Death of the Salesman? Marketo Is Automating Sales Relationships-And Growing Like Crazy

11/8/11Follow @wroush

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completely changed the power relationship. The buyer today is not going to talk to the salesperson until they’re ready.”

That doesn’t mean that selling is dead, but it does mean that sellers have to figure out their new roles. “It’s how do we listen and respond,” says Fernandez. “How do we become transparent and authentic…and make ourselves findable.”

Fernandez’s own career has roughly tracked the rise of marketing technology. A history major at Stanford, he cut his entrepreneurial teeth at Masstor Systems, an early large-scale data storage company, and then Metaphor Computer Systems, a Xerox PARC spinoff that made workstations that connected to the first SQL-based relational databases. Given that Metaphor’s single largest customer, Procter & Gamble, used the system to study brand dynamics, it was essentially one of the world’s first marketing tech companies, Fernandez says.

His next two gigs were also marketing-related: he was chief operating officer at Red Brick Systems, which made databases for the data warehousing systems used by big companies to store customer records, and then president and chief operating officer at Epiphany, which sold customer-targeting tools to big telecom and financial services companies. Epiphany, which was founded by Steve Blank in 1997 and went public in 1999, at one time enjoyed a $9 billion market capitalization on $5 million in revenue. (“This ain’t no bubble compared to that bubble,” Fernandez says now.)

Marketo's Salesforce.com plugin shows salespeople which leads are most valuable using stars, and which are 'hottest' using flames.

Fernandez left Epiphany after SSA Global bought it in 2005. The founding principle at Marketo in 2006, Fernandez says, was that the kinds of statistical modeling that Epiphany had deployed to help big credit-card companies and wireless carriers know whom to target, and when, should be available to all companies. “There is incredible value to be had with these systems, but they were way too complex and big and heavy,” he says.

Fernandez and his co-founders Jon Miller and David Morandi found support for their idea at InterWest Partners, a Menlo Park, CA-based venture firm that had recently hired a general partner named Bruce Cleveland. For some time, Cleveland had been nursing an investing thesis about the role of data in the softer sides of business, such as sales, service, marketing, and support. “What marketing campaign should I run? Should I serve this customer or that one? All of these things are left up to the discretion of employees, and even if they are really good at their job, it’s based on pattern matching; they are not really using current data to make these decisions,” Cleveland says. “The notion was that there was an opportunity to build a new class of applications that would be targeted at the front office and delivered as Web services; that would take subjective impressions and convert it into objective data and enable these groups to make much better business decisions.” Ideally, such tools would even help companies predict how much revenue would flow from each marketing initiative. Hence the term that Cleveland coined for the new application class: revenue performance management.

It turned out that the ideas Cleveland was sketching on his whiteboard were roughly the same ones floating in Fernandez’s head—and InterWest wound up participating in all four of Marketo’s funding rounds. But Marketo’s beachhead product was pretty modest compared to … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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