going away - a lot of that tracking is going away, but also people's engagement has changed, right? There used to be a lot more direct engagement with a brand and with a salesperson, and now there's a lot more connectivity with peers. So Slack groups, LinkedIn groups, asking friends - I think COVID really accelerated this sort of connectivity. I know I'm in multiple Slack groups now and I'll ask for recommendations for software. Those types of interactions don't get tracked historically by some of these software-based attribution methods. And so people might think that they're less important. Even a podcast like this. If you look at a traditional HubSpot report, an inbound comes to you after this call - How To SaaS, right, it's probably going to show like Google search, but maybe it started in this conversation with the podcast. And so I think there's a growing importance to almost get back to basics. Like I see a lot of value from our B2B companies just starting to ask, how did you hear about us? It seems so simple. Even having salespeople ask, asking on the form, you can get a lot of really interesting insights from that.
And we had one of our companies, for example, they - you know, their traditional software attribution said, you know, 5% of their inbound demo requests were coming from YouTube. And then when they ask, how did you hear about us as a percentage, YouTube was 30%. And it gave them an increased level of confidence in their YouTube content creation and scaling out their YouTube team, and then seeing how that percentage changes and what their velocity is. And so having these kind of multiple points of attribution to illuminate some of these aspects of the dark funnel and then inform your strategy, I think it’s just more and more important right now in the modern journey.
Shiv: Yeah, it's interesting, right? Like if you were to look at the first touch or last touch attribution of most companies, branded search would be one of the top contributors to revenue. But really the question is, well, how did they hear about this brand in the first place to search for it? Or - and then the second one would be direct traffic. And so between those, you have customers self-serving their way directly to a specific business. And you really have to think about, well, how do they hear about us if it was only through branded search? Like that doesn't really add up, right? Especially if you're out there speaking or creating thought leadership content, or there's amazing word of mouth out there for the business and the work that you're doing there. So somehow you have to find a way to incorporate that into your attribution models to better understand what's working and what's not working. So I guess a question for you would be, what accountability metrics are you measuring your portfolio companies on or benchmarking them against each other to figure out if something is working or not? Because I would imagine that that's changed in the last 10 years. And so what's your perspective on measuring the marketing departments inside those organizations?
Cody: Yeah, it's a - you know, I think everyone talks about the single source of truth, right, Shiv? And I kind of think it's a pipe dream. I think it's really about triangulation of multiple sources of data to triangulate the truth, which requires interpretation. I know that sounds kind of complex and - but it's, you know, it's like, we should have software based attribution and you should look at that. And you can trend that against itself, but you should also have, you know, how did you hear about us based attribution and have that be a source of intell. You should also have your salespeople give you insights. You should also look at your social media comments and qualitative insights, right, to get some of that. I think that's, you know, at a company level, how do you make decisions? When we think about like benchmarking, because everybody's journey is different, everybody's, you know, mix is different, marketing context and maturity is different. A lot, we're looking at, you know, marketing percent of revenue, marketing mix - so where are we spending those budgets - growth rates, and then marketing sourced contribution to pipeline and spend against that ratio. And a lot of those are blended metrics, right? But blended really is what is actually happening.
And then it's up to the marketing leader - and it's why marketing is so difficult to make those decisions on how they're going to allocate their spend to see the results. And sometimes it's a matter of correlation. And so we'll look across, you know, what are our fastest growing companies that have the highest, you know, spend to marketing pipeline ratios? What are the commonalities across them and can that be shared elsewhere? So, you know, we just had, you know, a benchmark annual benchmark survey. And one of the findings was a lot of our fastest-growing companies have community programs and this is in tech. And so it was a matter of, okay, well, those community programs, it's an indication of success. How can we think about if that's a fit for some of our other companies as well?
Shiv: Right, yeah, there's so much to unpack there. So let's go one by one. I think the single source of truth piece is a narrative that's kind of put out there by software vendors that are trying to push this idea that you can actually bring everything into one system and multi-touch attribution through systems like Bizible and some of these other platforms that are out there kind of make that promise, but they make the same mistakes because they're trying to automate everything - trying to pull first touch, last touch, or trying to give certain values to certain actions and pull it all together into one system that - and then associate revenue with that. But oftentimes it just doesn't give you the right picture or you end up making bad decisions on the basis of that. So I think one of the keys there is to really understand the incentives that are in place because the software vendor wants you to believe that that's the only way to make a decision. But really that's not what's actually happening when you ask a customer, ‘how did you end up buying from us in the first place?’
Cody: And there's limitations of those systems, right? Cause you know, Bizible says first touch, but that is probably not actually their first touch, right? It's the first measurable by Bizible touch, which maybe is branded search, right? But you know, the first touch was probably, you know, maybe it was an event or maybe it was one of your existing customers having a great call with them and telling them about your software being, you know, so helpful. So I think there's even kind of misconceptions in nomenclature and just really understanding the limitations of the different options is part of the marketer's job and also to communicate those limitations to other professionals in the organization to give a better understanding of how you're making decisions.
Shiv: 100%. And I want to come back to the second thing that you said is around this idea of blended contribution of pipeline. And there's validity in looking at campaign level and channel level metrics. We encourage all of our clients to do this too, because you can bring a ton of discipline to a company. We've found in some cases millions of dollars of waste by just looking at certain data at a channel or campaign level. But that being said, like when you're trying to understand what's working and what's not working and whether to scale budgets up or down really comes down to marketing sourced contribution of pipeline and revenue, right? And with that, you're kind of looking at the overall environment that you are creating for the buyer with the marketing organization and all of its activities and how that's actually driving revenue. So is that the main metric that you're using to hold your companies accountable?
Cody: I think it's a measure that you can benchmark, right? So that's, it's a guide, right? And I think that metric also has different contexts. So, you know, a lot of companies talk about, ‘hey, we want, you know, spend to pipeline ratio of greater than 3X or greater than 5X,’ right? And if you, you know, are targeting kind of a 12-month payback period, you're assuming a close rate of 20% to 33% or something like that. But if your close rates are different, you might target a different ratio. If your profitability margin is different, you might target a different ratio. So there's all sorts of different contexts to that metric. I think it's helpful to say, hey, this cohort of companies is around five, you're at one. What's going on? Or you're at 15, what's going on? So it's more about the outliers than it is about, you know, everyone should be at this level.
Shiv: Right, right. And I think that the piece on triangulation, I think, is the key is because you kind of have to bring some subjective judgment to every company's unique situation to really understand like, is this working or not working? And have we given certain initiatives enough time, right? Like if you launch a podcast and you're on episode five, yeah, likely it's not sourcing pipeline for you or even showing up in a how did you hear about us form. But if you get to episode 100 likely you'll start to see those benefits in some capacity and you kind of have to be able to measure that with something and be able to say, ‘okay, we're going to keep funding this initiative, but these other initiatives we may not fund as much.’ So I guess my question on that is like how much subjectivity or subjective judgment are you bringing when the numbers aren't telling the whole story, right? Because even with how things have gone over the last year or so, one of the areas where companies have slashed budgets the most is on the marketing side, right? So you can easily get into dangerous territory where you cut something that is likely driving revenue but is not visible from a direct attribution stamp.
Cody: Yeah, it gets really tricky when you're trying to go into like channel level or campaign level. I think, you know, the blended metric allows you to kind of get a sense for how things are going overall and tells you, you know, red, yellow, green, right? And like, should we really dive in here or are we feeling pretty good when it comes to like diving into the actual metrics, I think in terms of efficiency, you're right. Like a lot of companies right now are trying to be more efficient. And when you do look under the covers, like you mentioned, sometimes you can find a lot of waste. I think the exercise becomes, for the things that can't be measured: Do they have a reason? Right. And you know, a CMO that I talked with last year, it really resonated with me. He was like, you know, ‘Not everything can be measured, but everything should have a reason.’ And sometimes they can't be measured and they also don't necessarily have a reason that's compelling enough to keep funding them. But there might be also non-quantitative things that you can look at.
So for example, the podcast example, you know, is it being brought up in a sales conversation like, ‘Hey, I heard about your podcast’, or are there comments or are you seeing follower growth from your ICP? I think there are qualitative signals and thinking about your programs and initiatives kind of in different phases of maturity, because the earlier phases, you probably need earlier leading indicators. They're not going to be showing up in pipeline right away, but your more mature programs, you can probably connect them to pipeline a little bit better and make decisions around that. And some are playing more upper funnel, some are playing more bottom of funnel. And so you have - it's hard to have the exact same measurement framework for all of your different programs, but that takes strategy and persuasion on a marketing leader's front to be able to have like a strong enough argument. And then also if you are doing cuts or things like that, making sure that you have a measurement protocol to say, we think this will happen if we make this cut, and then look for that.
Shiv: Right, right. And interesting you mentioned that because, you know, when we get on sales calls, one of the most common things that I hear from people is, ‘hey, I read your book,’ or they'll have the book with them on the Zoom call and they're showing me that they've already read the book. So they're coming pre-qualified with that. But if you check our attribution, you'll never find the book anywhere in the metrics. But it's such a big driver because it's either read by the PE investor or they've passed it around the firm or the CEO read it and he got his entire executive team to read it. And so we'll come into an engagement and they're already qualified or they're already fans of what we do as a business. And that makes the selling process way easier. So we know subjectively that it's had such a big impact on our company.
Cody: Yeah, and so many will like, try to go to like the Amazon sales and like download the email list and like connect it to your conversations, right? Like that's what some marketers are trying to do with their programs. Where like you as the founder, like you, you're like, ‘I feel it. I know it. I believe in it. This is the reason.’ Right? And, you know, just one - a shout out to the book. I love the book. I see it back there. I've got a copy. So if you haven't read Shiv's book, highly recommend.
Shiv: I appreciate that. Thank you. Yeah. On the topic of waste, with how important efficiency is now, like where are the places where you're seeing companies waste the most amount of marketing dollars and how are you reigning that in?
Cody: It's a really big topic right now. You know, obviously massive focus on profitability, in this economy, and always, right. Like the profitable growth is the most durable growth. And so the most common areas that we're seeing, ironically, like paid search is just not as performant as it used to be. And it's usually one of the biggest line items for a software company in their marketing spend in their variable spend, right. And so really digging in deep into where we're spending, what keywords do we have keyword-level tracking into our CRM to try to be able to assess truly like contribution to opportunities and pipeline.
You know, when we do that analysis, you know, some people just look at paid search altogether, but if you go under the hood to look at actual keywords, it's like, ‘Oh, it was branded that was making everything look good on average, but there was 80% of waste under there that we could cut and turn off and not really see an impact at all.’ And that's - you know, some people get really defensive about some of those things. And I think that strategy is actually really easy to turn back on, right? If you're wrong. And so like, it's a really easily reversible decision. And so coming up with what are the tranches of spend that we're gonna turn off, see if it has an impact or not, and then, hey, we can turn it back on. You know, that's a lot easier of a variable opportunity than like, you know, pulling out of an event that we already spent money on. It's like, what's the sunk cost?
Shiv: Totally. You can't really cancel that, right, totally. There's the story about Yahoo back in the early 2000s with the dot-com bubble bursting is they were seeing a lot of ads and ad revenue with the boom that was happening. And then when everything crashed the companies that had the money that were spending on those ads no longer had the money, so Yahoo saw a crash. And it's similar to that, right, where if you're a software vendor and you're selling to other businesses that have been systemically impacted by the macroeconomic environment, then likely those people are cutting their marketing budgets or software budgets or technology budgets. Even if they click an ad and come to your site, maybe your close rates are significantly lower simply because of the state of the market. And so you're seeing far less revenue, but if you keep spending at the level that you were and assume that your conversion rates, let's say, will stay at 30% and your payback is 12 months or whatever, that's not usually going to hold, especially if you're susceptible to those kinds of shocks. And then the other side of it is, I've seen companies - and we audit businesses all the time that have tons in spend and a PE investor will ask us to figure out where the efficiencies are - and specifically on paid media, I've seen companies continue to spend on paid media when their LTV to CAC ratio is incredibly low, or their payback period can be two, three, even seven years I've seen in worst case scenarios. But they're just continuing to spend because either they're in a hyper-competitive market where let's say there's two or three behemoths in the room and the cost per click is $40 or $50 a click, or they're looking at it at just a blended level and haven't looked at the channel, like detailed campaign-level reporting to see what's working and what's not. It might turn out that there's two heroes and the rest are just being pulled up by the averages of those specific campaigns.
Cody: Absolutely. Yeah, I think going to that next level of analysis is so important. And also your targets probably need to change based on what you mentioned, right? Like if your close rates are deteriorating because of the market or if your sales cycle is getting longer or your conversion rates or your ASP is going down, like it changes the whole calculus at the top. And sometimes, you know, if marketing is not super connected into those other business metrics, they might have a status quo based on targets that, you know, a year ago were efficient, but those targets need to change, right? And we have to make a change. I think also you can get in this sense of, you know, it's almost the status quo. It's like, well, we've always done it this way and we're just going to keep doing it and try to get a little bit better. You know, in some cases, these shocks are actually really positive because it forces you to kind of go back to zero and rethink how are we approaching things and is there a better way? And a lot of times you find these unlocks by being forced to innovate. And that's been really exciting to see like, oh wow, I was forced to cut my PPC budget 50% and I actually didn't really see any impact in my inbound flow. Now I have, you know, maybe I can get back 10% of that to allocate to something else and create a new program that's so much more scalable.
Shiv: Totally. Yeah, it's funny because when things are going up into the right, you don't think about shutting anything off because everything is working. And then when things stop working, then you start looking under the hood and you find these inefficiencies. Like we've seen companies with 30 to 50% excess spend. And if you pull marketing leaders and CMOs and you ask them if they have enough budget, like unequivocally, almost all of them are gonna say they don't have enough budget. It's just like they want more money to spend. They think there's more programs, more creative things that they'd like to do, and they want more budget, but they just aren't looking just at their internal budget to find those opportunities, because they exist. Even if - let's say you have $1 million, which is a low budget for a company, but let's say $1 million for marketing, there's 30% in waste there. That's $300,000 that you could be allocating to another program or initiative, and that can be quite meaningful for most organizations, and it scales kind of exponentially the bigger a company gets.
Cody: Yeah, and I think, you know, there's kind of cutting in order to give back to the business. There's the reallocation, which is like staying the same, which I think a lot of our companies are doing. And I think a lot of companies should do, right, like the market changed, the buyer journey is changing, like your own situation is probably changing causes reallocations. There are those companies who deserve more budget to, right, like their marketing is doing really, really well and they're beating benchmarks and you want to go out on your front foot. And this is a great opportunity for those companies who are in a really good position, if their competitors potentially aren't as much, to actually increase and accelerate. And there are cases where that's happening as well. And so I think that narrative is kind of less common in the industry right now. But there very well are some cases where like that is the right strategy and you can really have exponential growth right now when a lot of others maybe don't. But again, it's very contextual.
Shiv: I think that's a great call out. And as a process, when we're working with folks, like we see - what we do is usually, step one is historical, backwards-looking, what's working, what's not working, what is the data telling us and maybe there's a bunch of inefficiencies you kind of find. Step two is reallocation and taking the existing budget that you've already got and put it into something that's likely more profitable. And then step three is scaling or identifying new channels, new opportunities, new programs.
And that is often a step that's missed. We find that a lot of companies continue doing the things that they are familiar with, but they'll leave certain opportunities on the table, especially when they've reached a certain level of scale where maybe a company should be producing more content or more thought leadership out there. Maybe they should be investing in more paid social ads to get in front of more of their ICPs, even if the LTV to CAC ratio is a little bit lower there because you're going to get those people into your funnel and slowly educate them through that. So I think that's a really important call out. I guess a question would be, what percentage of Summit’s companies or companies in general are you seeing that could benefit from that type of exercise? Would you say most of them still need to focus on the efficiency side or are a lot of them also ready for scaling budgets because they kind of have everything headed in the right direction?
Cody: I think it's really case by case, Shiv, you know, each individual company is a very different product, different market, different team, different situation. And, you know, we take a much more kind of individual partnership bespoke approach. And so my conversations are wide ranging on both sides of the spectrum. I will say that like every company is thinking about this and should think about this. And you know, honestly, it should be thought about proactively, right, at least annually. Sometimes we wait for exogenous forces, like market changes and things like that to cause us to have these conversations. But I think like a start, stop, continue exercise is worth doing every year, every quarter. The more agile you are, right, the smaller you are, the more frequently you might do it, right? The more mature you are, maybe the less frequently you do it or depending on like the level of the organization, right? Is it a channel manager versus, you know, program manager versus the department head? So I think it depends is unfortunately the answer, but I think is also the reality. And that's an important thing for people to know that like benchmarks are just guides, right? It's like, you have to think about your own situation, your own trends, your own opportunity, and not just rely on what other people are doing.
Shiv: And I think that's a good transition here. When you think about this case by case basis and figuring out where companies are, are you starting by auditing where a company is in their marketing maturity or what exists from, let's say a buyer journey standpoint, where do they have enough assets or programs running to, let's say, focus on capturing demand versus generating demand? Like, how are you looking at that to figure out which companies need to take what type of approach to get to the next level?
Cody: That's a good question. I think the - It's a triangulation approach, right? Of the market opportunity, the specific product, the specific team, and then their specific kind of content and materials. I think a lot of times companies jump straight into like tactics and spend before thinking about, you know, strategy, right? Like what's our segmentation approach? Where should we focus? Like, do we have the right messaging? Do we have the right pricing and packaging? Should we be focused more on acquisition or like retention marketing? So I try to like first understand like what's the business context and what's the you know primary goals of marketing within this business context and is there alignment across that, right? And then once we have that kind of strategic alignment then it's thinking about budget to try to achieve that strategy? And then what's the roadmap to do that, right? And I'm not the one who's doing that, right. I'm doing it in collaboration with great marketing leaders or new ones, right. Or great partners, you know, like yourself, Shiv or agency partners, right, who might be coming to help with that execution. So it's very much, you know, more of a consultative approach than a, ‘hey, here's what you should do’.
Shiv: Totally, and you mentioned an important area here, which is just the people side, right? Because as you're going through and identifying where a company should focus or where the opportunities are, I think org design and staffing and having the right people in the right seats becomes so important. When you look at the companies that you've worked with or just across all the portfolio or other companies that you meet in general, do you find that the people side is a huge lever within these marketing organizations? Do you find that they're either overstaffed or there's not enough skill at the table? And how do you go about addressing that within these companies?
Cody: I think people is the number one growth lever, right? Like the right people in the right seats, you get more - everything's easier. I mean - and so I think org discussion is something that we talk about right away, right? It's like, hey, what's the existing team? What are their skillsets? How are they organized? What's the operating approach of the marketing team? What do we think the like gaps are, the most important things to fill? Obviously, like we have a - we think about hiring the leader first and making sure that we have a discussion with that leader, right, and making sure that we're aligned in that approach because, you know, different leaders have different models and they're just different, right? Not one is better than the other. And so thinking about what's the right org structure and people, and then also in-source, outsource, right, to try to achieve the plan. And then really, I think job descriptions are severely underrated. Like so many people just kind of like Google a bunch of stuff and are like, here's what we need. And they Frankenstein things together and look for unicorns. I really try to help companies, like I believe deeply and like what are the five things that this person needs to do? And like, what are the five qualifications that they need to have, and you only get to pick five of each. And like that forcing function really helps prioritize like what are the needs. And then also helps your interview process. And so the, the talent finding vetting onboarding process is key to how we support our companies.
Shiv: How much of an effort are you putting into hiring the right CMO for these companies? Because really it starts there, right? Having the right leader in that seat. So how much of a focus is that?
Cody: It's really about - a lot of times it's hiring their first marketing leader. Right. So a lot of our companies, you know, are maybe in the small smaller side, you know, five to 10 million ARR, or maybe they have a marketing manager, but they need, you know, a marketing director or a VP of marketing, right, to take them to the next level. And so helping them figure out what does that profile look like? I'll be involved as kind of a functional interviewer, right? Cause I can speak the language. I can help a lot of founders who maybe have never hired for this role before. You know, I see a lot of marketers, right? Both existing ones in the portfolio, but then, you know, you might interview 10, 20 people for a role. And so having an understanding of what good is. And then, you know, sometimes there might be a transition for a marketing leader, whether they, you know, want to take another role in another type of company, or it's not the right fit for the next level of growth, you know, helping understand, you know, what is the go-forward plan and what's the right person to come in and achieve that.
Shiv: Totally, yeah. We've seen the CMO - or having the right CMO - be a critical piece of the puzzle because if somebody's, let's say, more account-based focused but the business requires more of an inbound focus, that can be a bit of a mismatch if the CMO is not data-driven enough, more of a brand marketer, but the company needs somebody that's more demand-gen focused, like there's a mismatch. So having the right person depending on the stage of business and really on a case-by-case basis identifying who exactly we need to drive this company forward. We've seen that be a huge growth lever as well because oftentimes we're playing that role in our engagements, but then we kind of have to transition and find the right replacement. So we've seen that be a critical piece to take that business to the next level.
Cody: Yeah, how are you thinking about, like - I think about kind of three common archetypes for like a marketing leader either they're like grew up in kind of product marketing or they grew up in kind of brand or you know demand gen. Like those are kind of the three pillars that I typically see and like trying to define that archetype. Like what do you need? Does that resonate with you or what are some archetypes that you think about?
Shiv: Yeah, that definitely resonates. I think we look at it in that way for sure. But then another way is more based on the complexity of sale and the ACV, because some marketers just have never experienced selling a $500,000 product with long sales cycles. And you need that at the table to be able to support the sales team. And so I think that's a different marketer than someone that's really good at inbound or content and SEO, paid ads and things like that. And sometimes you need a combination. In general, my default is to go with somebody that truly understands demand gen as like almost on a first principle basis and can adapt their approach because that is probably the hardest thing to teach. You can hire a product marketer, for example, and they can take care of things like your key resources and website and sales enablement, but it's really hard to teach demand gen. Because if you get that wrong, that's where pipeline is coming from, right? And we find that in organizations where you don't have a good demand gen leader in marketing, then marketing is just a supporting cast member. They're just literally doing some trade shows, some sales enablement, and maybe some type of other events or holding an annual user conference or something like that. So I think that is the pivotal thing that I think almost every CMO needs to be an expert in or expert at building the right team for.
Cody: Yeah, I think that I agree with you, especially on that last point, right? Like I've seen great brand CMOs, but they're usually paired with a really good VP of demand gen or director of demand gen or something, right? I think sometimes there's a desire to have everything in one person and it can be really challenging to find or impossible. And it's like, a lot of conversations I have sometimes is like, we're actually looking for two people. And we have to either decide are they peers or which ones above the other, or what's the existing cast that we have that we really need to complement with. But you can have really powerful one twos or peers. I'm seeing that more and more now than just kind of the one well-rounded kind of CMOS.
Shiv: The only risk I see, in some cases, yes, having a brand first or type of CMO can be valuable where let's say you have a platform company, you have 20 brands underneath that and you kind of have to bring it all together to tell one unified story. I think somebody who understands brand and product marketing there is quite valuable. But the downside is that I see companies make mistakes or prioritizing the wrong thing. Like a classic example that we talk about often is we see companies go through a rebrand all the time. And it costs millions of dollars and it doesn't really drive pipeline. And when you have a brand-oriented CMO, like I think you can end up prioritizing things that don't move the needle as much as when you have a demand gen and data-focused CMO, because they're more about the results and the outcomes. But I think a good really great combination would be somebody that is well versed in demand gen and understands the value of content because I think content and demand together actually do create brand. It creates brand in a different way than let's say us doing more the product marketing and messaging and positioning exercise would do. It's like actually producing value for the marketplace which creates more affinity to what you're doing within the audience that you're kind of going after. So I think that's like the ultimate, is somebody that understands both of those and can bring a team together to focus on both of those things.
Cody: Yeah, yeah. And I, I guess maybe it's semantics, but I, you know, I think there's great brand-oriented CMOs that still are commercially aligned and driving outcomes, right. And they're more thinking about, you know, the messaging, the positioning, like what products are we bringing to market? Like it's almost - I feel like in some B2B organizations, like the classic four P's of marketing have been split and moved into product and moved into sales, right? And then, you know, marketing's just left with promotion, which is, you know, a travesty to me, right? It's like the old days of marketing, it was like, well, you had the four Ps and some people kind of sneeze on the four Ps, right? It was like price, product, promotion, placement, but they're very important and they're critical and like, someone who can think commercially across all of those is such a valuable executive to have at the table. And so I think having that level of well-rounded thinking, in addition to the data orientation, you know, is the, the superpower, right?
Shiv: You definitely need that. Yeah, it is funny though. I think the type of person that we're describing is really hard to find. I think this is one of the reasons why you see CMOs having a tenure of like less than 18 months or whatever it is, because the expectation is that somebody can play all of those seats and that's really hard to find. Like it's maybe one out of 25 to maybe even one out of 100 CMOs might be that good across the board And so this combination idea that you mentioned is probably the best bet and you kind of have to pick which one you want in that head seat to lead the overall organization
Cody: Yeah. But, I'm sure it's the same for you, but it's like the stronger individuals that we have in the company, the stronger our relationship and ability to influence is as well, right? And it's very much like a collaborative effort - how do we work together?
Shiv: Totally. Yeah, I think that's where people in your role, I think that's such an important piece because you need this cross-pollination and bringing best practices from one company to the other and more of a standardization of approaches and frameworks or metrics or what have you. So I think that's why PE firms are investing more in this. So I think that's a good takeaway. As we wrap up, Cody, just one question we like to ask all guests is, what's one book that you would recommend for the audience if they're looking to learn more about all the stuff that we talked about today?
Cody: It's kind of - it's an older classic. It's called Influence, by Robert Cialdini and the six principles of persuasion - it's more of a psychology book, but really it's the foundation of marketing. If you read it - I've read it probably four or five times now. Sometimes I give talks on the six principles of persuasion. I absolutely love it. I highly recommend it. If you read it and you can think about applying these principles in all sorts of your marketing, that is a go-to book that I always recommend.
Shiv: Highly recommend it myself. I think that's one of the probably first five marketing books you should probably read. So, great recommendation. We'll be sure to include that in the show notes and a couple of your articles as well. And with that said, Cody, thanks for doing this. Appreciate you being on.
Cody: Yeah, thanks Shiv. Great to be here.
Ep.8: George Rossolatos
How to Build Sustainable Growth with a Longer Term Investment Approach
How an evergreen fund offers a rewarding alternative to rapid growth at all costs.
Ep.9: Matt Gallagher
How to Increase Efficiency with Data and Strategy
How the Hg portfolio team prioritize growth strategies that will move the needle most in the first months after an investment.
Ep.10: Allen Duan
5 Pillars of Value Creation for Minority Investors
How being a minority investor influences B Capital's value creation approach and how they leverage advisors and partners.