What Marketers Need To Know About Category Creation (With Emergence Capital’s Viviana Faga)
What Marketers Need To Know About Category Creation (With Emergence Capital’s Viviana Faga)
Tricia Gellman: Hi, I'm Tricia Gellman. And I'm excited to welcome you to this episode of CMO conversations. Today, I'm here with Viviana Faga who is Operating Partner at Emergence Capital. So Viv, thanks for joining us.
Viviana Faga: Thank you so much for having me. It's so great to see you again.
Tricia Gellman: Yeah, that's great. So we should probably let everyone know that we worked together many years ago at Salesforce.
Viviana Faga: We did. Yes.
Tricia Gellman: And you've done a lot of things since then.
Viviana Faga: It's been fun.
Tricia Gellman: Yeah. Maybe you can tell us a little bit more about your role because it's a little bit different. The series is really about CMOs and you are in a leadership marketing role, but being at a VC it's really different. So maybe you can explain to people what you do.
Viviana Faga: Yeah, absolutely. It is quite different. And I get this question a lot because a lot of folks want to take some time and maybe go into venture. Venture is really exciting for many, many reasons. And just to give you some background on Emergence. So we are an enterprise SaaS focused venture firm, and we invest in people who change the way the world works. So really we invest in any founder, any technology, any product that really is fundamentally changing the fabric of how we work. And so that is our core focus. It's always been our focus. The firm is about 15 years old now and her business insider, we are one of the most successful funds in the last decade-
Tricia Gellman: Congrats. Yes.
Viviana Faga: And some of our most recent investments or inaugural investment was in Salesforce. And then from then we went on to invest in Yammer and Box and Zoom and Gusto. So we've made a lot of really great investments and have been very lucky to partner with some category defining companies. So that's the firm in general, but we're very, very focused. A lot of other funds will invest in biotech, they'll invest in other areas, but that's really what we enjoy doing. And so what's been unfortunate for me is that my whole background has been enterprise SaaS. So I started working in Salesforce in 2004. So at the time I think we were just shy of 500 employees.
Tricia Gellman: And that was really early days for marketing in terms of product marketing, which is where we worked together.
Viviana Faga: Exactly. And I think that we were so lucky and fortunate to work with some really brilliant marketers. And we had a lot of exposure to inaudible at the time. I was lucky to take all that experience and really take it with me to go to companies like Yammer and build that category. And so what I wanted to do most recently was I really took a step back and asked myself," Okay, I've been a CMO now for eight years. I've worked closely with boards, I built several categories. I've seen several successful exits. I worked for Microsoft for a year and a half reading all of enterprise social." And so I really asked myself," What do I want to do next?" And I thought the idea of venture would be interesting because what you get to do is you get to look across the sea of all of these different enterprise companies and you decide, which company is going to be most successful and you get to partner with them closely. And so our firm only makes five to seven investments a year. We're very, very focused. And so I liked the idea of getting to partner with several companies at once versus working with just one.
Tricia Gellman: Yeah.
Viviana Faga: Because you know, as a CMO, that is the one thing that you think about every morning when you get up and every morning when you go to bed is just, how am I going to take this company to market or what am I going to do differently? And I like the idea of doing it multiple times over.
Tricia Gellman: And I think as a CMO, in the companies I've been at, I've actually had great relationships with the investors because they are really curious, what are you doing? How are you building the category, the board decks, et cetera. And so I think it's always nice to have that partner in the investors, but I think like you said, I'm singularly focused. How are we going to own our category? How are we going to build our business? So I think it will be great for you to share with us what do you think are some of the trends that are impacting marketing today and how is that impacting companies like super early versus like those that have been more mature.
Viviana Faga: Yeah, there's so many different ways to look at marketing right now. And I wish I could say here's the magic wand, do these three things and they're going to work for you. And so I like to break it out by business model. I think that's really important if you're in a freemium business.
Tricia Gellman: Yeah. The role of a CMO is very different in freemium versus in more B2B enterprise kind of company.
Viviana Faga: Yeah. And you've seen that with Drift, right? inaudible the big freemium business.
Tricia Gellman: Yeah. And we're growing from the freemium model up in toward the enterprise.
Viviana Faga: And what you do for Drift is going to be vastly different from what you did at Salesforce, because Salesforce is a 30 day trial. And so you have to break it out by each. And so there are different tactics that support each and that could literally be a 30 minute conversation on its own, but what I like to do at a meta level. And I'm sure you're seeing this too, is that people always ask me about digital and the role of digital. And I'd actually love to hear your thoughts on it because this is a hot topic amongst all the CMOs that I work with. And so my big thing is that digital works up to a certain point, right? Meaning spending on paid digital ads. It's great. It's fantastic. But it can be really expensive. And if you're in a very competitive market where your competitors bought up all the keywords on the super expensive, then the acquisition costs might frankly not work. And so I've seen that quite a bit. And also compound that with the fact that hiring salespeople is becoming more and more expensive. And so you've got these two levers that are frankly not making it very expensive for you to acquire customers. And so I think a lot about digital, but I think you have to be very thoughtful in your spend there. One thing that I talk a lot about right now that I find so fascinating, I'd love your thoughts on this too, is I say," What's old is new." Because the tactics that we ran now that digital people are kind of questioning the value of digital because it's so expensive online and you still have to do it. I mean, I believe in content, content is king, everyone believes in content. Podcasts are great. Obviously that's why we're here. But this idea that what's old is new. So we use Zoom as an example, which is a portfolio company. And Eric had this very big idea that he wanted to build a big brand in this space. And so he went and he spent a ton of money in out of home. He-
Tricia Gellman: crosstalk See them everywhere, buses, et cetera.
Viviana Faga: Everywhere you go. And I tried to do that, but every board would tell me, no way, we're not going to allow you-
Tricia Gellman: crosstalk.
Viviana Faga: How do you measure that? And you really can't, it's harder, but he just believed in it and championed it and did it. And I think it worked and they were able to build that brand and they had a very clear message that supported it. You and I can talk about this at length, but getting the message right is so critical early on and understanding that the message you have now is going to evolve with the company over time and understanding when to evolve it.
Tricia Gellman: Yeah. I think one of the challenges with messaging is that you have the founders and you're early people who believe they know exactly what the message is. And if I go back to my one- on- one product marketing days, it's not really about what you think your messaging is. It's really about what value you're delivering to the end customer and putting the customer in the center. So what's your advice to marketers in terms of how to create the right message as well as how to validate it internally, externally?
Viviana Faga: It's a lot of work. And I think you touched on a very sensitive topic, which is that the CEO, we talked about the curse of knowledge, the curse of knowledge is a concept. And I say this all the time to the CEOs that I work with. They have been living, eating, breathing this ideas for many, many, many years until it actually came to fruition until it actually launched. And so in their mind, they believe that everybody knows just as much about their product and technology as they do and that's never the case. So you always have to repeat a message a minimum of 20 times until people get it. Now traditionally at least in the Valley, in tech, most of the founders are product centric. So the way they talk about the product works great in one-on-one conversations, but it's not going to work from a sales and marketing perspective. So I run this exercise. I basically put the whole executive team through a positioning statement exercise, which anybody can run, but it's really important and it's a nice and an outsider, but also a friend is coming in to force a really tough conversation. And then we segment the message, we'll say," Okay. So we came up with your positioning statement. Now from that we created your mission and your vision and your values. And so let's determine." And then there's a hierarchy to messaging. There's the 100, 000 foot view, which is what marketing is going to take to the press and the CEO is going to take on the road. And then there's the 1000 foot view, which is what sales takes with that. And that includes, the competitive messaging being really thoughtful about how to de- position, because one thing that I'm sure you know every market right now is very, very competitive for every market there's two or three entrance. So you have to be very thoughtful about your message and get it right early on.
Tricia Gellman: Yeah. You touched on it before, but category creation. Some people feel like," Okay, I have to spend a lot of time as a CMO, creating a category." Other people feel like," Oh no, I don't need to do that." What's your perspective on category creation?
Viviana Faga: That is such a great question. It's the one I'm deeply passionate about partially because... Actually when I left Salesforce, I went to a company called Jive Software for a few years because I believed in the social space and I eventually went onto Yammer, but Christopher Lochhead was on the board there and he became a good friend of mine and actually just recently saw him and he's written the sort of definitive book on category creation. He and I talk about this quite a bit and I was just-
Tricia Gellman: We work with him as well.
Viviana Faga: Yeah, he's so great.
Tricia Gellman: I mean, not necessarily doing our marketing, but he's been a part of our hyper- growth event series and things like that.
Viviana Faga: Yeah. He's just so wonderful on it. And he's right in that there could be nothing more important in creating a category. And the reason for that is because let's say you have the best product. And I worked with some of our portfolio companies that have been in this situation where truly they have the best product in the market, but they don't feel like they need to create the category or build the messaging because it is by default the best product. At the end of the day, people only believe what you tell them. So if your competitor has an inferior product, but yet they decide that they're going to create the category and build the brand and let's say there's company A and company B. Company A has the better product and company B has the better marketing. You can go to the two websites and you're probably going to want to talk more to company B because they just look different and they sound different. And it seems more interesting. And they're deep positioning points for you are much stronger. And nobody has time to research anymore.
Tricia Gellman: Yeah. I think in the past five years, this is the biggest thing that I've seen as a change is in our early days of Salesforce, it was like really focus on the features and people were evaluating products on the features. And now it's so much up in the brand. I think it's really changed in terms of your messaging, your positioning and people just assume," Okay, all these things are kind of equal because technology has kind of become an equalizer." And so then it really comes down to whether you are presenting yourself in a way that demonstrates that you're the leader or that you have the best solution or your messaging into the points that people care about.
Viviana Faga: Yep. And then the other thing that I think is really interesting and I recommend this often, but it's hard for technical founders. It's that people now want to connect to brands on a human level. And I think you guys do a really nice job of this adrift, but if you're deciding between two technologies, you really want to connect with the product that you think," Gosh, this resonates with me." And so it's not just about features and functions anymore. It's about," How do I build this community? And how do I get people really excited about my product on a different level than just features and functions."
Tricia Gellman: Yeah. It's interesting you bring that up because it's a conversation I've been having with Dave inaudible, our CEO, which is a lot of people talk about, " Are there different marketing tactics for B2C versus B2B?" And we've seen that in the past five years a lot of blending of that. And B2B2C, B2C2B, whatever, all the terminologies. But what I've been really talking about is how we're really in the B2H world, which is, you have to really think about how are you marketing to the human? How are you connecting to that human being and really making your brand personal, but also your interactions and engagements personal.
Viviana Faga: I love that.
Tricia Gellman: Yeah.
Viviana Faga: I've been inaudible that. Let's do it. The B2H. The B2H.
Tricia Gellman: crosstalk.
Viviana Faga: I like that a lot. We should write a blog post on that. That's great. You're spot on. That's what we miss in all of this. It's just technology, technology, technology. I worked really closely with SalesLoft and they kind of reposition themselves really to focus on this human connection aspects. And it's like the sales of tagline. So that was also really important for them.
Tricia Gellman: Okay. So let's go back to this idea that you work across different companies' series ABC, even one of your portfolio companies, Zoom, they've inaudible. Do you think that there's a different role for CMOs at the different size companies? And one of the reasons I ask this question is because there's a lot of data out there about how CMOs don't stay in their jobs that long. And so I'm wondering, is it because you think there's different skills that are needed in those different times?
Viviana Faga: There are. I think fundamentally all VPM, CMOs, they have to be really good at many different things. So whether it's product marketing, messaging and positioning, which really would fall under corporate marketing, there's performance marketing, which is really demand generation and creative, they have to understand all of those, but they can only have a super power in one of them. And so this is one of the challenges that I find without the CEOs that I work with is that they expect people to just be amazing at all of those. And I think that's impossible, right? What would you say your superpower is?
Tricia Gellman: Yeah, I think my superpower is working with sales.
Viviana Faga: Okay.
Tricia Gellman: But because I was a designer in the beginning, I can work with the creative team and because I was a product marketer, I can do the messaging. So it's like that mix, but I would say-
Viviana Faga: It's your unicorn.
Tricia Gellman: I know, yeah. But I think if I had to say one and that's why I came to Drift is because I think Drift is really changing the relationship between sales and marketing. And that to me is my passion. So it's not just like a superpower it's something I'm really passionate about. And so I think working at a company where you have a huge passion is important. None of these jobs are easy so you need to go somewhere that you really love.
Viviana Faga: Oh my gosh, yes. You have to love the product. I always say, you're the number one cheerleader for the company, if you're the CMO or the VPM. I mean, you literally have to get up and eat, breathe, sleep your company. So you have to love the product. You have to love the CEO and the neutral of every facet of the business. And you hopefully have a good relationship with your head of sales.
Tricia Gellman: Yeah.
Viviana Faga: But just to get back to your original question, I think there's a broad range of skills you have to be good at round yourself out hire really good people to support you that are really deep in that specific area.
Tricia Gellman: Yep.
Viviana Faga: Hire the best field marketer if events are important for you. Hire the best demand gen person you can. Hire the best creative person you can assuming your company starts to grow. But what I found early on when we tend to invest at the series A, which is, I always say 10 engineers and a dog it's really early, and they might have a go to market person. They might have one sales person, or they might have one marketer and the marketer tends to be either a product marketer or a demand gen person. But I always get the advice of if you're looking to hiring kind of a head of marketing to look for a director to senior director level, don't come and bring the big VPM and then figure out as a CEO, figure out what super power of those four that I laid out is most important to your business. Not what's most important to you because a lot of CEOs want to build their own brand. And in a sense, the company's brand is tied to the CEO.
Tricia Gellman: Yeah. Especially in the early days.
Viviana Faga: Right. But what you think you might need. And that's what I spent actually, a lot of my time with early on with the founder is helping them kind of navigate," What do you need in a head of marketing?" What they might think they need and what the company might need could be two totally different things.
Tricia Gellman: Yeah, interesting.
Viviana Faga: And the other thing I say is that, look, we see the revolving door. Most VPMs will last two years at a company and then they move on. And I think we've made this mistake in the Valley because it's such a broad discipline we will just push people out. We'll say," Okay, you've done your two years. I'm now ready for the next big gun." But at those two years were a lot of work and the person did a lot. And so I try to advise that my recommendation is to keep the person on. Maybe they're not the same or maybe they want to work for the CMO. Maybe there's a new focus area. Maybe they're strong in operations and they want to move into that organization. But if you're a growing company, try to keep some of that consistency because it can be really disruptive when there's change there.
Tricia Gellman: Yeah. A hundred percent. Do you think that branding is a more important superpower in the beginning than later, back to your comment on category creation?
Viviana Faga: I think it's important. So really early days at the A, you're already thinking about your next round of funding and how do you get to the B? And so there are some companies that have this magical halo around them, maybe because their early investors were really very prestigious or maybe the company just has built an early brand, where everybody's kind of looking at it and saying," Gee, I really want to invest in that company. So maybe the next round isn't as critical for them. And they can just focus on brand and they don't have to focus on the metrics as much." But once you get to your B, you have to have a certain amount of revenue to make that raise easy, frankly. And so while you want to focus on brand, you still have to actually have a strong sales and marketing team to get your AR to a certain point. Otherwise, you'll end up taking more dilution and it won't be as favorable for you.
Tricia Gellman: Interesting. Yeah. That's a great perspective to have. So what do you recommend for marketers that are looking to sort of, how do they pick the right company? How do they know they're the right fit? Especially if maybe they're going to get pushed out in two years at a senior level, what are the criteria that you think people should look at and, or work on to create their right resume?
Viviana Faga: My gosh, this is a good question. And I get this question so, so often, because it is hard and it's scary as a VPM to say," Okay, I'm going to dedicate probably only two years of my life to this, but I'm going to put my hundred percent in and I might not be here." So let's try to avoid that. And let's try to get to those four years. So how can I do that? We talked about it a little bit, but I do think the number one relationship is the CEO. So the relationship with the VPM slash CMO and the CEO. So it's one thing to go through an interview process, like go to dinner with them and ask yourself," Can you finish this person's sentence? Do you think you can get to that point where there's that certain level of trust?" And I always referenced back to that, when I worked with David Sacks at Yammer and I felt like he was a very strong product leader, we had very different skill sets and I was a very strong marketing leader and he didn't really understand my world. He told me when I interviewed with him, he said," I'm told I need to hire you, but I really don't know why." My product sells itself. He came from PayPal and he took that and he applied it to enterprise. And in fairness, they had all this user growth, but from an AR perspective, they actually, weren't doing great. And I said," Well, look, your numbers actually, aren't that great." And so we got into this whole debate about it. And we just ended up having this really great relationship and we could finish each other's sentences and there was a lot of trust there. And so I think if you really have to ask yourself, can I trust this person? And so that relationship is really important. The product do you love it to get up every day and say," Gosh, I want to go to war for this product, because you do have to go to war in many ways." You have to beat the competition. You have to build a community. You have to rally everybody that works for you. And that's a lot of work and it should be fun. It shouldn't really feel like work. It should feel fun.
Tricia Gellman: Yeah. But if you don't care about it, then it's not, right?
Viviana Faga: Right.
Tricia Gellman: Because there's a lot of great companies and I know myself I've been recruited to IT security firms and it's just not my passion area.
Viviana Faga: Sure, sure.
Tricia Gellman: It's interesting. You guys are growing like a weed, but I just can't come here. I'm never going to be that passionate about it.
Viviana Faga: Right. I'm not going to get up and wear t- shirts inaudible. I mean, kudos to whoever takes that job, obviously-
Tricia Gellman: crosstalk.
Viviana Faga: They're probably really passionate about that space. So talk to the next one, which is the category itself, are you excited to build that category and own it? Some people prefer building new categories and some marketers prefer working in established categories. So kind of figure that out too. I like to build new categories and traction is another one that I found is really interesting. The marketing candidate can get so excited about the CEO and the product, and then they don't dig into the numbers. So dig into the numbers and make sure that the company is actually growing as well as the CEO says that it is.
Tricia Gellman: Yeah.
Viviana Faga: And those are all really important factors to think about.
Tricia Gellman: Yeah. We've talked and throughout the conversation, you've talked about VP and marketing, you've talked about CMO. Is there a difference? Should people be looking for one versus the other? What's your perspective?
Viviana Faga: Honestly, my perspective is that titles don't matter. If you are so incredibly excited about the opportunity, just get on the rocket ship. I think it was Sheryl Sandberg that said that. So just do it. It doesn't matter. VPM or CMO it's frankly, the same job. And what's nice about being the VPM is that you can get promoted into being the CMO and your probability of being pushed out, frankly decreases. And if you're the CMO, I think all eyes are on you and most people don't know how to measure that role. And so while you might believe that you're doing an amazing job and some people might not think that frankly, because again, there's no measurement of success.
Tricia Gellman: Interesting. So let's say that I'm a young marketer and I want to grow to be at this senior level in a company. What's your advice on where to focus? What are the key skills, especially with the way that marketing is changing? What do you think people should look to add into their portfolio?
Viviana Faga: Well, they're all important skills to learn. So I would say early on, you'll want to spend one to two years in each of the disciplines because it just makes you a better marketer. It's pretty hard to be a demand gen marketer only, and then become a CMO. You might actually end up in a consumer company because the growth role is so much more critical there than it is in B2B, but I'd say kind of make the rotation. I loved that I was able to go into corporate marketing and I worked really closely with PR and then I moved into product marketing and I worked really closely with events. So I felt like I had a good perspective. And then when I went to Yammer, I was thrown off the deep end and really had to learn freemium because we were one of the first companies that really built freemium for the enterprise. So I think it's good to be well- rounded, it's really hard to understand the role if you're not, but again, take a step back and ask yourself," What is my super power?" And then eventually master that. It was product marketing for me. So go kind of build yourself through that. And I've found that most CMOs either come from product marketing or come from growth. Demand gen.
Tricia Gellman: Yeah, I mean, in the end of the day, I think that's really critical. And then I think in demand gen, it's important to understand messaging. I hear a lot of demand gen people who are really good at the tools really good at working with operations, but then they're just like putting things in places versus really looking at like," What's the message? And is it right for the audience?" And if you don't have that, you just don't get performance.
Viviana Faga: Yeah. I always think it's so funny when the demand gen team will say," Gosh, the ads aren't working, they're not performing." And then you look at the ad and you're like," Yeah, no wonder why. I mean, they're awful. Did you talk to the product marketing team? Did they give you the target segmentation? Did they tell you what the ideal customer profile was?" Those two sides have to connect absolutely.
Tricia Gellman: A hundred percent. Yeah. I think for the CMO to kind of be one of the people that can bring that together, that's a critical component of that.
Viviana Faga: Yep. Yeah.
Tricia Gellman: Absolutely. Excellent. So anything else you want to share with the audience, whether it's advice or a great story you have?
Viviana Faga: I mean, honestly, I think marketing is so much fun. And you know this, I'm so passionate about it. You get to be really creative. So I hope that there are more marketers who get excited, frankly, after seeing this talk because they think for a lot of marketers, they get worried about this discipline, is there a long- term career path for me, it's such a hard role. I met with two different CEOs this week. Companies were looking at investing in and they both said," Gosh, all the marketers I've worked with have been terrible." And so I hope that we can change that perspective because I do think marketing can completely change the trajectory of a company unlike any other function in the business, frankly.
Tricia Gellman: Great. Well, thank you so much joining us.
Viviana Faga: Yeah, this has been fun.
Tricia Gellman: It's been, I think, a really great conversation and we'll stay in touch.
Viviana Faga: Awesome. All right. Thank you, Tricia.