Technology

With Adobeacquisition of Marketo, I have been reflecting on what an amazing and pioneering company Marketo has been since it was founded in 2006. There are very few tech companies that have defined a new category, executed a successful IPO, been acquired by a private equity firm for more than four times the companyinitial IPO market value and now, at a price of $4.75 billion, become the largest acquisition of a world-class company like Adobe.

The credit for this dream-come-true Silicon Valley company goes to the co-founding team of Phil Fernandez, Jon Miller and David Morandi, who together built an amazing customer-first product, defined a breakthrough category and launched a marketing automation company that continues to delight and amaze partners and customers alike.

I had the unique pleasure of meeting the founding team in 2006 when they shared their vision and passion for marketing automation. At the time, all they had was a PowerPoint deck. But it was clear then that they had a special idea and the unique capability to build a breakthrough product to deliver on their vision.

In all honesty, I couldn&t know how truly extraordinary the company would become. Thankfully, I was lucky enough that the team chose me and my former partner Bruce Cleveland as their first investor and also was fortunate to serve on the board for 10 years. Most recently, I was thrilled thatPhil joined me at Shasta. One of the qualities I admire most about Phil — which was apparent all those years ago and continues to this day — is that he never stops iterating to do things better or faster or more efficiently or more thoughtfully. Phil always carried a notebook that said &THINK& on the cover, which epitomizes how he approaches his work.

Phil recently shared his &10 Things I&d Do Even Better If I Did It Again& presentation with our team and our founder/CEO community. We believe his insights are &10 Must-Dos& for todaysoftware entrepreneurs. Ithard for entrepreneurs to know the trade-offs required when making the tough decisions — especially early on ­& but what follows is what I learned from Phil, and the key takeaways from his talk that I believe can help more founders create iconic companies with lasting value.(Note: Click here to view excerpts of Philtalk.)

Have one person own revenue

If your company is like every other company, there are two executives — vice president of Sales and the chief marketing officer — who are regularly locking horns because they are each tasked with taking different approaches to the same goal of increasing revenue. How do you solve this

Hire a chief revenue officer (CRO) who can see both perspectives, plus give the context that sales and marketing are missing.This seat understands the big picture and doesn&t belong in marketing or sales. The CRO needs to talk strategically about life cycle revenue — across the customer journey. She or he should be a storyteller who can look at the numbers and the models and explain it all in plain English to the executive team so that everyone understands. Like a chief people officer, you&re going to have to spend on a CRO — but itworth it in the long run.

Hire a chief people officer (CPO) ASAP

Your company needs a leader of &all things people& who can make sure your workplace is welcoming, diverse and responsive to employee needs. For the staff to have trust, this person needs to be in a role that is empowered by the organization and not just by the CEO. Hire the most senior, overqualified HR executive into your business as early as possible — Series A level — and have him or her report directly to the CEO. By constantly listening to people — which is really hard when you&re working really hard — the CPO will help build your culture and be the eyes and ears for the CEO. Investing early in HR will come back to you tenfold through employee retention, team morale and an enviable culture.

Give back when it makes no sense

The day you think you&ve got to get a product release out the door and thereno time to do anything else is the day you get out and give back in whatever way makes sense for your company and your community. Give employees time off to volunteer. Pick a cause for your company to support. Or, consider starting a charitable foundation with pre-public stock. It will create a spirit and energy that will give back to your team five or 10 times whatever it is costing you.

Charge your first customer

Phil personally wrote a stupid thing on their website that said, &At Marketo, your success doesn&t have a price.& That copy stayed up for years as a testament to how customer-centric they were. They were proud that they weren&t charging for services. But as Phil said, that was a big mistake; they should have been charging from day one.

There really isn&t any friction about asking customers to pay for services. If you say, &Look, this product is great. Itgoing to transform your business but itnot easy and it will cost money,& they will spend it. Feature-level sales is a great way to justify why you are charging what you are charging, and it keeps customers renewing services and adding more features as their business grows and changes. To make this strategy work, gear your sales metrics toward incremental increases over time­ instead of pushing sales reps to sell as much as they can all at once.Customers will pay for quality products that meet their needs.

Build a world-class Rev Ops/Sales Enablement team

You need a VP-level Rev Ops/Sales Enablement executive by the time your company reaches $2-3 million in revenue. That individual must think holistically about how revenue is happening, from the early lead in the door and the sale to renewal and the up-sale; understanding full lifetime value and thinking about it in a modeling sense. She or he needs to be a storyteller — one who can look at the numbers, look at the models and then explain it in plain English to the executive team. Thatgold.

Focus on continuous ARPU expansion

Today, to increase ARPU (average revenue per user), you need to design feature-level packaging every bit as much as how you design product functionally. The same people on product management ought to be thinking together with Rev Ops and Sales about how you dish out the product, how you launch the pieces, how you turn on pieces and how you enable pieces. It becomes a part of the art of product design as much as the art of revenue design — and thatwhere these two rules of thought really come together. Basically, you need to design an expansion pass.

Incubate new product initiatives

Marketo failed in defining a multi-product company, from when it was $30 million a year to when it was $300 million a year. If you&re going to bring a second product line into the company — whether itorganic or inorganic — it needs to be incubated. It needs to have its own dedicated sales team and its own separate quotas. If you&re thinking about becoming a multi-product company, do not pass Go, do not collect $200; go read Geoffrey Moores& Zone to Win, the only business book Phil has ever recommended.

Pursue constant technology renewal

The pace at which tech is moving and the competitive advantage that new tech is providing over old tech has never been like this during the past 35 years. Today, you need someone thatcharged with thinking not about product but about the future. You need to value technical currency. If you&re three years old on your technology and a new company enters your market — the degree of agility, pace and performance the new entrant has in running circles around your company will win over a five-year cycle. Every time.

Always be seeking more TAM

No matter how good your initial tenure is, no matter how good it feels, no matter how amazing you see your company, as the CEO, as a leader, have a Plan B. Know whatnext, know where you&re going next and make sure you&re always talking about it. Be absolutely zealous about ensuring you know the next piece of TAM you&re going to go after. Think about whatgoing to happen if you have more money; what would you do next Give yourself that opportunity to dream, but make it real, make it defensible.

Watch the clock during scale up

When you&re a startup, short-range thinking is seductive, but long-range thinking is powerful. Always be watching the time. The tension between operating leverage and scale-up investment is really dangerous. At Marketo, they got to it late and their growth slowed a little too much. Live in the real world and focus on cash and on making the investments so you have the capacity when you need it. Have a long-range planning process and understand the day when you&ll need $2 million of ramp capacity. Don&t let the tyranny of a seductive short-range model triumph over what the real world is telling you about the dynamics of growing the business. Understand what it takes to really scale.

After a disappointing second quarter, Netflix is back in Wall Streetgood graces. The company just released its third-quarter earnings report, and as of 5:30pm East Coast time, the stock is up 12 percent in after-hours trading.

The most important number here is subscriber growth, and thatwhere Netflix came in way ahead of expectations, with 6.96 million net additions, compared to the 5.07 million that analysts predicted. The service now has a total of 137 million members, and 130 million paying members.

The company also reported earnings of 89 cents per share on revenue of $4 billion — analysts had predicted EPS of 68 cents.

In addition to reporting on the latest financials, Netflixletter to shareholders also offers an update on its original content strategy. It distinguishes between two different types of Netflix Originals — the ones like &Orange Is the New Black,& where Netflix gets the first window for distribution, and others like &Stranger Things,& where it actually owns the content.

The company says:

Today, we employ hundreds of people in physical production, working on a wide variety of owned titles spread across scripted and unscripted series, kids, international content, standup, docs and feature films from all over the world. To support our efforts, we&ll need more production capacity; we recently announced the selection of ​Albuquerque, New Mexico​ as the site of a new US production hub, where we anticipate bringing $1 billion dollars in production over the next 10 years and creating up to 1,000 production jobs per year. Our internal studio is already the single largest supplier of content to Netflix (on a cash basis).

Netflix also says romance has been big recently, thanks to its &Summer of Love& slate of original films, which have been watched by more than 80 million accounts. Apparently &To All The Boys I&ve Loved Before& did particularly well, becoming one of Netflixmost-watched original films, &with strong repeat viewing.&

The service plans to release &Gravity& director Alfonso Cuarónnew film &Roma& in December, which has already been getting rave reviews at film festivals. While Netflixoriginal movies generally have a minimal presence in theaters, the company says &Roma& (like Paul Greengrass& &22 July&) will be released on more than 100 screens worldwide — not a blockbuster rollout, but not a perfunctory release, either.

The company is forecasting the addition of 9.4 million new members in the fourth quarter.

Founders building a brand today are largely relying on new infrastructure to do it, though they&re still heavily reliant on legacy carriers like FedEx and DHL when it comes to international shipping. In fact, prohibitively high prices, along with not a lot of support or tools, are a few reasons why more American products aren&t shipped abroad. Many startups especially decide itsimply not worth it.

Enter Passport, a 1.5-year-old, San Francisco-based startup that sees an opportunity to make it easier for brands to reach far-flung customers and has raised $3 million in seed funding toward that end. Among its backers is Resolute Ventures; Precursor Ventures; Product Hunt co-founder Ryan Hoover; Girlboss founder Sophia Amoruso; and April Underwood, the chief product officer of Slack.

What piqued investors& interest The team, for starters, including co-founder and COO Aaron Schwartz, who previously founded his own e-commerce company (Modify Watches) and CEO Alex Yancher, who, among other things, co-founded a smart fridgekiosk companycalled Pantry that was acquired. The two have some experience in moving packages from one point to another; they also know the pain of dealing with lost and delayed packages.

The company is also &asset light,& which investors typically like. Indeed, the company is largely a customer service business focused on shipping globally. How it works: One of its customers — lettake Native Deodorants — will hold its inventory in a third-party logistics warehouse. In Nativecase, ita Connecticut company called Fulfillment Works, and Fulfillment Works slaps a label on Nativepackages that have been created by Passport, then gets thepackages ready for pickup.

After that, Passport arranges for a daily pickup of all of Nativeinternationally bound parcels, working through a third-party freight company like Old Dominion or FedEx Freight. That company brings the parcels to a consolidation point, where the parcels are sorted by country and final mile. After that, the Canada parcels, say, are sent on a truck to the border and perhaps injected into the Canadian Postal system, or they&re flown to Australia on a Qantas flight and shipped out to the recipient via the Australian Post. Passport then acts as a reference point so if a customer has any questions about his or her package, they are fielded by Passport.

It doesn&t sound like rocket science. All the same, in an age where consumer expectations are higher than ever when it comes to at-home delivery, an aggregator that connects all the pieces to provide a better customer experience may well prove worth it to some brands. Indeed, in addition to Native, others of Passportearly customers include the menoutfitter Shinesty, the backpack maker ISM, the socks manufacturer Bombas and the clothing companyBetabrand.

We were in touch yesterday with Yancher and Schwartz to learn more.

TC: How did you identify this particular sliver of industry as a problem worth tackling

AY: I ran a personal shopping service — Lynks.com — that helped people abroad buy products from the U.S., and I saw that demand for American goods is booming abroad. In fact, half of a brandInstagram followers are from abroad, but only 10 percent of its sales are. Despite the boom in cross-border, current international shipping options are lacking a lot of what a merchant needs to successfully sell and ship abroad.

This pain doesn&t just exist for individual brands alone but also for third-party logistics facilities — the operations companies that partner with brands and that receive, warehouse and fulfill customer orders. They have incredible buying power for shipping customers, and yet they&re also unsatisfied.

TC: It sounds like your differentiator is customer service, but couldn&t another startup come in and strike relationships with international carriers and do precisely the same thing

AY: Shipping a package internationally is complicated. Building a consistent experience across hundreds of partners with different transit times expectations, technical backends and terms and conditions requires technological as well as logistical expertise. I&vespent years stringing together custom shipping routes. This isn&t something you just jump into, therea ton of nuance into how you work with global posts and private carriers.

What we do differently is embed customer support via Intercom on the tracking page, which is where consumer anxiety happens. Anyone can offer customer experience, but for international shipping, itpretty darn hard. You have to get detailed data from a bunch of carriers. You also have to know what the &exceptions& are. We automate a lot of the support behind the scenes, which has taken a year to get going.

We also offer proactive notifications when door tags are left, so a customer can follow-up directly with their local carrier and packages aren&t set back to the U.S.; we set up direct Slack channelswith brands in order to help their own customer experience teams deal with any other questions about international shipping; and we do in-shopping-cart integrations, like a fully landed cost calculator, so consumers know exactly what they are paying for an item and won&t get hit with a &your item is held at customs.&

TC: Which international carriers are you working with, and do you have any kind of exclusive deals with them

AS: We ship to 195 countries around the world and use a different last-mile provider in each country and use a variety of trucks (to Canada and Mexico) and air transport partners to get parcels all over the world. In total we work with over 300 carriers and posts. We don&t have exclusive deals on the carrier side of the business.

TC: How do you price packages How much more do you mark them up in exchange for the hand-holding you provide

AS: Our price depends on multiple factors, from the origin point to the quantity of shipments. Our markup range is between 5 percent to 50 percent depending on the client, but our pricing is 100 percent transparent. If you ship with DHL, FedEx, etc. you&ll get a rate sheet. But then you&ll also have a bunch of hidden fees like fuel surcharges, or &remote area surcharges& of up to 30 percent that will be sent 30 days later, after you&ve charged your customer. They&ll charge you extra for certain deliveries. They&ll charge you extra for the fully landed cost calculator — or tell you to partner with a different party. And if your package is lost, they&ll say, &Fill out this form. We&ll be in touch in 90 days after an investigation.&

Our point of view is that great logistics is necessary but insufficient when it comes to international shipping. You also need to deliver a great digital experience for brands. Everything that goes into delivering that gets bundled into our postage price.