Building a Multibillion-Dollar Category

Chapter 2 Building a Multibillion-Dollar Category By Mark Organ Mark is one of the original enterprise software as a service (SaaS) pioneers as founder of Eloqua, one of the first marketing automation solutions to usher in the shift to the cloud for marketers. Eloqua was the crucible for testing his theory of category creation. Mark had anything but an easy time finding his niche with Eloqua, but when he did, he found the unsung heroes of digital marketing — the demand-gen marketer. He studied their needs, delivered a solution for them, and helped elevate their stature in marketing departments to that of a professional position and role. This was classic category creation in the making. In this chapter, Mark lays out his theory and explains how to build a multi - billion-dollar category. Billion-dollar startup valuations are rare. As of November 2016, only 149 of the tens of thousands of funded companies have achieved that legendary (and contentious) unicorn status. Many of these companies created their own multibillion-dollar categories: transformative empires that permanently alter the ecosystem and establish themselves as kings of those categories . The benefits of being the category king are enormous — these companies seem to have no trouble in achieving rapid growth, raising capital, or hiring the best talent out there. Working with a transformative empire is also just about the most fun one can ever have in business. Steve Jobs called it “making a dent in the universe.” In other words, it’s the opportu nity to make a real and last - ing positive impact on people’s lives. But if it were easy, then everyone would be doing it. 2525

Chapter Chapter 2 2 I’ve mI’vead em itad mye it lif mye’s lifworke’s work to b etterto better under understands tandthe dyna the dynamics manicsd and proceprocesses ofsses buil ofd binguil dtraning stranformativesformative empire empire categories categories. I’ve . studieI’ve studied d dozednsoze ofns c aoftegories categories and theirand theirkey creators,key creators, and I’veand beenI’ve been a mai an main driverd riverbehi nbdehi twond twocategories categories as an as entrepreneu an entrepreneur. Ther. Thefirst firstis th e is the cloudc-blouased-bd asemard kmetiarnkgeti anutomationg automation categor category, whichy, which has hbecomas become e a traan strforanmsforativemative empir empire, worthe, w orthmore more than than$10 $10billion billion today today — as — as exemeplifiedxemplified by Eloqua,by Eloqua, whi cwhih wechn twe publicnt public in 2012 in 2012 and andwas wassold sold to Ortoac leOr acforle nearly for nearly $1 b illion$1 billion in 2013. in 2013. The seconThe second is thed is advothe advocate cate markmaetinrkgeti cantegorg category, whichy, which is growing is growing very veryquickly quickly and isan edx emplifieis exemplified d by myby c myurre cnut rreconmt pancomypan, Inflyu, Inflitiveu.itive. ReflecRtingeflec tingon whaton what I’ve leI’vearne leda rneabdout ab theout trtheans trforansmativeform ativeempir ee mpire categorycategory creation creation, I have, I hidaentifieve identified patterd pnsatter thnsat, thwheat,n whe combn cionmbed,i nbeuildd , build a repea arepetableat frabamele frwameorkw: ork: 1. Identify underserved heroes who will be elevated by 1. Identify underserved heroes who will be elevated by disruptive technology and trends.disruptive technology and trends. 2. Solve their problem with a transformational product and 2. Solve their problem with a transformational product and business model.business model. 3. Build a movement. Celebrate the heroes and mobilize them 3. Build a movement. Celebrate the heroes and mobilize them with a galvanizing idea.with a galvanizing idea. Discover and Develop the CategoryDiscover and Develop the Category A lotA of lot wo ofu ld-bewould-be entrepre entrepreneursn eaurers s atyrem iestydm byie dthe by lacthek oflac ak killeof ar killer idea. idThisea. Thisis unfort is unfortunateu nasate so as man so yman greya tgre neawt nceowm paconmiepas ncoieusl dc obue ld be createcred aotherwisted otherwise. Rathere. Ra ththeran thwaaniting wa itingfor a forge nai uges nnieuws nprodew ucprodt iducea t idea to cotom eco tom mie tond mi, I naddvocate, I advocate stron sglytro nforgly goi forn ggoi deepng d oeepn und oner undstandersitnandg ing a speac ialspe groupcial group of people of people and aand vis ioa nvi sthioant ththeyat theyhave hforave a fordiffere a different nt kind kinof fdu turof feu. turEntrepree. Entrepreneursn eshoursu sldho theuldn thestund ys tuthdayt grothatu pgro ofu peoplp of people’s e’s neednees, envirods, environmenntme, anndt , sanituad tiosituan ition detn ina ildet, andail ,d aelivernd deliver a tra nasfor tranmasfortivmae tive experieexperience annced banusdi nbesussi nmesosd elm o—d elthe — type the typeof e xperieof experience thncaet thdriveat ds rives enthusiaenthusiastic asdvotic acacdvoy.cacy. For categoryFor category creator cres,a cretors,ati crenga etinnthg usenithasustici asadtivocc adacvocy froacmy froa grom au pgro of up of specialspe peoplecial people that grothawst gro powsw pow erful erfanudl naumnd eronumusero shousu sldho buel dthe be pri them e prime objectivobjective. It’se .the It’s rotheute ro toute d otom idnancomienanc of ea ofhighly a highly attra ctiveattra ctivemark maet. rIkt et. It sounsouds sinmdspl siem, bplute ,s bo ufet wso e fentreprew entrepreneursn setuarrts stheirtart theircom pcanomiepsan thisies wa thisy. way. 2626 2626

Building Building a Multia Multibillion-billion-DollaDr ollCategorar Category y They Theymore m ofteoren ofte fall nin f alovell in wloveith theirwith theirown proowndu proct duvisctio n,vi sandion, the andn thefigurn e figure out ao waut ay to wa selly to it sell. it. Why Whydon’t d monore’t m entrepreore entrepreneursn foeurcuss fo oncus d ionstin dcits tinusersct users and c anusdto cmuserstom, ers, the peoplethe people I’ve c aI’velle dc athelled un theder unservedersderve heroed heroes? Wells?, Wit tellak, esit t aa klotes ofa lot wor ofk work to doto it rightdo it .right I liter. aI literlly intervieally interviewed hunwedd hunredsd ofre dsupers of super advo adcatevosca anteds ma andr ma-r - keterkseter for ms fory In mfluy itiveInflu reseitivea reserch. aSrchom. eS oenmtrepree entrepreneursn deounrs’ td wanon’tt wan to het toar hear thingsthings that conflithat conflict withct withtheir theirvision vision. If you. If wa yount wa to ntbu toild bu a ciladtegory a category king, kiI ng, I encourenacourge yoageu to yo leu atove le yourave yourego aegot the a td theoor ,d pooutr ,on pu yourt on yourdete cdtiveete chtiveat, hat, and liandsten li wstenith wa begiith a nbeginer’ns nermin’sd. m Yinoud. c Yaounn cota nwnillot a w cillategory a category into beiinton gbei. ng. tegory by serving a very specific c You hYaoveu htoave dis tocover disc overand danevelopd develop a ca a category by serving a very specifi groupgroup of custo of cmustoersm werith s wa sith oluatio solnu thtioant fits their that fits their uniquueniq neeued nee. d. Now,N bacowk, bacto thek to fr theam efrwamorkew. Ifork yo. u’Ifre yo wu’illingre w illingto put to in put the in work the work, here , here are theare steps the steps you ca yonu t acake ton ta bke toegin begin buildbinuilg ad tringan as trforanmasfortivema etivempire em: pire: Step 1: Identify underserved heroes who will be Step 1: Identify underserved heroes who will be elevated by disruptive technology and trends.elevated by disruptive technology and trends. ThinkThi liknek a link ean athropologin anthropologist. Disstcover. Discover and stuandd ystu fridnyge fri cultngeu cultres uthresat that operaoperte oautets iodue ttheside ma thein mastreinamstre aamnd thanadt couldthat could be mass be massively ivelyeleva elevted ated by nebwy ntreewnd tres anndds danisrdu dptiveisruptive technolog technology. They . idTheea iisd enota is to not bet to on bet d ions di-s - ruptiveruptive technolog technology, buty r, abtherut ra btheret o bnet the on peopl the people whoe wwoulho wd oulmostd m beostnefi bet nefit from froit am ndit s aervend s theervem the withm aw tithailore a tadilore technology d technology solutiosolnu. tion. This Thiis ws hisa tw trhanat sfortranmasfortivema etivempire em pirecategory category crea torscrea torsdo: Idodentif: Idy entify underserveunderserved heroesd heroes, und,erst undanderst theirand theirsitua tionsitua itionn gre ina tgre detailat detail, develo, develop p fit their needs, and capitalizepit awlizehen w trehennd tres evolvends evolve into ain netow a new solutiosolnustio tons to fit their needs, and ca normanorl. mal. Let’s Ltetak’se taa khypothetie a hypothetical ecxalam eplexam tople s eeto hoseew hothisw prothisc espros cwesorsk ws. orks. Say yoSau’y reyo eu’xrecite edxc abiteoutd ab theout potentithe potential fora ld forron edsro inne cos inm pcoanmiespan. Yiesou . You can imacangi imane gisonme eso cmome pcaoniesmpa coulnies dcoul haved haa fleetve a fleetof thous of thousands andor eves orn even millionmsillion of dsro ofn esdro onenes daoney. Sdaomy. eoSonmeeo wnille n weedill n toeed m anto ageman aagell of a tholl ofs e those droneds.ro Therenes. There may bmae ay febew a h feunwd hreudn ddrerodn ed romanne amagersna ingers the in world the world toda y today (as of( asw ritingof writing this, therethis, there are 4 a5re0 on45 0L inonke LdInink)e. dInIf d)rones. If drones really re taallyke toaffk, e off, one daonye thereday there may mabe ytens be tensof thous of thousands anofd dros ofn edro manane managers. gerWiths. Withthe the potentipotential groawl groth ofw ththi ofs in thidustrs indy,ustr theyy, theywill n weeilld n teeecdhnology technology and servi and cservies ces a good entrepreneur knows that there ther’s e’s to doto their do theirjobs wjoellbs. wAtell this. A tpoint, this point, a good entrepreneur knows that a grea atgre opportunityat opportunity to provi to provide a solutionde a solution for those for those peopl people. e. 2727 2727

Chapter Chapter 2 2 To taTkoe tathiske lithisne oflin ethi ofnki thing nking outsideoutside of te ofch nteologychnology for a for a mommentom, entthin, kthi anbko uat boboutd ybo- dy - buildberuils, derspes, cifispecallycifi callyArn olArd nold SchwarzeSchwarzeneggenegger. r. BodybBoudilybdinguil dwingas wonasce o onn ce on the frithenges fri ngesof athleticof athletics ansd and not cnonot sicdoneresidd erea dre aal resportal s. port. ThenThen, P,u mpiPunmpig nIrog n Irowna s was relearelesed aseind 19in7 7,19 7fo7cus, foincusg ing on Schwon Schwarzeneggerarzenegger and Landou FerrigLou Ferrigno asn othey as theycom petedcompeted for the for Mther. Mr. UniverUniverse titlsee . titlThee. mTheovie m oviekick -skitacrtek-sdta rteSchdwa Scrzehwaneggerrzenegger’s film’s filcamree car, reer, leadinglea dtoing hi sto ca histings cas itingn T erinm Tinaermtoirna. Btourt .beyon But beyond thadt, thcaategoryt, category creator cres ators saw thesaw popularity the popularity of the of fil them an filmd lever and leverageda itge indto it theinto 80s the fit 80sne ssfit ncreassze cr, aze, openopeing nuingp a unpe wa nmearwk metar ofk etprod of ucprodts foruct sb ofordy bbuodilydbuers,il dincers,lud incinlgud fooingd , food, gymsgym, supples, supplementms, aentnds, a evendn m eveagn maziagneaszi. nes. Case Study #1: Case Study #1: Salesforce discovers its underserved heroesSalesforce discovers its underserved heroes Salesforce:Salesforce: Betw Beteenw 1999een 1999 and 2001and 2001, Salesfor, Salesforce idcentifiee identified d a groupa group of s aofle ss amleasn magersanagers from fro high-growthm high-growth com cpoamniepas nies whow nhoeeded needed good-enough good-enough networked networked fun cftiounnactiolityna lityto to tracktr acackc ouacnctsou, ncontts, contacts,ac atsnd, asnadle ss aopportules opportunitiens.itie Thes. y They put ap upret am preiumm iounm e oanse e ofase a cceof asscce anssd anused (uansed ( anpayd mpayenmt), ent), not dnot epth ofdepth of produ product fecat fetureastu. res. The Thetechnology technology trend trend to elevate to elevate these these folks folks is the is multithe multi- - tenanttenant cloud cloud database database application, application, making making it easyit easy to to provisionprovision sales sales force force automation automation without without requiring requiring a stack a stack of serversof servers and andintegration, integration, or a orpurchase a purchase order order that thatwould would triggertrigger delays. delays. As a Asresult a result of this of technologythis technology trend, trend, it was it wasa a reasonablereasonable bet thatbet thatthe salesthe sales managers managers and andadmins admins of the of the future would become powerful and numerous.future would become powerful and numerous. 2828 2828

Building Building a Multia Multibillion-billion-DollaDr ollCategorar Category y Who Whowould w ouldhave hthoughtave thought in the in 6 the0s th 6a0ts bthodyat bbodyuildbinuilg dwinougl wd okickuld off kick a off a wholew holenew nebillion-w billion-dolladr ollmaarrk meta anrketd banecod bmecoe am lase tian lgas fitnesting fitness trensd tre thnadt that contincontinues toudaes yto?day? The uThend erserveunderserved heroesd heroes are amareo namg ousn.g They us. Theyare oaurer colleour acollegueas, gues, membmersemb ofers ou ofr i ndouur sindtry,u asntrdy , oaunrd n oeuxt-r ndeoorxt- dneighoor neighbors.b Borsut .w Bhuatt w mahakte mas kes themthe differentm different is th aist ththeyat theylive oliven the on frithenge fris nofge stheir of theirindu strinduy. strWityh . With EloquEloqua, theya, theywere w dereema dnedma-gennd -genmark maetersrketers. Comm. Coommn enooughn enough, but ,w buhilte while they theywere were servi nservig their ng their clientcs,lient theirs, their need nees wereds wn’eret beinn’t gb eiservedng served. . Take TTaeslake ,T eslafor e, xamfor eplxame. Aplt eEloq. At ua,Eloq wua,e tal wkee dtal abkeodu abt hoouwt hoTeslwa Tcoeslna con- - nectendecte withd wwithealthy wea colthyns umconersums werhos wwhoere w wereilling w illingto pa toy a p preay am preiumm foiumr for its caitrss, cbautrs , whbuta twh wea td weidn ’dt itdanlk’t abtalkou abt waoust howaws hoTeslwa Tcoeslnanecte connected witdh with Case Study #2: Case Study #2: Eloqua discovers its underserved heroesEloqua discovers its underserved heroes Eloqua:Eloqua: Between Between 2000 2000 and and2002, 2002, Eloqua Eloqua observed observed that that somesome marketers, marketers, calling calling themselves themselves demand demand generators, generators, werewere emerging emerging from from Mad Mad Men–style Men–style boardrooms boardrooms with with a desirea desire to create to create a quantitative, a quantitative, repeatable repeatable process process for for generating demand for their products.generating demand for their products. EloquaEloqua researched researched these these underserved underserved heroes heroes in depth — in depth — whatwhat tools tools they they used used to solve to solve their their problems, problems, the people the people theythey found found influential, influential, their their unique unique nomen nomenclature — and clature — and providedprovided them them with with a solution a solution that thatwas wastailored tailored specifically specifically for them.for them. It was It wasa reasonable a reasonable bet thatbet thatthe abilitythe ability to track to track activityactivity on the on internetthe internet and andthe superiorthe superior nurturing nurturing qualities qualities of opt-inof opt-in email email subscriptions subscriptions would would increase increase the thepower power and andnumber number of demand-generation of demand-generation professionals. professionals. The Thebet bet generation generation professionalsprofessionals is about is about three three times times higher higher than than at Eloqua’s at Eloqua’s founding in 2000.founding in 2000. 2929 2929

Chapter Chapter 2 2 Case Study #3: Case Study #3: Tesla’s transformative customer experienceTesla’s transformative customer experience TeslaTesla is a greatis a great example example of a ofcompany a company that thathas createdhas created a a trulytruly transformative transformative customer customer experience. experience. After After developing developing its vehicle,its vehicle, Tesla Tesla wrapped wrapped a unique, a unique, personalized personalized buying buying experienceexperience around around its cars. its cars. It allowed It allowed customers customers to schedule to schedule a testa drivetest drive on its on website its website and removedand removed the middleman — the the middleman — the car dealer—bycar dealer—by opening opening up Tesla-runup Tesla-run showrooms, showrooms, similar similar to Apple’sto Apple’s approach approach with with the Applethe Apple Store. Store. It empowered It empowered customerscustomers to create to create and andpurchase purchase its cars its carsonline, online, and andalso also did awaydid away with with haggling haggling by selling by selling every every vehicle vehicle at list at price. list price. The Theafter-sale after-sale experience experience is justis justas tailoredas tailored to the to the requirementsrequirements of ofthe thegreen-conscious, green-conscious, design- design- and and performance-performance- oriented oriented underserved underserved hero. hero. If you If youbuy buya a Tesla,Tesla, the companythe company delivers delivers it directly it directly to you. to you. Should Should you you experienceexperience any problemsany problems with with your your Tesla, Tesla, the company the company will will pick pickit up it and up andleave leave you withyou with a replacement a replacement vehicle. vehicle. You’re You’re also alsoguaranteed guaranteed a resale a resale price. price. The Theradical radical level level of risk of risk reductionreduction to buying to buying an innovative an innovative product product is a key is a aspect key aspect to to manymany transformational transformational category category creators’ creators’ business business models. models. It acceleratesIt accelerates early early adoption adoption and andalso alsobecomes becomes a core a core component of the experience itself.component of the experience itself. Tesla’sTesla’s remarkable remarkable customer customer experience experience was wasessential essential to to accomplishingaccomplishing its mission its mission in a inmarketplace a marketplace where where nearly nearly everyevery other other new, new, independent independent automaker automaker has hasfailed. failed. TeslaTesla started started with with a small a small submarket submarket that thatit could it could own, own, the the high-endhigh-end electric electric sport sport car, car,and anddelivered delivered an exceptional an exceptional customercustomer experience. experience. This Thisgreat great customer customer experience experience gen gen- - eratederated genuine genuine acts actsof advocacy of advocacy for thefor brandthe brand that thatwent went viral.viral. One Oneof my of favoritemy favorite examples examples of this of isthis a videois a video called called “Fireflies.”“Fireflies.” It cost It costTesla Tesla nothing nothing to make — not to make — not a single a single dime. dime. Why?Why? Because Because it was it wascreated created by a bycustomer a customer advocate. advocate. The The advocate’s name is Sam O’Hare, a well-known director. He advocate’s name is Sam O’Hare, a well-known director. He 3030 3030

Building Building a Multia Multibillion-billion-DollaDr ollCategorar Category y spentspent 18 months 18 months of his of life his writinglife writing and andcreating creating “Fireflies.” “Fireflies.” He wasHe wasso inspired so inspired by Elon by Elon Musk’s Musk’s vision vision of a ofworld a world less less dependentdependent on foreign on foreign oil that oil thathe poured he poured his heart his heart and andsoul soul into it.into it. SurpriseSurprise and anddelight delight are keyare tokey understanding to understanding why whyTesla Tesla works,works, and andthey’re they’re actually actually very very important important for advocacy for advocacy itself.itself. It shouldn’t It shouldn’t come come as any as anysurprise surprise that thatwhen when Tesla Tesla newnew innovation innovation around around its air its air wantedwanted to announceto announce its its filtrationfiltration system, system, Elon Elon Musk Musk said, said, “It’s “It’spowerful powerful enough enough to to survivesurvive a biological a biological attack.” attack.” It’s no It’s surprise no surprise that thatTesla Tesla called called this thisthe bioweaponthe bioweapon defense defense mode. mode. Why Why did hedid dohe that? do that? BecauseBecause this thiscolorful colorful phrase phrase created created lasting lasting buzz buzz both both BuzzBuzz energizes energizes advocates, advocates, and andthis thisis important is important because because TeslaTesla doesn’t doesn’t spend spend anything anything on commissioned on commissioned sales sales reps, reps, and andminimally minimally on traditionalon traditional marketing. marketing. The Thevast vastmajority majority of itsof salesits sales and andmarketing marketing is pretty is pretty much much done done through through advocates.advocates. Tesla Tesla has anhas engaging an engaging online online community, community, the the that thatboast boast a conversion a conversion rate rateof 70% of 70% without without a test a testdrive. drive. The traditionalThe traditional auto auto retailing retailing rate rateis 12% is 12% with with a test a drive.test drive. All All to market.to market. them.the Teslm.a Tsaesllesa sarepsles repsdidn ’dt iadppron’t aapproch theirach theirpotenti potential cuastol cmustoersm wersith with an aggrean asggresive ssiveoutb ououndtbou mandr kmaetingrketing cam pcamaignp. aignInste. adInste, theyad, theyinvite invited d the cuthesto cumserstom toers try to the try pro thed uproct dsuo ctht saot theythat theycoul dcoul experiend experience it caen d it and make ma ajuke da gmjuent ondgment on their o their own. Twn.esla Taensdla Eloqu and Eloqua spent a spent significsigannifictly lesantly less s moneymo onney tr onaditio tradnalitio manalrk maetingrketing, inste, aindste relyiadn relyig onn gc uosnto cmuserto admervoc adacvocy acy for groforw groth. wth. At thiAst point this point, you , myoightu m bighte curiou be curious as tos aswho to whoInflu itivInfleu’sitiv uned’serserve underserved d heroeheroes ares. Waree . serveWe serve custo cmuserto mmaerr kmaetersrketers, who, wareho responare responsible sfoibler for 3131 3131

Chapter Chapter 2 2 generatigenerating valueng value from frothem instheta lleinsdt abasllede ,bas incelu, dincinlug dgeinnger geatinnerga tilenadsg le, ads, increasiincreasing repngu tatiorepuntatio to accn toelerate accelerate the b theuyin bguyi prongc epross, candess, getti and ngettig realng- real- time timeacce sacs ctoe sdrives to drive insights insights and dandirec dt irerevect nurevee. nuTodea. yT,od thereay, there aren ’ta rea n’t a lot oflot customer of customer mark maetersrketers in the in w theorl dw, orlbudt , wbue’tre w beetti’re nbgetti thatng wthatith wthithe the increaseincreased ubiqd uuitybiq ofuity the of sothecia sol wcieabl wandeb itands gre itsa tgre poawt erpo inw erhelpi in helping ng buyersbuyers make m inaforke mineford mpuerdc hpasuricnhgas diencgis dioens,cis iothens,se the indseivi indduaivilsdua willls s wooilln soon be propelledbe propelled into herointo herostatu ss.t aThetus. reThesulti rensgulti nenwg nemawrk maetinrkgeti auntog maautotioman tion may mayneed need to be to fo becus foedcus aroedund aro trunduste trd,us auted,thenti authentic procx iespro ratherxies rather than than directdirect com mcoumnicmautionicnastio, asn exs, asem explifieemplified by de abrliery ea marlierrk maetinrkgeti auntog maautotioman tion solutionsolustion like sEloq like ua Eloqanua d itans peerd its speer. s. Step 2: Solve their problem with a transformational Step 2: Solve their problem with a transformational product and business model.product and business model. The Thecustomer customer experie experience ncis enow is nowwha twh defineat defines a cos ma pcoanmy.p anIn yf.a ctIn, fact, accordingaccording to Gart to nGarter, 8n9%er, 8of9% all of org allan orgizaantioiznsatio consm petecomdpete pridma pririlyma orilyn on customercustomer experie experience innc 2016e in 2016. Whi.c Wh raihicshe srai these sq theues tioqun,es tiowhyn, awrehyn ’ta rethne ’t the remareminingaining 11% intere11% interested isnte thed in cus theto cusmer?tom I cer?an Io cnalyn assuonlyme assu theyme ’theyre no’ret not interestedinterested in comp in company groanyw groth. wI cathn. Ic caonnfide connfidetly snatlyy th saayt wthithoat wuithot listeutn liste- n - ing toin cgu tostomer customers ands ideandn tifyingidentifying their theirprob leproms,ble yoms,u ca yonun caot ncnootm petecom petein in any maranyk maret. ket. For mFore, theme ,a therchetype archetype of a cusof ato cusmerto emxerperie experience–fonccuse–foedcus exeedcu extivee cutive is Jeffis B Jeffezo sB ezoof Amazos of Amazon, whon, whois trans is trforansmiforngm maingrk maet arkfteret amafterrk maet wrkiteth with this athippros aapproch. aHech. sHeolves solves for cusforto cusmerto mexerperie experience andnce andmea sumreaabsule rable the valueval, creatiue, creating theng btheusi nbeusssi nproessc eprossesce anssesd techand ntechologynology only oanfterly athftere needs are thoroughly understood. With Amazon Prime, customer’s needs are thoroughly understood. With Amazon Prime, customer’s he disrupted the online purchasing experience with fast delivery, low he disrupted the online purchasing experience with fast delivery, low prices, and the best selection and service. With Kindle, he introduced prices, and the best selection and service. With Kindle, he introduced a revola revolutionuationry elearyctroni elecctroni boock boo-readk-reingad eixnperieg experience. Wncithe. WAmaith zoAman Wzoenb Web Services and Amazon Lambda, he transformed the experience for Services and Amazon Lambda, he transformed the experience for deploying and building on-demand software. deploying and building on-demand software. Eloqua’s transformational experience for the marketers was about Eloqua’s transformational experience for the marketers was about enabling ways to nurture a prospect automatically by email, letting enabling ways to nurture a prospect automatically by email, letting usersusers do the do re thesear recshear inc peh iacn epe unactile untheytil theywere w reaered yrea tod hy atove haa vesale as sales conversation. The subscription business model was like Salesforce, conversation. The subscription business model was like Salesforce, ith the peproct.spe By ct. By which massively reduced risk but kept contact with the pros which massively reduced risk but kept contact w the timethe timeusers u wsersere w reeread yre toad buy toy, buthey ,rel theatio relnsatiohipns whipith wtheith b theran db rthanadt that 3232 3232

Building Building a Multia Multibillion-billion-DollaDr ollCategorar Category y markmeterarkseter wousl wd omanauld manage hadge develope had developed withd wmithinim mainl preimassl preuress ouren b otonh both sidess —ide everyone s — everyone had a hpositive ad a positive experienexperience ancde coansdts co wsere ts wkept ere kdept ownd.own. InfluitiveInfluitive mak emas itke spo its sipobles siforble custofor customer mmerar kmeterarkseter to s motob ilizmoe bilize hundhuredsnd remdsore m adorevoc adatevocs abtey sprovi by providing daing gam a e-ligamkee-li andke self-serviand self-service ce experieexperience. nThece. bTheusine business modelss m odelhas ah asus bas csuriptiobscription andn perforand performancmane ce elemeleentm, reentdu, cing the riskreducing the risk to the c to the customustoer evenmer even furthe fur.rther. So hoSow hodow yo duo iyodentifyu identify custo cmustoersm’ probleers’ problems? Fomsc?u sFo ocnu goings on going wher we here they theyare. Yaoure. caYoun’t cawna’itt wforait the form the tom co tom ec otom eyou to, younor , cnoran youcan syoupen d spend moneymo toney try toand try candonvi cnocenvi thencem theto m coto me to youcome to you. . This Thicustos cmustoer mexerperien experience cocme petitivecompetitive adva ntadavgaentag cae n bcaecnome bec omethe the secretsecret weapon wea thponat trathants tracenndscs encodmsp coanmiespan. Wieshe. nW Muhensk Mu is sk isn’t working on n’t working on Tes Tesla, hel’a,s foche’us singfocu osingn S olonarCit Solya,rCit whichy, w bhichenefit besn froefitms froTeslma Tadeslvoa adcacvoy cac— y — there is a common purpose. there is a common purpose. In a similar way, Influitive also benefits from the advocacy gained from In a similar way, Influitive also benefits from the advocacy gained from Eloqua. Eloqua and Influitive don’t do the same thing, but they do follow Eloqua. Eloqua and Influitive don’t do the same thing, but they do follow the satheme sa primenciple prin cipleof repe of arepetableat processeable processes. Eloqs. uaEloq tauargete targeted madrk maetinrkg eting automaautotionma wtionhile w Ihilenfluitive Influitive show shos thwast thmoatb ilizingmobilizing your yoaduvor adcatesvoca istes a is a procesprocess thast cthaant bcea nrepe be arepeted aforte dme forasu merabasuler abresultle results. Theys. Theyalso sahlsaor e share the founthe dafountiodan oftio ind entifyingof identifying the un theder unservedersderve heroed heroes ands solvingand solving their their probleprombs.le Fmanss. Fofa nEloqs of uaEloq alreuaad alrey tradustey trdu thsteadt bthraant db raanndd w anered w wereillin wg illito ng to buy Influitivebuy Influitive beca busece of thause of that earneat ed arneadvod acdacvoy.cacy. Step 3: Build a movement. Celebrate the heroes and Step 3: Build a movement. Celebrate the heroes and mobilize them with a galvanizing idea.mobilize them with a galvanizing idea. MarkMetingarketing for cforategory category crea torscrea torsis d iffiis cdult.iffi cMostult. Most people people do ndoot not understundanerstd wanhatd w ahatt first at loofirstk sloo likkes a li krade aica radllyi canellyw neconceptw concept. Trad. itioTradnaitiol nal approaapprochesa chesto b uiltod binuilg ddeinmang dedman cand bcea ne xbtremelye extremely expe nexpesiven, sivaned, aarne d are oftenoften ineffe inctiveffee.c Ctivategorye. Category entran entstr tooants ofte toon ofte justn poi justn tpoi to nthet to c theategor category y creatorcre aantord saanyd th saayt theythat theydo wh doat wh it daoest it ,d juoesst ,b juettest br,ette faster, rf,as orte crheape, or cheaper. r. The cTheategory category crea torcre adtoroe snd’oet hsnave’t haa veco ma pcoanymp orany pro ordu proct duframct efr amof e of referenreference to cceo tomp caorem pitselfare itselfto — to it c—an it only can conlyomp caorem ptoa reother to other categories categories. . This cThis hallenge reqchallenge requires souiremse so levelme levelof sophistic of sophisticationa totion over to coveromec.ome. The priThem epri diremec dtiveire coftive the of ca thetegory category creator cre ias torto is tobuil d,b nuilurtd,u nrurte, aunrde ,m anard -mar - ket theket c theategor category , toy b,uil tod b auil grdas asroots grassroots move mmoveentm aerounnt adroun thed c theategor category. y. 3333 3333

Chapter Chapter 2 2 This isThis be sist bdeonest d boney in bspiriy innspirig ng prospeprospects wcithts waith g aalv angaizilvnang izing idea, ideagetting, getting the e thearlyv eanarlyvgelianst gelist custocmuserto heroemer heroes to ssh atore s htheiarer their ideasidea ands eanxperied experiences ncin esthei inr their own owwornds, w orands,d elevanda elevtinga antind g and celebcreleatinbgra theirting stheirucce sssuceces. sses. One Okeyne akreaey awhererea where category category crea torcres aatorres differeare different fromnt fromcategor category y entraentsntr isa ntsthe is e atherly egroarlyu pgro ofu cup softo cumsertos mtherats they that stheyerve s. ervThesee. These custo cmusersto, mers, the underservedthe underserved heroe heroes, tens,d teton bed to mi bessio minsariession,aries not ,mer notc merenariecenas. Theries.y They believebelieve in the in mi thessio mins ofsio then of c othemp canomy panandy the and q theuan qtumuan-steptum-step improveme improvement nt in suicnces susc cestheys theywill enjoywill enjoy as a aress au lt.res Theyult. Theyare baerest bmoestb ilizemobdilize withd witha a massivmae,ssiv galve, agalvnizinagnizi idneag . idAea rallyi. A nrallyig crnyg. In cr ythe. In ethearly edaarlyys ,da Saysle,s Sforalecesfor’s ce’s ’s was “Eliminate dnaepete dndepeencnde eoncn e on bold bstoldateme statement wanst “ waNos S “oftNow Sarofte.w” Taresel.a” ’Tse wassla “Elimi fossil fossilfuels .”fuel Eloqus.” Eloqua’s wasa’s “ wRepeas “Ratepeablaet, abmeale,su mraeabsulera probleces pros forces ges fornerati genneratig ng demadnemad.” Inflnd.”u itivInfleu’sitiv ise ’“sS topis “ SStopelfish Selfish Mar ketiMarngketi.” Jnusg.”t Jremeust remembermb, yoeur,r your rallyinragllyi cryn ghas cry to has be to a cbaue ase c auworthse w fightingorth fighting for. A fterfor. Aafterll, whe all,n whe donen d rightone , right, the categorythe category is all aisb allou at btheou tc uthestomer customer and hi ans dor hi hers or as herpir aastiopirns,atio notns, yo notur your produprodct or eveuct or even your n your compcanomy. pany. The nTheext nstepext stepafter afterfinding find theing r athellying rallying cry i sc tory imas tork maet arkutheet anutheticanllyti. cally. AuthentiAuthentic categoryc category mar kmetianrkgeti foncusg foescus one s theon custheto cusmerto mheroeer heroes and s and makingmaking them them the ctheenter ce nofter your of yourconte contn. teUsnet. theUse spethec ifispec clanificg ualangge uage and storieand stories thats yourthat yourcusto cusmertosm teller syo tellu. Wyoheu. nW yoheun c yoommu coummnicauten itoca teth e to the yousutor cmusertos mers markmaret, yoket,u s yohoulu sdhoul be tda lkiben tgalki abnogu abt yoouutr yocustour cumstoers,m anerds, yo anudr c shoushold beuld be talkin talkig abnoutg ab yooutu. you. One cOnelassic cla wsasicy to w aaccy toeler accaelerte thiates pro thicses pros forces thes for ca thetegory category creator cre ias torto is to use liveuse eve liven evets ton getts to cus getto cusmerto heroemer heroes togethes together. Whetherr. Whether a larg ae l,a annurge, annual al evenevet or nintit orm intiatem diatenn ersdinn, gettiers, ngettig cusngtomer customers togethers together with wproiths peproctsspe is cts is an acantivity activity that oftethatn ofte pronduc proesduc highes highretur nsret uinr nsboth in bshortoth short and loandng loternm g term whenwhe donen done right. right. Thes eThe eventse events shosu shold buel adb boeu at btheou tca thetegor category, its rya, llyiits nrag llying cry, acrndy ,the and s uthecce sssuc ofce ssthe of c theusto cmustoer heroemer heroes, nots, yo notur yocompur canompy andany th ande the specificspe technology theycific technology they use to u dseo their jo to do their jobs. bs. This iThis thes i sapproa the approach atc Inflh atu itiveInflu witiveith wAdithvo Acamdvopcam, thep ,o thenly oconnlyfere conncferee nce on customeron customer experie experience, encneg,a egengmaentgem, aentnd, aadvond acacdvoy. cacRathery. Ra ththeran thpuant put on a onconferen a conference revolvingce revolving around aro oundur ad ouvor adcacvoy cacplatfory plm,atfor wm,e ho wset hoonse t one 3434 3434

Building Building a Multia Multibillion-billion-DollaDr ollCategorar Category y focusfoedc uosned the on btheigger bigger advo adcatevo camaterk maetingrketing move mmoveentm. Wente . inviteWe invite our our competitorscompetitors to pa torti cpipartiatceip, soat eth, soat wthea tb wuilde b theuild c theategory category together together — we — we gain gmaorein m borey b uilbyd binuilg dupin gthe up size the ofsize the of pie the th piean thbyan fighti by fighting overng overthe the widthw ofid thou ofr sli ocuer . sliWcee d. Wone’ td waonste’t wa timstee tiamnde goodand goodwill tellingwill telling people people that that our prooudur proct duis grect isa tgre. Ourat . goOural gois tao l is to help helpthe u thenderserve underserved herod heroexper eixper- i - ence ecance reerca sreerucc essusc. cess. CategoryCategory creator cresator shouls should elevda elevte ate and andcele bcelerateb rathete theund erserveunderserved d hero.her Caotegory. Category events events are a a grere aa t great way wtoay d oto s od,o b suot, thbuatt this ajut sist thjue st the beginbniegingn.ni nSga.lesforce Salesforce fam oufamsly ously puts putsits c uitssto cmustoer heroemer heroes on sgi oann t giant billbobaillbord adarsd. Aadwas. rAdwas cererds mcereoniemsonie, s, wherew herethe thespecific specific acco macplicosmhpli-sh - mentms eofn tcsu ofs customer heroes are rec - tomer heroes are rec - ognized, ognized, are rel areatively relatively inexpensiv inexpensive e and andgen ergeatener aa telot a oflot goodof goodwill. will. The healthy competition around being successful helps to nurture the The healthy competition around being successful helps to nurture the categorycategory by provi by providing dleiadnger lesadhiper asnhipd directio and direction to nen tow peoplenew people joining joi nthinge the categorcategory. Trainingy. Training, certific, certificationa, tionand ,jo anbd b jooabr dbso proviards provide findane finciaanl secciaul ritsecy urity for your heroes, and for companies looking to take the plunge but that for your heroes, and for companies looking to take the plunge but that are feaarerf ufel ofarf notul of h notaving skille having skilled labdor l abto orpa torticip participate ina thete in c theategor category. y. BuildBuild Advocates and Mobilize Them Advocates and Mobilize Them Is theI sc retheatio crena oftio trnan ofsfor tranmasfortivema etivempire em cpireategorie categories a msa ttera m aoftter ran ofd oram ndom luck, loruc ka,re or these are these categories categories designe desdigne? Whiled? While there there is cert isa cinertly asiomnly e some goodgoo luckd andluck opportuneand opportune timin tigm involveing involved, thed, gre thea tgre caategoriet categories of osu ofr our time time share sha anre uma bnerum of berco of mmcoommn eleomn eleentms.ents. Category-creCategory-creatinga tingentrepre entrepreneursn eurcans cdarn dramatically increase their amatically increase their od odds ofds s ucofc essucs cbyes sfo bycusi foncgusi onng d onelivering delivering a ta ilorea tadilore, tradnsfor, transformativmae tive experience for a special group of underserved heroes who will grow experience for a special group of underserved heroes who will grow numerounumserou ands po anwd erfpouwl erfas ua l reass ulta re of sultdi sof rudptiveisruptive technolog technology. y. WhileWhile man yman entrepreneury entrepreneurs dreams dre ofam be ofco bmeingcom theing n theext nElonext ElonMusk Musk or or Marc Benioff, there are also entrepreneurs who yearn for more modest Marc Benioff, there are also entrepreneurs who yearn for more modest 3535 3535

Chapter Chapter 2 2 objectiveobjectives of frees ofd freeom daonmd aa nhed aalthy hea lifelthystyle life swtylehere w herethey theyhave hcaoventro col ntrol over overtheir theirwork w liforke. Fro lifem. Fro mym e xmperieny experience, thece ,m theetho mdetho outlid noutlied herened herewill will workwork for all for of all us. of Fo ucs.u sFoincgu osinn gthe on n theeeds n eeofds a speof ac ispeal groupcial group of peopl of people e createscreates differe differentiationtina ationdn baandrrier basrrier to cso tom petitivecompetitive entry entr, whichy, w hichprovi provide de the margithe margins reqnus irereqdu forire da goofor ad goo busdine buss.sine Havingss. Having your yocuustor cmusertosm doer ths de o the markmaretingketing for you for i syou an effiis ancient effic waienty to wa groy tow gro, whetherw, whether your yoamubr itionambsition are s are modest or tranmodest or transformasfortivmae. tive. Case Study #4: Case Study #4: HubSpot’s Category MarketingHubSpot’s Category Marketing HubSpotHubSpot is a textbookis a textbook case case on how on how to build to build a grassroots a grassroots movement.movement. Founders Founders Brian Brian Halligan Halligan and andDharmesh Dharmesh Shah Shah did this by tackling three key essentials: did this by tackling three key essentials: 1. They identified an enemy that their underserved 1. They identified an enemy that their underserved heroes rallied against; heroes rallied against; 2. They launched a world-class event that focused on 2. They launched a world-class event that focused on marketing the category, not the product or company, marketing the category, not the product or company, providing a foundation on which their advocates could providing a foundation on which their advocates could convene; and convene; and 3. They educated, trained, and certified inbound mar3. They educated, trained, and certified inbound mar- - keters, giving them knowledge and tools for career keters, giving them knowledge and tools for career betterment so that the strength of the movement and betterment so that the strength of the movement and the influence of its advocates only grew.the influence of its advocates only grew. First,First, HubSpot HubSpot identified identified an enemy: an enemy: traditional, traditional, outbound outbound marketing.marketing. It framed It framed this thisas “interruptive as “interruptive marketing marketing and and salessales tactics,” tactics,” or in or other in other words, words, marketing marketing that thata customer a customer doesn’tdoesn’t really really want. want. The Thetired tired tactics tactics of direct of direct mail, mail, email, email, what was a marketer to do?what was a marketer to do? BrianBrian and andDharmesh Dharmesh looked looked at a blogat a blog they they ran and ran andrealized realized 3636 3636

Building Building a Multia Multibillion-billion-DollaDr ollCategorar Category y but wasbut wasgenerating generating more more views views than than many many big companies big companies withwith sizable sizable marketing marketing budgets. budgets. They They realized realized people people don’t don’t wantwant to be to interrupted be interrupted by marketers by marketers or harassed or harassed by sales by sales- - people,people, and andalso alsothat thatpeople people were were adapting adapting to the to web the web and and theythey could could help help marketers marketers reach reach buyers buyers by creating by creating good good contentcontent and anddrawing drawing customers customers in, rather in, rather than than going going out to out to find findthem. them. And Andthis isthis how is how content content marketers marketers and andinbound inbound marketersmarketers became became marketing marketing heroes, heroes, and anda key a partkey partof any of any modernmodern marketing marketing organization. organization. HubSpot’s HubSpot’s marketing marketing still still doesn’tdoesn’t focus focus on its on product its product and andwhy whyit’s amazing, it’s amazing, but on but on the categorythe category and andwhy whyit solves it solves a problem, a problem, and andon elevating on elevating inbound marketers.inbound marketers. Second,Second, HubSpot HubSpot convened convened people people on the on category, the category, not the not the companycompany and itsand product. its product. Unlike Unlike most most companies, companies, HubSpot HubSpot doesn’tdoesn’t host host an annualan annual user userconference conference that thatgenerally generally involvesinvolves selling selling its product. its product. Instead, Instead, its conference its conference focuses focuses on helpingon helping marketers marketers excel excel at inbound at inbound marketing. marketing. Most Most of of 3737 3737

Chapter 2 the time, HubSpot the product isn’t even mentioned; the conference is marketed as “Inbound” with no reference to the HubSpot product. Instead, HubSpot shares its knowledge — often gained via its products — to help improve the category. Think about it: You probably know marketers who attended HubSpot’s conference. Notice how they never talk about HubSpot the product. Instead, they come back filled with ideas about how to be better marketers, which usually involves better serving the customer. In short, they’ve become HubSpot advocates. Finally, HubSpot created a world-class education program for both aspiring inbound marketers and advanced content leaders. The program focuses on career betterment to develop true advocates and movement builders in its customers, and gives them the tools and forums to be influential. By training and certifying marketers through its HubSpot Academy, it helped create a community that constantly shares resources and updates, as well as provides further educational support and partnership creation. By focusing on education, HubSpot was able to surpass industry giants like SAP and Salesforce by achieving a disproportionate online social presence. HubSpot’s category marketing approach is a textbook example of how to build a genuine movement. It did this by vilifying outdated, interruptive marketing, running a category-focused conference, and creating strong educa - tion and certification programs. Mike Volpe, former CMO of HubSpot, explains, “Creating a movement can drive an irrational bias in your product’s favor. Customers will then make a buying decision due to their loyalty to your cause, and not because of a logical feature comparison against your competitors.” HubSpot was able to create a mutually reinforcing cycle of social proof that was founded on cus - tomer loyalty and advocacy. And it worked. 3838