Category Creation, with Jon Miller [Episode 844]

Jon Miller is the CPO at Demandbase, and previously cofounder at Engagio and Marketo. In this episode I talk with Jon about his journey from being a physics major at Harvard to playing a significant role in creating two huge product categories. First, how as a co-founder of Market he helped to transform marketing automation. And then, as founder of Engagio, how he’s helped drive the account-based marketing phenomenon. We also dig into what Jon sees will be the next big transformation in marketing and sales.

Episode Transcript

Andy Paul: John Miller. Welcome back to the show.

Jon Miller: Hey, glad to be here.

Andy Paul: I think it’s been almost four years

Jon Miller: No, seriously.

Andy Paul: Since we last had you on the show. Yeah. Four years. It seems unfortunately it seems like yesterday. Of course, everything got stretched out, with the pandemic, but, I guess it compressed all the time before then. Gosh, congratulations on the acquisition.

Jon Miller: Yeah. Thank you. Yeah, it’s, it’s been a whirlwind two months since that, since we announced it, I’m really happy with how well things are coming together so far. I’m sure we’ll talk a little bit about that.

Andy Paul: Yeah, we’re going to talk about that. So we’ll keep people in suspense, but if they didn’t know what the acquisition we’re talking about until just a few minutes down the road. So you’ve been at the forefront to serve creating two categories, significant categories, in marketing and sales, marketing automation, account-based marketing or account-based everything as it was the subject of our last talk. So how first question is, how does a physics major from Harvard ended up. In marketing and sales and then creating these two revolutions?

Jon Miller: Yeah, I think the direct connection to physics really just comes in the fact that, marketing is increasingly as much about science as it is about art and there, and that’s driven by just the massive amounts of data that are available now. and frankly, the increasing number of options of ways that we have to interact with customers and prospects.

And so the best markers say really do balance both sides of that equation. Data for targeting and measurement, as well as creativity for connecting to people’s hearts and minds. So anyway, so that’s the physics connection to marketing .

It’s funny. I’ve just always been passionate about, trying to find ways to help companies market better, using both data and technology. I ended up, pretty soon out of college, I worked at a company that spun off a marketing tech, called Exchange, which that went on to be leading marketing technology of the mid nineties. I leveraged that experience after business school to land a job at a company called Epiphany, which went on to be probably the leading marketing technology in the internet bubble.

Andy Paul: Oh, yeah. Yeah. Everybody, I remember them as E-piphany.

Jon Miller: Yeah. When they added that dot to the name that was like a billion dollar increase in the valuation back at the time?

Andy Paul: Was it really?

Jon Miller: Oh yeah. Everything was, e dot something or whatever. It was pretty crazy. And then we took the dot away after the internet bubble crashed.

Anyway, I was at epiphany for a little over seven years and we sold that in 2005 and that’s when Phil Fernandez and I started Marketto, and we really saw that, there was a big need for technologies, like what Epiphany was selling, but that softwares and service and enabled a new way of delivering it to marketers. That was much more aligned with how marketers buy stuff.

Andy Paul: So it was on-prem best.

Jon Miller: Yeah, exactly. It was like $250,000 minimum to buy the software. And that’s not how marketers shop right. Marketers buy trade shows, ad-words and, print runs and things like that. And so software as a service let us sell powerful software in a way that was much more aligned with how marketers buy stuff. And I think that’s really what unlocked the software as a service or the MarTech opportunity. It was how we align those things.

Andy Paul: Yeah. Well that sort of required a change in  behavior though, on the part of the buyers, right? So what was the initial reaction on marketing people and when you hit them with Marketto, after they’d been accustomed to Epiphany and other offerings?

Jon Miller: It was effecitve was the short answer. The thing that was a little interesting about it was, they had gotten used to being able to buy email, from more on a subscription basis because there were tools like MailChimp, and stuff like that. And so there was definitely a group of customers that saw what they saw in Marketo was, email on steroids and so there was that you had that vector, which it wasn’t quite as different.

I think the other factor you had going on, which is, it’s just weird to think about what we’re talking about is like 2005, 2006. Marketers were really just beginning to do that online lead generation. Google ad-words really only got started in 2002, it was a relatively early problem that marketers were generating these leads, but they were finding, that there was this business disconnect of, I’m generating leads, people are clicking on my ads and coming to my website, but they’re not yet ready to talk to a salesperson. And that kind of gap between when somebody, would become known to you and when they were ready. I think we did a really good job of helping to really promote the need to do lead nurturing. And that was a key thing that also drove Marketo, people buying Marketo, it was like, there was very clear business problem that needed solving.

Andy Paul: Is to manage that gap between the initial interest and making them sales ready.

Jon Miller: Exactly. Exactly. And then those are pretty clear ROI on doing that also.

Andy Paul: Yeah. I’ve never heard her phrase that way. That’s that’s. Yeah. Forcing me to think here. It’s and that seems like a fairly obvious, so what I mean, okay. Moving into that space, what was happening beforehand in terms of what were your customers saying they were experiences just sales was calling people too soon and they would just fall off the map altogether. They had no way to keep track of them. After that initial sales contact.

Jon Miller: Yeah, pretty much, you generate a lead and, most companies, the first thing they do is then a sales person would call them up.

Andy Paul: Yeah.

Jon Miller: The person would say, why are you calling me? I just wanted to read your white paper. And then the salesperson would mark it in the system is okay, bad lead. And that would be the end of it. And it sounds funny, but that was happening all the time.

Andy Paul: I was gonna say it just reinforced that stereotype in the minds of sellers that all marketing leads are bad.

Jon Miller: To a degree and then, obviously, one in 50 might be okay, so they still call them. Or you have some hapless SDR do it, which is in some ways, even worse. The other thing you got going on at the time is, was a company called Eloqua. And Eloqua had gotten started about five years before Marketo did.

And so they were pretty early in being out there and trying to preach that there’s technology to automate some of these processes. And I think that’s the last thing that sort of helped Marketo unlock was that, especially in kind of Silicon Valley venture backed tech companies, there was a awareness of the need for technology like what Eloqua had. And when Marketo came along with something that was similar, but was more affordable and also easier to use that. That was pretty exciting to a bunch of people.

Andy Paul: Interesting sort of phrase it that way as is not just about Eloqua, but also about the role Marketo had is that it’s really this category, this marketing automation category that really enabled this specialized sales, predictable revenue model that we have.

Jon Miller: That’s a pretty strong statement, but what I mean, but I do think is that the model today of sort of marketing generates leads and marketing takes some responsibility for the revenue funnel and then ultimately creates these warm leads that they can then pass on to sales like that very much, I think it was unlocked through the kind of marketing automation technology. I agree with that part.

Andy Paul: Yeah, very interesting. So then after Marketo came, Engagio. And so what was the path there? What was the sort of the aha moment about this need for account based marketing?

Jon Miller: Yeah, there was both a personal journey then like the business opportunity journey. On the personal side, after nine years at Marketo, it’s been a great experience, but the company had gotten big enough. It didn’t really feel like my baby anymore. And so I just was craving, honestly, the go back to, to that kind of startup and build something from scratch and so I was it’s time. Let me think about what the right opportunity might be.

Andy Paul: What, what was it about the change though? I’m really interested in that it’s because, you know I think it’s a common entrepreneurial struggle as how do you establish and maintain a culture of that you want to work in?

Jon Miller: So you have to remember, I wasn’t the CEO of Marketto. I was the original CMO, and then I ended up focusing more on just demand generation. And so almost by definition, as the company grew, the scope of my role got more specialized. And that’s just inevitable, unless you’re the CEO , there was nothing wrong with it and I enjoyed it and I spent nine years, but I was craving, I am a generalist in many ways and I do like touching lots of different things. And so the kind of that return to the, to the early, very broad scope move very quickly. Like I just don’t know if there’s, there’s no way to hold on to that forever. It’s just naturally happens as you grow

Yeah, so I was like, okay, I want to do something. And I wanted to do something in marketing technology. And there were a couple of key trends that I had noticed through my time at Marketo. The first is that, there’s a limit to how far we could take that traditional demand generation model, where marketing generates leads and hands it to sales.

Andy Paul: And what was the limit?

Jon Miller: Effectively declining marginal returns. If I doubled the number of webinars I run. I’m not going to double the number of leads I generate. And like I could write twice as many blog posts, but it doesn’t generate twice as much traffic or leads. And so while it was a really efficient system, it had limits to it.

And, even internally at Marketo, we found ourselves, looking for other engines of growth. And we like many companies were turning to more focused outbound efforts, and I started to use the analogy of the time of the traditional model that Marketo had helped develop was like fishing with a net. We didn’t, we had our campaigns, we threw them out there and we didn’t care who responded. We just would look in the net to make sure we got enough. And then you do the nurturing and all that to pass the good ones to sales. But we, but there was this other motion we had also started to do, which was more fishing with the sphere.

Let’s go find those big, valuable fish and proactively go after them. And that worked also, and yet at the same time we were doing it at Marketo, but I was, I saw firsthand how hard it was to do and how the technology that we had, didn’t totally, meet the needs. And then the other factor trend, I would say that was going on was I would say I was starting to see a changing dynamic between how marketing and sales work together.

The, again, the traditional model is very linear baton. Marketing generates it, hands it to SDRs, qualify it and hand it to sales. But partly related to this needs to do outbound. It was, we were requiring much more kind of synchronized or orchestrated processes where sales and SDRs and salespeople were sending as many of those first touch emails as marketing was. And we’re starting to use tools like Outreach and SalesLoft, to send those emails.

And so that the role of marketing owning email was going away. And the marketing owning the front of the funnel only was going away. And at the same time, as these deals got bigger and bigger, there’s no way the salesperson was talking to every single person at that account.

And marketing was actually playing a bigger role in the opportunity stage. Because again, the traditional model you turn marketing off when the opportunity gets created. And here we were like, no, that, we should advertise to the people. We could keep advertising that account and make sure we’re like nurturing all these relationships for people who aren’t directly part of the buying committee, but are still influencers.

So that linear Baton handoff is falling apart. And so it was those two key trends. I was like, okay. There’s a need for, another kind of technology platform. And it’s funny initially I called it narrow funnel marketing, but very quickly realized that this was basically what people were calling account-based marketing . like these concepts and almost immediately, I’m like, okay, this is an account-based marketing technology and account based marketing company. And so that was 2015, Engagio actually got started on PI day. Three one four one five or March 14th, 2015. And, I think partly because I, with my Marketo experience had leaned in hard in ABM, I think that helped put more spotlight on the technology, on the concept. And you can really see ABM as an idea taking off in 2015. Before then, it’s been this idea that mostly Demandbase was out there talking about and pushing, so five years of Engagio, we we’re building it out, building out. It’s a very kind of unique point of view.

Andy Paul: What was that?

Jon Miller: Oh, and this gets to the Demandbase merger, a little bit that we hinted to earlier. Traditionally Demandbase and I would say as well as Terminus and 6Sense which are the other kind of large ABM players to a degree RollWorks as well. I would say had a primarily advertising centric approach to ABM, and there was a machine learning behind it.

So let’s use machine learning to identify the accounts that are gonna be most interesting. Or perhaps in market for our solutions. And then let’s advertise to them, very targeted way, to create awareness and drive them to our website. And, that’s a flavor of ABM and kind  and all these platforms built some stuff for later. No, maybe you alert the sales person if one of their accounts, it’s the website, that kind of stuff. Or maybe you do website personalization so that when they come to the website, they get a slightly different experience.

At Engagio you we had taken with the Marketo background, a much more marketing automation centric approach to building ABM. And that meant first and foremost solving the pains that I had at Marketo trying to do this stuff. Which was really, was a data and integration challenge first off, Marketo and the other marketing automation tools are people centric systems. Literally at the time you’d log into Marketo and it was called the lead database.

You’d make a list of leads of people. And similarly, Salesforce has always had this interesting disconnect where leads in Salesforce, don’t roll up to accounts. They’re like an independent object. Contacts do but leads don’t. And that creates a real challenge if you want to be account centric, because effectively a bunch of your important data doesn’t connect to the account. I mean all your Marketo stuff doesn’t roll up to the account. All your lead stuff doesn’t roll up to the account. Even, and then when you think about the things like the data that sits in your email and your calendar system, the emails that are going back and forth through three accounts, That’s all email-based, doesn’t roll up to the account, et cetera.

And so when I was at Marketo trying to do this stuff, and I was trying to both target accounts and manage campaigns and measure the results. It was really hard and manual because none of that data connected the way I needed it to. So that’s what we solved that Engagio first is really building that integrated, we called it the foundation, your account foundatio. Pull all that data together, match it, everything to the right account, and then make, basically make your Marketo in your Salesforce better because we’re then able to push that account centric lens back into the existing tools. And then on top of that, we’ve built really robust measurement capabilities. So that way you could know if your ABM efforts were working. Cause with ABM, it’s not about how many leads do I generate it’s am I engaging with the right people, the right accounts? So you need to measure it a different way. And then lastly, we built out orchestration and sales functionality.

So that way we could start to actually coordinate these actions between what marketing wants to do and what sales wants to do, not that linear Baton handoff, but that more soccer team passing the ball back and forth. So that’s what Engagio built-out, which was really interesting, but we didn’t do the ad stuff or the predictive machine learning stuff.

Andy Paul: Like 6sense did, right?

Jon Miller: or Demandbase did, for example. And so I think we, I was really proud of what we had, but according to the analysts, we didn’t have the complete solution. And that was an interesting dynamic cause, I didn’t frankly want it to get into the ad business by myself, if you will. Maybe just segue then into the acquisition with Demandbase, we, it’s funny because even though Demandbase and Engagio were competitors, we’d also been partners, and we’d done some co-marketing together. In fact we actually had 40 customers to use both platforms. And early this year before the pandemic hit, I had started to have a couple of conversations with them where we really realized that if you take what they do and what we do, and you put them together, it’s the unbeatable platform. Because it’s the best advertising and machine learning and predictive platform with this, the best kind of data integration and orchestration platform. And we started having kind of formal discussions about, merging the companies and then the pandemic hit and it was, honestly only through sheer force of will from both Gabriel Rogo, the Demandbase CEO and myself. And how much we believed in the value of this merger that we’re able to keep the conversations going through Zoom and everything else that was going on, and all, or ultimately get the deal done and announced in June.

Andy Paul: Yeah. Interesting. So hadn’t really thought about the mechanics of actually putting a deal together when it’s all done remotely.

Jon Miller: Yeah. And it probably wouldn’t have happened if Gabe and I hadn’t started talking in January and February in person. but yeah, everything totally shifted online, I mean we had to negotiate and do the negotiations that way. Get the board approval virtually. All the diligence done virtually. Yeah, totally. and then –

Andy Paul: I’ve done a couple acquisitions. That was, it would be really hard not- because I mean part of that was going and actually seeing what people said when you asked them questions, seeing body language and so on. Yeah.

Jon Miller: Yeah. The good news is, Engagio, we were a pretty tight ship, so you’re able to do due diligence on us and you’re not gonna find anything goofy. And so that certainly helped. The other thing that’s been interesting is then the last two months I had to join a new company and assimilate into a company, totally virtually. And if you think back to the, my life journey, I told you a little bit earlier, I actually haven’t started a new job since 1999.

Andy Paul: Working for somebody else. Yeah.

Jon Miller: Exactly. Cause Marketo I started and then engage you. I started, so it didn’t over 20 years before I even had to fit into an existing company. And in this case I had to do it entirely over Zoom as well. So that’s been interesting.

Andy Paul: Yeah, I can somewhat identify I in my, I worked for myself for 20 years and sold my or my podcast was acquired in February, right before the shutdown and doing same thing. Yeah, integrating with the team at ringDNA from through Zoom.

Jon Miller: Yup. Yup. but the good news is it works pretty well.

Andy Paul: It, it does surprisingly. Yeah. so what’s the next revolution for Jon Miller?

Jon Miller: Right now, as we looked at the beginning, we are moving like the wind or bringing these platforms together. And we’re actually going to have the first customers live on the integrated solution in September, which is, right now we’re recording this in mid August. So any day now. And then we think we’ll have the GA of the integrated  solution in Q4. W what’s next for me is bring these things together. And then, I really do believe that this will be the dominant ABM platform. And it’s fun when you’re in a kind of hot, semi hot, emerging category with the best solution.

Andy Paul: Yeah.

Jon Miller: And at least a couple of years of continuing to build and sell and I think ultimately dominate the ABM category. That’s what’s next.

Andy Paul: All right. Let me phrase the question differently then. So in your mind, as you look out and scans or the horizon is yeah, what do you see as the big sort of, I don’t call them pain points, but opportunities for evolution.

Trends yeah. Okay. Yeah. So

Within B2B marketing, B2B sales.

Jon Miller: I think we’ve just barely begun to scratch the, that changing nature between marketing and sales that I alluded to earlier, that move from a Baton pass to a soccer team.

Andy Paul: Right.

Jon Miller: Like where there’s so many interesting integrated campaigns you can do when you think about it. I want to go after this account and so I want to open the door by sending a direct mail package, but I want the sales rep to write a customized note that I’m going to insert in the package before it goes, when the package shows up, I need an SDR to reach out in a personalized way. And, at the same time, I’m running a personalized ad campaign with personalized content from marketing, supporting a whole initiative. Like that kind of integrated play is incredibly powerful for doing that kind of spear fishing, but just think about how many moving parts you have to coordinate to make it work.

Andy Paul: Is there something that’s involved with just rethinking marketing and sales and the whole function behind it? it’s, I was talking to someone a while ago and they were saying, you look at us, basically when you combine those two, you’ve got two functions you’ve got acquire and retain. And why don’t we align people that way and just forget this whole sales marketing thing. You’re either in acquisition or you’re in retention.

Jon Miller: it’s an interesting thought philosophy. I think it, my personal belief and experience is that it doesn’t really work because of the realities of people. For one hand, a phrase I always like to talk about is sales is from Mars and marketing’s from Venus. You need each other, but you end up thinking about the world very differently.

Like people get into marketing versus sales, with different backgrounds, different experiences, different skillsets, probably that different views of the world and different motivations. So the first piece is I just think you just have very different functions doing, thinking about the world differently.

At Marketo at one point we tried to having a single revenue department, we actually hired a chief revenue officer who had six direct reports. The head of enterprise sales, the head of mid-market sales, the head of AMEA sales, the head of demand generation, the head of corporate communications and the head of product market. So there was no CMO and no head of sales. It was just as one chief revenue officer and it didn’t work. Lesson learned  I. think you need, it’s really important to have, I think a marketing leader and a sales leader, and –

Andy Paul: Ut brings up it down. It’s just an interesting challenge because it’s, at some point something’s going to have to change and it’s like, when do we start the change? And I think that my impression is that. You know, it’s just, we have a hard time thinking about it, cause it’s just, it’s always the way it’s been.

And when we think people have these different personalities, but I think that if you rethink the jobs people’s expectations over time change and they wouldn’t necessarily come in with the same mindset they do today. It’s just gonna be this period of transition that has to happen.

Jon Miller: Maybe you’re thinking about it more a visionary in a more visionary where I am. I guess I’m a little bit more on the, you do have the, let me go back to the soccer team analogy, maybe.  You’ve got forwards and you’ve got full backs, and those players have slightly different skill sets, and they play different roles, but they can still operate as a single team, and they pass the ball back and forth. I think if I use American football, it seemed better analogy. Cause obviously the wide receivers in the lineman. Are very different from each other.

Andy Paul: Trouble with American football though, is you have offensive and defense.

Totally.

The nice thing about soccer is that plays on both the same team plays both ways there.

Jon Miller: Yeah. But even just an offense, as I said, Lyman and wide receivers, totally different, literally genetics, and you kinda need both on a team, but they have to find a way to work together as a team. I guess I’m not against, a single revenue team per se.

If you can find the ways to kind of get everything to work, like we might move it. I couldn’t imagine moving in that direction over time, but it just needs more process, more technology, a lot of things that kind of don’t really exist today. So I think so that’s an area that I’m thinking a lot about kind of as a marketing and sales technology trend. There’s more opportunity. I think that, Oh, go ahead. You had a question.

Andy Paul: Yeah. Questions for you just want to throw this out there. One thing I spent a lot of time thinking about is the sort of this idea of seller productivity. And I talk about productivity in a conventional productivity senses, dollars of whatever dollars of output or say rate of output per unit of investment. And this case, dollars of revenue generate per hour of actual selling time.

And how effective are sellers in the interactions with buyers, whether in person or virtually or whatever. And I was talking to someone recently, who’s doing some research into this and I put the case to him. I said, you know, my gut feel is that this unit of productivity, sellers ability to generate revenue per hour of sales time. Hasn’t substantially changed over the last three or four decades, despite all this increase in technology, into business in general, but sales as well. And I was just wondering whether we’ve reached a limit in terms of what our technologies can do to improve that. Meaning that what’s left and what we’re struggling with is how do we just make people better at the human elements of sales, which has really seemed like this gating item for us right now. I’m just wondering how you think about that.

Jon Miller: I think it’s a really interesting question. First off, back at Marketo one of the things that we were proud of, the fact was that our sellers actually carried a decent chunk, higher quota, then your typical SaaS sellers., They, our reps usually were, our typical mid-market rep was carrying 1.2 million a year, you know what I’d say? The average is more like 800 or something for kind of,

Andy Paul: Even lower perhaps. Yeah.

Jon Miller: Yeah. Maybe even lower for a comparatively paid rep. And our hypothesis at the time was look at this amazing revenue engine that we built that’s powered by our own technology, where our sales reps don’t do any prospecting themselves.

They are only getting fed this warm supply of, this steady supply of warm and hot leads. And that’s what enables them to be so productive that they carry this high quota. I’ve come to learn over the years that what Marketo actually had was amazing product market fit.

And, that amazing product market fit combined with good sales and marketing execution is what enabled us to have such great sales productivity. And that’s just a long way of saying, I agree with your premise, right? That, with the exception of companies that have ridiculous product market fit, we have not seen a step function change in sales productivity.

Andy Paul: Yeah. Yeah. I don’t have an answer for it. I’m just as I’m asking the question, because I think it’s. If look at productivity in general, the impact of technology on productivity in the economy in general, is it basically peaked after the introduction of email. Whereas through like the eighties and nineties they’re in productivity growth is growing you know, three plus percent, annually, but then after email, it sort of settled into 1%.

And, yeah, it makes you just think about, okay, we’ve got this huge explosion of technology into sales marketing in the last 5, 10, 15 years. Is, are we using it in the right way in order to really impact productivity? I don’t have the answer. I’m just throwing it out there.

Jon Miller: I think, this gets away from my world of expertise quite as well, it is interesting that you’ve seen a rise in so many kinds of saleT enablement tools. the last few years I’m talking about like seismic and HighSpot and stuff like that, that, cause that, people are moving beyond just the, Hey here’s what I can do with better marketing tech, like I’ve been talking about, to unlock more of the human side. So yeah, no, I, I wish, I wish I had a little bit more to say besides your hypothesis was interesting and I’m going to noodle on it.

Andy Paul: All right. you’ll come back. We’ll do it again. And it won’t be four years though. All right. Jon, that’s been great. I really appreciate you taking the time to join us today.

Jon Miller: It’s always good to chat with you. And it’s been thought provoking.

Andy Paul: And if people want to connect with you, what’s the best way for them to do that.

Jon Miller: Usually just shoot me an over LinkedIn. It works pretty well. If you want to find me on Twitter, I’m @jonmiller.

Andy Paul: All right, John. Thank you so much.

Jon Miller: Cheers.