Cloud marketing automation firm Marketo recently raised $50 million in a new round of funding. Led by Battery Ventures, and with addition support from the firm’s existing investors, the latest injection of cash brings Marketo’s total funding to $107 million since it was founded in 2006.
Phil Fernandez, founder and CEO of Marketo, declares:
“ It’s an exciting and scary time for us! It’s a testing time being a top tier private company in Silicon Valley these days. There is a lot of money chasing good companies and it was clear to us internally that even though we had $22-23 million of cash on hand before the financing, we looked at the world and our business and could see so many areas that represented ways in which we could grow a great business. We decided to open the door to listen to a bunch of people that had been asking to give us more money and we decided to take some additional funding to try and translate that into even faster growth. ”
But Fernandez also sees the latest round of funding as a ringing endorsement of revenue performance management (RPM), a market category that Marketo is trying to establish almost single-handedly. He highlights:
“ I had messages yesterday from the heads of technology thinking from Goldman Sachs and Morgan Stanley, all saying that this is great proof that the category is real and hot. This is a real category that is going to emerge and make a mark. ”
This belief in the category has flown in the face of some:
“ We see still some folks who don’t like it at all. Gartner Group is an example and every time we talk to them they are like ‘we create categories, you don’t!’. ”
But Fernandez sees RPM as a necessary and natural response to the new reality of sales and marketing, and the changing relationship between buyers and sellers. As has been well documented, the expectations of buyers has fundamentally changed, demanding transparency and easy access to information and prices and buying guides, wherever they want. And this is changing the relationship of professionals in sales and marketing:
“ Historically, marketing hasn’t been very good at actually driving demand and delivering leads to salespeople. But in a world where marketing tends to own social channels and the web and tends to be on the frontline of producing that kind of content, the power is shifting towards the marketing department because they are meeting all prospective buyers before a sales person ever does. Sales people on the other hand recognise that they get the cold shoulder if they call somebody too early, so they know they need to try to engage with buyers much later, when buyers are ready to talk to a salesperson, which is typically when they are ready to buy, not when they are seeking information. ”
This creates the need for a tool that binds sales and marketing, a product that helps people be much more effective at using online and social channels to find prospective buyers and develop those relationships. Marketo, says Fernandez, fills this gap, integrating CRM and marketing, and providing marketing automation. Marketing automation may have failed to catch the world alight the first time round, but this, he says, is a different breed of marketing automation for a different age:
“ Marketing philosophies haven’t changed very much for many years – the notion of finding customers and targeting customers, sending email drops and direct mail, going outbound, and that was what people were trying to automate with marketing automation just a few years ago. But the world as it exists now is that the leads happen on the buyer’s schedule. The experience of a modern marketing organisation in an online world is that a buyer clicks on a Google ad, whenever the buyer wants, not when marketing thinks it’s the right time. Or a buyer engages on a social page or clicks through on a tweet when the buyer wants to. So all of a sudden there is a need for a technology platform to be able to catch and respond to these buyer actions that happen on the buyer’s schedule. ”
But it is the category of revenue performance management, rather than marketing automation, that he sees as the chief focus for Marketo:
“ RPM is not just about a software product, it is about a new way of thinking about how to architect and create revenue. I meet more CROs every day and hear CEOs that are saying they are interested in the topic. It is clearly an emerging part of the dialogue and I think as the world moves forward we’ll see definite reinforcers. We are going to start to see the FTs and Wall Street Journals and Forbes and Economists of the world start to talk about the topic I think. ”
But nothing will be a better vindication of RPM than Marketo’s success says Fernandez:
“ There are two parallel tracks going on. One is you’re just building a business that is growing, making customers successful, creating real value and at one level I think I could do that whether or not the category gets a name of its own or whether people want to just call it part of CRM or whatever. The first priority is to build a great business that delivers real value. But ultimately some day CEOs or executives will wake up in every business and say ‘what are we doing about RPM, we need and RPM initiatives’. And having the [RPM] category come together becomes a buying accelerator as the category becomes mainstream. But we’re far from that. ”
