Playing to your strengths and strengthening your brand identity with Seismic's Doug Winter
Playing to your strengths, and strengthening your brand identity with Seismic's Doug Winter
Doug Winter: We knew who we were and we kept focused on what we knew we could do well and what our model was. And I think that's really important. You need to have your eyes open your ears open, but know who you are.
VO: I'm, Peep Laja. I don't do fluff. I don't do filler. I don't do emojis. What I do is study winners in B2B SaaS, because I want to know: how much is strategy, how much is luck and how do they win?
This week, Doug winter co-founder and CEO of Seismic, a sales enablement platform founded in 2010. Seismic today is at 280 million in annual revenue run rate and has over 1,300 employees. In this episode, we discuss how Seismic achieved success by committing to innovation, keeping their customers extremely happy, and by staying true to their brand identity. Let's get into it.
Doug Winter: We had been in and around the ecosystem of content for a number of years, myself and the other founders, both at a small NASDAQ company and then later as part of EMC. And we're in and around the area of content management and solving content problems for large enterprises. And the opening that I saw was really that if you think about, you know, what Salesforce did at a high level, they took an established domain CRM, they made it much easier to use kind of consumerize the experience. They put it on the cloud, which is a new technology stack and they implemented a new business model, a subscription business model. And it changed the world. If you look at what Workday did. Some more things going from PeopleSoft to Workday. ERP. And as we looked around, we said, no, one's really doing this for content. There's no one that's really attacking the hard content problems, which, you know, had been attacked and established by vendors like EMC Documentum in a cloud first model and our vision was let's do that.
And let's start by attacking the needs of sales and marketing teams, which we knew were the worst served by the existing solutions. And we thought, well, over time, we'll expand beyond sales and marketing and take on other content problems. If there's anywhere that we missed. It's the fact that, the needs that, uh, exist in sales and marketing are huge and there's lots of other opportunities and we don't really need to go more horizontally with our solution. We can just keep going deeper and deeper. All sales and marketing.
Peep Laja: So sales enablement has its roots somewhere in the nineties, according to the internet. When you started, what was the market awareness like, and how did you go about increasing demand?
Doug Winter:The funny part is, we didn't know sales enablement terminology. When we started, it was probably two years into our journey after a lot of debate and internal discussion where we finally realized, yes, this is in fact, the label, that fits the best for us. This really is the category that we're in. And at that point in time, we tried to take ownership of that terminology. If you can't beat them, join them kind of approach. but yes, a company called Savo group, I think out of Chicago, it was probably the first to really use that term, and help popularize there, at least at any kind of scale. They were one of our earliest competitors, which is how we kind of got familiar with the terminology. Ultimately we passed them up and then acquired them. And a lot of their former employees and customers are now on the Seismic journey with us. But yeah, it wasn't one that we knew, enablement. Funny enough, it isn't actually a word in the dictionary. It's a made up word. We did a little tongue in cheek campaign a couple of years ago to try to get enablement added into the dictionary. We haven't gotten there yet, but hopefully someday soon.
Peep Laja: Oh, wow. These days it looks like every B2B company is inventing their own terminology. Sales enablement has been around for so long. You would think that, of course it's a thing, but you know, everything was made up at some point.
Doug Winter: It is. And I think that as you're defining a category, you really are. You're defining the category. You know, everyone has a picture in their head when you say words like enablement. Over time, those pictures have changed. and I think a lot of our job has been over the years, to educate the marketplace on our definition of what enablement really means.
Working together with our customers and seeing where the value is added and where the pain comes from, and then working on solutions for those things. And then, you know, applying the terminology "enablement" and having it become public.
Peep Laja: You guys were bootstrapping for the first two and a half years or so. What was it like back then and what kind of customers did you go after at the beginning?
Doug Winter: The founders and I had the benefit of two things, I guess. One was some .com experiences with investors that didn't go so well where we saw sort of not so great behavior that can sometimes happen. And the second was, you know, we'd had some success with earlier ventures to where we had the luxury of being able to bootstrap the business for a number of years.
We really went into it thinking we'll keep going that way. You know, we can have a really nice business. We'll grow a little bit slower, but it will be great. And we won't have to worry about outside investors. And I think, at some point, though, we realized, "Hey, this is an opportunity that's much bigger than we might have originally imagined it was going to be. And if we don't get our name out there," (we had no people in marketing at this point in time, zero.) And if we don't get going with the customers a little faster, I think we had two people in our sales team at that point, that the opportunity might pass us. And so we decided that we were going to go down the road of trying to raise some capital. But really, the reason is we thought, well, we'll do this on our own, a little bit naively but, at the same time, I think it caused a lot of good behavior. It truly is your money. And we always treat our investors money, like it's our own, but in this case it really was our own. And so it caused a lot of good behaviors, a lot of discipline, a lot of focus on getting those first sets of customers.
You asked about the kind of first customers that we went after. Our DNA was cut with larger enterprises, I guess we were kind of going against the trend. You remember 2010, everything was around freemium models and, starting with small, accounts and working your way up, that was just not the way we were wired.
We knew how to service big companies. We knew how to work with big companies. We knew the patience required to navigate larger enterprises. We knew the complex needs of big companies, financial services companies. So we focused on larger enterprises and financial services companies. And that's where we got our early traction.
VO: You get to know your strengths as a founder. I've always been a writer and a content creator. So demand generation has always been my go to market model. In Doug's case, he and his fellow founders knew how large enterprises work. Intimate industry knowledge can be a huge asset and a moat. This is similar to what Gary Hoberman, the founder of Unqork, said on a previous episode of How to Win.
Gary Hoberman: Knowing where we came from, which is fortune 50 companies, where there's 50,000 engineers in a company, what we also knew was we can't start off solving simple problems in small business.
So if you walked into a major top four bank and said, "Hey, we're going to come in and we're going to solve your major onboarding issues that are the biggest issues of your company or your regulation issues." You'd get laughed out if the technology couldn't support the scale of security, vulnerability assessments, everything they need and worry about from a regulation point of view, the compliance. And so what we did different was we said, we're going to start with tier one customers, the fortune 100 customers, the ones that are the toughest on any company, no matter what size. You know, the ones that have a 1500 questionnaire when you're coming in to meet with them about compliance.And we're going to start with tier one customers with tier one use cases. We had to focus on five tier one customers, five different tier one problems to solve. And the goal was if we solved those problems, all the other problems are easy. So instead of working our way upwards in complexity and scaling, we said, let's start with the most complex and everything else is easy after that.Starting with tier one, I would recommend everyone go big, go for the largest complex use cases, the largest customers, because you'll be taken seriously by the rest of the market and everything else is easy
Peep Laja: So after raising money, you guys set some insane growth years, back to back growing like three times, year over year. What were the things that you got really right? Like, what was driving that growth?
Doug Winter: Yeah, I think it's cliche, a little bit, but the product-market fit. We landed on some specific use cases in financial services. We landed on some specific use cases, with high-tech companies, that really we were meeting their needs in a way that they hadn't been met before. And so I think the product-market fit. And then I think because of our focus on larger companies, we got bigger deals. And we also had in our DNA customer success, you know, having a customer success team, understanding that larger companies want help with change management. They want help with implementation. The sort of freemium, "here's a really cool product.Go figure it out on your own," Didn't work for larger companies. That's just not the way that they operate, not the way that they work, and kind of being able to match up with that allowed us to get some very early traction with big companies and big customers.
VO: To win, you need to be the best at something. That's a prerequisite. You need to be the best at something for a specific type of customer. So the strategy is to choose your customer. Depending on your size and resources, you can serve multiple audiences, but ultimately you can't win by catering to everyone and you'll need to decide who are you going to design the product and brand to serve. For that select audience, you need to speak their language, market to them in their own vocabulary, show them the solutions to their specific problems. In SaaS, it's extremely difficult to build a truly differentiated product. Everyone has every feature, but you can have the edge for the specific segment that you're after. You can solve some of their problems better, objectively better, than the alternatives.
Peep Laja: What was your go to market motion like? Was it sales led, outbound, what worked in terms of customer acquisition?
Doug Winter: It was a mix, but it was heavily outbound sales led. You know, one of our co-founders, Ed Calnan, came from a sales background. You know, had built an inside team. In the early days, it was maybe he and I working on our network, calling companies that we knew and people that we knew. Again, having the benefit of focusing on larger companies, the companies that we had done business with before in past lives allowed us to get the first couple, right. And the first few customers are so bad. Because once you have references, once you have the ability to point to other success, things get a lot easier.
But we were very outbound, very, direct. Working our networks and then expanding that into an outbound BDR/ SDR model. And then ramping up marketing as well.
VO: You know the sayings, "contacts become contracts," and "your network is your net worth." Life is relationships and the rest is just details, somebody once said. No matter your goals, relationships are the rocket ship to get you there. Keep up your relationships and check in with your contacts. The right person can open the door for you when you need it. Here's Michael Seibel, managing director at Y Combinator, on why your first few customers should be people you know, and where you can go from there.
Michael Seibel: How do you find your first 10 customers? To start, hopefully you're solving a problem that either you have, or someone that you know has. So your first customer, your first couple of customers should be folks that you know. That's what's ideal because they're people that you talk to or knew to actually solve this problem.
Second, YC's advice is always to find 10 people who love your product and to do that in a way that doesn't scale. So you should be thinking that your first 10 customers don't have to come from elaborate advertising schemes or some viral growth mechanism, you should probably be hand recruiting them. The next thing to keep in mind is that there is no benefit to you to make those first customers hard to get customers. So you should be looking for customers who intensely have the problem that you're looking to solve, are willing to work with an early stage startup, and generally are willing to pay to solve the problem that they have.
Peep Laja: So every emerging space, you know, in the beginning, there are all these pieces up in the air, and there's a land grab for market share and it's plenty to go around. Today, you're in a space that is pretty mature and there's a lot of competition. So how are you currently setting competitive strategy and what makes you win over others?
Doug Winter: First of all, never rest. We have emerged as well-established in our category and the sales note in the category. We're three times the size of anyone else in our space, which affords us the benefit of having more customer dollars coming in, that we can put to work.
However, I'm a big believer that only the paranoid survive. This category is far from mature and far from finished. It's still evolving very, very quickly. And so we invest tremendously in R and D. We have about 450 people working on our product from product managers, to designers, to QA people, to engineers, lined up in different parts of our product area.
Some of them are focused on meeting the needs of existing customers. Others are looking out over the horizon on what we can build, that we might be able to start selling next year. So we continue to invest heavily in that. We've also invested heavily in our customer success infrastructure. Happy customers buy more stuff. There's one of the mantras you'll hear around our halls all the time. And we firmly believe if we keep those customers happy, we keep engaged with them in a proactive way, as we bring in new products and new capabilities they are going to be excited to upsell and cross sell and buy new products.
Peep Laja: Were you guys always the category leader, or was there a moment where there was a battle and then you just came out victoriously?
Doug Winter: I would say in the beginning that Savo was absolutely the leader in the category. They established it. I think if they made any mistake, it was maybe being ahead of their time. Um, they were much larger than us. Much more credible than we were. I think that being a little bit ahead of the times at some point the growth slowed down a bit and there wasn't a lot of investment available for them, uh, to be able to modernize and keep up with the technology curve. And so we came along at a time, I think, where we had a little bit of luck, we executed well, but a little bit of luck. We were building a newer technology, made it easier to develop, at the same time, they were kind of cutting their investment levels. And so as we got momentum, we started to catch up and at some point, you know, it was really a tight neck and neck race, probably between us in terms of the size, but we had a lot more momentum.
When we acquired them was the moment, I would say, that things changed significantly. Suddenly we're twice the size or three times the size of anyone else in the category. Which again, there's real benefit. You know, you can raise a lot of money from investors. You can burn a lot of money from investors, having customers actually paying and allowing you to use that money to reinvest in better product, better infrastructure, better customer success, et cetera, is a long-term sustainable advantage, that as long as you can continue to innovate, you can leverage and keep going. And so I'd say that, that was the moment when we kind of clearly separated from the rest of the pack.
VO: The stability of market positions in nearly all markets is impressive. Whoever is number one or two tends to stay there for a long time. Whoever is number 17 also will remain 17 for a long time. Most try to grow by competing on brand preference, but it doesn't work. There's just too much market momentum. Category leaders get the cream and control mental availability in buying situations. Minor improvements offered by challengers are not enough for customers to notice you nor care enough to sign up. The most reliable way for new players to quickly grow market share is through big innovations, creating new categories or subcategories. Listen to the legendary marketing professor, David Aaker shed more light on this:
David Aaker: You look at the computer industry. I mean, DEC didn't become a major player in the seventies, a multi-billion dollar player, because it beat IBM. It created a new sub category and dominated it. Sun didn't become a major player in six years, the fastest growing company in American history because it beat a DEC or it beat IBM. It created a new subcategory network workspace. You can go after category after category, and it's the same story. The major changes occurred when somebody created a new category or sub category. Well, let's step back and define brand relevance. If you look at a decision process, a customer first likes a category or subcategory, maybe it's SUVs and then it determines what brands to consider. Maybe it's Lexus, BMW, and Cadillac, and then select which brand. The first two steps are brand relevance and the really unique thing is that it brings selection of the category and subcategory into the process. The last stage is brand preference and we spend way, way, way too much money and time on brand preference competition and way too little on brand relevance competition. The routes to winning are completely different. In brand preference competition, you win because your brand is preferred over other brands. The problem with this model is it's really hard to own an incremental innovation cause somebody will copy you or at least give the impression they've copied you and you have nothing. Now in brand relevance it is completely different. You win because competitors' brands are not considered, not because you're preferred. And so the strategy is to engage in substantial and transformational innovation to create new categories and subcategories, and then to manage those categories and subcategories.
Peep Laja: Is your theory of advantage that you have an objectively better product and that's how you're going to keep on winning and are you also thinking about this product getting commoditized? 'Cause sooner or later all the competitors will have all the features.
Doug Winter: When you say product, I think it's easy to laser focus only on, you know, the application that you log into, the user experience, the buttons that you click. But it really, especially when you're dealing with larger enterprises, you have to think bigger than just that, the lines of code. The product that we offer includes our value team that works with our customers pre-sale to help identify the areas where they're going to realize value, or they're going to get an ROI from working with us. It includes our implementation team, which helps make sure that that vision of the value is what we're driving towards together. And we all understand what it's going to look like and what it's going to take to get there. Our customer success team on an ongoing basis, who's constantly troubleshooting where there might be problems, looking at places where more value can be delivered to the organization.
I'm a big believer that it starts with customers. If the customers are happy, if the customers are getting value, then you're afforded the opportunity to renew. You're afforded the opportunity to expand and grow your relationship and grow the economic part of your relationship. So I try to keep our teams focused as much as possible on the value customers are getting, the results, the impact that we're having on their business. You know, all of it together is really the product that we're selling.
Peep Laja: In addition to your product, how are you thinking of competing on brand, on marketing, on this softer side?
Doug Winter: Early on in our relationship with our first investor, he said something to the effect of, "you know, Doug, there's steak CEOs and there are sizzle CEOs and you're definitely a steak CEO." And I think he meant it as a compliment but it was hard not to take it as a, "Hey, you're not the sizzle guy." And I think that's right. We have never been the glitziest brand, you know. We're based in San Diego, not Silicon valley. Our second office was in Boston and the gritty Northeast, we focused on big companies, not necessarily the sexy up and coming logos. That's just the way that we've been. And I think, I'm happy with that brand. I'm proud of that brand. However, I will say that we're getting close to launching a new brand and we've got some really great people on our team. I don't want to steal too much of anybody's thunder, especially as we grow and start eyeing the public markets, we are investing in that recognition and growing that recognition and our visibility. And I'm really excited about how we're going to be reinventing that over the next couple months.
VO: A clear brand identity is a powerful thing. Yes, you've got to listen to the market and respond accordingly. But, if like Seismic, you're the meat and potatoes of your industry (meaning your customers choose you because they trust you to be steady and reliable) adding a whole bunch of flesh to your image is unlikely to do you any favors.
Take Ikea. Ikea is the eighth, most valuable retailer in the world, making it the most valuable furniture retail brand, but if they were to seek consumer feedback, without a doubt, they would learn that people complain about the shortage of staff in stores and how difficult it is to find the parts and difficulties with assembly, and the instructions are bad and so on and so forth. We could all come up with a long page full of complaints against Ikea. Yet it is the most valuable furniture brand in the world. If they listened to all the complaints and addressed them, focused on fixing all those issues and then eliminated friction, it would become a vanilla brand and we'd stop buying it. That's how brands lose their uniqueness.
Everything is a conscious trade-off. You can't be perfect at all things. Now I'm not advocating don't do research. I've been a champion of research for a decade. I'm saying be brand first, be deliberate in the strategic trade offs. Have a strong point of view and stay true to your brand principles. Filter all the research through your brand lens.
Peep Laja: If a new emerging player were to enter your space, and let's say it's a new well-funded startup, how might they beat you?
Doug Winter: In this space and this ecosystem that we're in, even expanding a little bit beyond our direct competitors, there are so many companies, there's so much activity and interest. I think that, I alluded to it earlier. We can't stand still. I think if we stand still, and we don't leverage the great customer base that we have and the strengths that we have in our people, in our ability to work with large enterprises and our knowledge of industries like financial services, we absolutely can be caught.
You know, technology is improving. The development environments. The cloud platforms, the AI engines are getting so much stronger on a daily basis, that it gets easier and easier for someone with a vision to go bring that vision to life. So we can't stand still. We have to constantly be looking at the worst part of our product and ripping it up and rebuilding it.
And at the same time, looking at new things that are going to compliment and add value to what we're doing. We can't take our customer relationships for granted. We have great partners and customers that have been with us for, you know, some of them for a decade. They're constantly hearing from our competitors and we have built great relationships. They trust us. We can't take those things for granted. We have to make sure that no matter how "safe" we think a customer and account is, we have to continue to lean in to that. We have to continue to ask them how we can add value. We have to continue to listen to them about what's working and what's not working and what other needs they might have. Otherwise we will absolutely be caught.
Peep Laja: What have been some of the biggest bets that you guys have made?
Doug Winter: I think one of the tougher challenges that a lot of companies face, especially as they grow to get to a bigger scale, is one of acquisitions. I would say not a week goes by where I don't get something in my inbox from an investment banker or from an entrepreneur saying, "Hey, we've got a company. We think Seismic would be a great fit. You should acquire us." I think getting the balance of, "Hey, it's interesting to look at those opportunities and learn" versus, is that the way that you're going to grow? You know, understanding that every potential merger acquisition is different and unique is critically important. The biggest bet we ever made, I would say without doubt was when we did acquire our largest competitor. So I really did a lot of hand-wringing about that decision because I kept picturing myself walking in that first day and going, "Hey, I know you hate us. I know that because of us, probably your best friend got laid off. We've been stealing your customers and making your life miserable and now your stock's not worth what it would have been et cetera, et cetera, but I swear we're going to be a great team together." And so going into an acquisition at that point in time, it was a huge bet for us early on that I've gotten comfortable with. But I was, I was pretty scared. I was pretty nervous about how it was going to work.
VO: For companies with cash, strategic acquisition can be a smart way to deal with competition and reinvest funds in future growth. There are considerations of course, but keeping potential challenges in mind, successful mergers or acquisitions can give a growing SaaS company increased market share and visibility while offering them technological innovations without the R and D time. Here's John Suh, senior advisor and former CEO of LegalZoom, describing why they choose to focus on strategic acquisitions as a way to manage disruptive innovations from competitors.
John Suh: Very specifically, we're looking at again, competitors. I remember Terry Semel talking about how Mark Zuckerberg was in the office, they had a deal, I'll get the numbers wrong, but it was a billion and a half or something. And he went back and said, I've been thinking about it. And I think the real number is two and a half, and it was such a discrepancy. It's like, "I've never acquired an unprofitable, not real revenue company for that and now you're asking me this." And so they walked away. Now I looked at Mark Zuckerberg and what he did with a variety of things like Instagram or a variety of other things, he's looking for the person that's going to disrupt them and he picks them up quickly. And we've now set aside a fund to utilize acquisition, to find really innovative new companies and say, "Hey, you know, the brand that we've developed and spent hundreds of millions of dollars in media to build, wrapping up this platform, people in technology, in a brand that 70% of Americans trust, let's now bring in these innovative solutions in other areas and allow our marketing team, our technology team, our operations team to scale it very quickly."
Peep Laja: Have some bets or acquisitions not paid off?
Doug Winter: Uh, sure. We've had a great hit rate with the acquisitions that we've done. All of them could have gone better. I think one of the lessons that I learned was really have a clear understanding going in of exactly what you're trying to accomplish from each one.
If it's talent there's a certain set of objectives, if it's technology or customers, it's a different set of objectives. You know, just be really clear with everyone about that as you head into it. We've done a couple at this point in time, over 12 years, each time through I think we get a little bit better at it and learn a little bit more and make new mistakes instead of the old ones.
Peep Laja: What's a bet you're making right now about the future?
Doug Winter: I think in today's world, you've got to be agile. You've got to stay nimble. You've got to keep an idea that the assumptions that you made in your plans and your models yesterday might go out the window. We're betting on the fact that the trend of enablement and this automation and the sales stack is going to keep going and that we can continue to invest heavily in growth.
We're assuming that there's going to continue to be a lot of investment that our competitors are going to get, or assuming that there's going to be new competitors coming in and we have to keep a close eye on them as we get larger, you know, how we interact and how we play with the largest companies in this space, the Salesforce and Microsoft, becomes more and more important. Making sure we don't get run over by them. And that we're good partners. On the technology side, certainly AI is a huge bet for us as it is for everyone else. It's one of those terminologies. You know, a few years back, it was a complete buzzword. Now you're starting to see real advances and real problems being solved. So we're staying really close to that. Investing heavily there, as well.
Peep Laja: What pieces of advice, would you have for a fellow B2B SaaS founder?
Doug Winter: Know who you are and be comfortable with who you are. I remember when we went out and started raising money for the very first time, our Series A, and I went all up and down Sand Hill Road and talked to a dozen or more early stage investors. Without exception they asked me two questions. They said, "You're going to do a freemium model. Aren't you?" And they said, "You're going to move your team up to San Francisco, aren't you?" And to both of those questions, my answer was no, but of course I tapped, danced around that and said, "We'll do what's right." And you know, all these kinds of things. But the truth of the matter was, that's not who we were and that's not what we were going to do. And the funny part is, 18 months later going around again for our Series B, talking to some of the same investors, some new investors. And they all asked me two questions. They said, "You're definitely not going to do a freemium model, right." And, "You're definitely not going to move your team up to the bay area, right.? The winds had changed. We knew who we were and we kept focused on what we knew we could do well and what our model was, and I think that's really important.
You need to have your eyes open your ears open, but know who you are. We knew we could sell the big customers. We knew it was harder to sell the big. But we also knew that that's what we were good at. And that's what we wanted to focus on. We knew we could sell the financial services. We knew that space, we knew it was hard, it was not popular, but we also knew that we would ultimately be very successful and we stuck true to that course.
VO: So, what are the three key strategies that have contributed to Seismic's success? One: they chose a specific market segment and focused on providing those customers with the best experience possible.
Doug Winter: We knew how to service big companies. We knew how to work with big companies. We knew the patience required to navigate larger enterprises. We knew the complex needs big companies, financial services companies, have. So we focused on larger enterprises and financial services companies and that's where we got our early traction.
VO: Two: they stay true to their unique brand identity, even when pressured by early investors to conform.
Doug Winter: We have never been the glitziest brand, that's just the way that we've been. And I think, I'm happy with that brand. I'm proud of that brand.
VO: Three, as they grew up, they turned their attention to strategic acquisitions.
Doug Winter: I think getting the balance of, "Hey, it's interesting to look at those opportunities and learn," versus, you know, "is that the way that you're going to grow?" You know, understanding that every potential merger or acquisition is different and unique is critically important.
VO: One last takeaway from Doug.
Doug Winter: I'm a big believer that it starts with customers. If the customers are happy, if the customers are getting value, then you're afforded the opportunity to renew. You're afforded the opportunity to expand and grow your relationship and grow the economic part of your relationship. So I try to keep our teams focused as much as possible on the value customers are getting, the results, the impact that we're having on their business.
VO: And that's how you win. I'm Peep Laja. For more tips on how to win, follow me on LinkedIn or Twitter. Thanks for listening.
