N.Rich: From High Churn to Profitable ABM Platform – with Markus Ståhlberg [432]

This is a machine-generated transcript.

[00:00:00] Omer: Markus, welcome to the show.

[00:00:01] Markus: Thank you very much. Thanks for having me.

[00:00:03] Omer: My pleasure. Do you have a favorite quote, something that inspires or motivates you that you can share with us?

[00:00:08] Markus: Yeah, I can share my own motto.

It's a talk is cheap. Life is short. So basically I, I like early in my career I came to conclusion that, you know what you do is what defines you.

And then maybe a bit later I realized that life is short and you just need to, you know, you, you just need to do those things to you like, and you want to do during your lives.

[00:00:30] Omer: I think we're, we're gonna talk about that as well, 'cause that was, that was a, a very relevant part of the, your story.

Tell us about N.Rich. What does the product do? Who's it for? What's the main problem you're helping to solve?

[00:00:43] Markus: Yeah. N.Rich is an account-based marketing platform and we help B2B companies who are targeting this upmarket or like high annual contract value customers and want to basically grow their business like without wasting [00:01:00] wasting their resources.

[00:01:00] Omer: And give us a sense of the size of the business. Where are you in terms of revenue, customers size of team?

 

[00:01:08] Markus: Yeah, so we are 55 people at the moment. The revenue is ARR is like between five and 10 million, and we are growing fast. Yeah, we are fully remote, so like 25 countries with this, this kind of team.

So it is no, no offices is anywhere. So it's you know, like yeah, fully remote setup.

[00:01:25] Omer: And you've raised somewhere between four and 5 million, is that right?

[00:01:29] Markus: Yeah, that's right. In 2020. It's, it was a fair, say practically, like more like a seed round and now we are profitable and like just investing everything that comes into to growth.

[00:01:40] Omer: Profitable. That's a word we don't hear enough, so . Nice job on that. All right, so we we're gonna talk about where you, where you know, where this all started, where you came up with the idea for this business. Before we do that, let's just make sure that we've got everybody up to speed here. I think a lot of people listening to this will understand what ABM is.

[00:02:00] But just give us like the two-minute spiel on how ABM is maybe different to something else that, you know, organizations may be doing.

[00:02:09] Markus: Yeah, so account-based marketing is based on the idea that, that you select the companies you want to sell to during the next few years. So that's called the ICP ideal Customer profile.

You define your ICP and then you just center everything you do around those accounts. It's the marketing and sales collaborating together, like from the start of the buyer journey, from like we call it, called stage until the accounts. Eventually are hot and then passing the be to, to sales while like marketing, keeping supporting this like the, by targeting these companies with advertising and ensuring the are buying committee is, is, is on board.

So the idea is that, that you waste much less resources here, because like everybody knows what they do. There's also intent data, which is very important part of ABM. So, so that like you collect this data about the accounts propensity to buy and like when, when you know that the account is ready or hot, then, then only sales starts to work on them.

And maybe also as an important thing, this is not lead generation, it is not about like getting MQL or form fields. It is about really long-term effort, like towards this accounts that you have selected from early awareness building a relationship like making sure that they know you, they know what you stand for.

And then eventually, like when they become like sales opportunities usually like the sales cycles are shorter, deal size is higher, and win rates higher as well. So, so it just you know, it's, it's just improves the efficiency of the overall like go to market motion.

[00:03:40] Omer: I think that was a good distinction.

In terms of, I mean you, you said ICP, every company should have an ICP. But with lead generation, it's, you're basically just going out there and saying, this is the kind of buyer I want and I'm just gonna go out and do cold outreach or marketing or whatever. And with ABM, I guess one big distinction would be is it, it's almost like building a wishlist, right?

Or, or a dream list of these are the hundred companies I'd love to be doing business with. These are the ones that we're gonna focus on building relationships with and make sure they understand what we do and how we can help. And eventually that leads to good things happening. Great. So let's go back to 2015. Where did the idea come from?

[00:04:19] Markus: So we started from actually we started from advertising format. Like, so we have, within the platform we have like this we call it native article. So the idea was that it's, it's about content marketing essentially like advertising directly with an article within the media.

That's where we started. And then within, you know, the first year or so, it was clear that B2B is where we want to focus. And then soon after that, it was ABM that we started like realizing that, okay, there is a lot of potential in the B2B market. These companies are evolving very slowly compared to B2C.

Like the, that transformation to digital just is going to take, you know, years. Tens of years, like always takes a lot of, a lot of time in B2B and that there is a big potential, long-term potential in this this market. So then we started building the product like and we have our own DSP, or we built our own DSP with, which is basically a like advertising, programmatic advertising platform.

Which then gives us a lot of capabilities that that many players in the market don't have. And just a lot of focus in them in the r and d, not so much on the go-to market side, but like more on the r and d and building this this really, let's say unique product like for the for this account-based marketing marketplace.

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What was the driver that that told you that, Hey, there's this opportunity here.

[00:06:19] Markus: Yeah, that's a good, good question. So, so we actually, we started with like very early, we started doing B2C and B2B at the same time. And then like our first B2B customer big B2B customer, we got they were like, we were able to invoice them something like you know, 20,000 whereas the other, you know, B2C customers were something like 1,500 or, or, or something like that.

So we realized, okay, so. You know, these guys are like willing to pay a lot. And then with this customer, who is by the way, still our customer, after, after almost 10 years we we kind of realized that this account based data is super valuable. Like that. If, if you think about B2C, it's like every, you know.

It, it's just like this, pray and pray like you just do a lot of things and then hope that something hits. Whereas there, it's, it's really about, you know, one individual account you know, visiting your website or, or like engaging with your ad. And, and there we realized that there is a lot of, a lot of potential in this market and these companies have a lot of money also that that they can invest in this in this.

So there was kind of this this realization that this could, there could be something here. There was also like one big player who is still there in the market called Demand Base, who we actually like did a lot of I'd say benchmarking from them. That was really helpful for us in our early journey to, to just like understand how, how these kind of products work and yeah, like then building our own DSP based on, based on those, those requirements.

And of course we had had a lot of like you know, this, this unique features or capabilities that that like those players didn't have. But it was super valuable to realize that there is a market. And like that's, that we kind of fit ourselves into that market rather than like I think that was actually that, that was also something that we worked with quite a bit about finding our position and one of the early important milestones where when we realized that, okay, let's not try to come up with the new category, like something completely new.

Let's just be an account-based marketing platform, because that's, you know, that's what people know and that's, that's where, you know, like they, they are going to find us better. So yeah, that was, that was basically the early, early journey.

[00:08:21] Omer: So part of the, the positioning of the value prop is that N.Rich is a more affordable ABM solution compared to some of these other products? How, how much could, could someone an organization typically pay? Like what's, what, what's, what sort of difference are we talking about here?

[00:08:42] Markus: So affordable is usually the last one we mentioned. So it's, it's more starting from the, starting from the fact that, you know, like with those other, we call them big box ABM, like, you'll get you know, 180% of what you need.

And with N.Rich you get like a hundred percent of, of, of what you need. And the price is probably, you know, 30% or 20% of what what those big platforms cost. So, so the price is important. The ease of use is important. And also implementing ABM is not about buying a tool. So that's, that's something we just tell to every customer that if you imagine that.

By buying an ABM platform that's, that's going to solve all your, you know, like ABM needs and like, you'll get great results. It's not, so there's a lot of transformation that needs to happen within the organization, and that's where we are with the customers. So we are basically providing support, you know, no matter if you are, let's say, you know, 50 employees or, or like a, you know, a smaller company, whereas these, you know, bigger players, they only really care about these, you know, huge enterprises.

So, so we really want to help customers to, you know, achieve sales and marketing alignment and like really get those results and understand like what ABM means, because it's a different motion altogether, like of, of what many companies are used to used to doing.

[00:09:58] Omer: How long did it take to build that first version of the product and what did it do?

I'm sure it didn't have everything, you know, that you would, you would've loved to build when you launched that product. So in, in simple terms, what, what were the specific problems and, and sort of the solutions you were offering in those early days when you were trying to get those first 10 customers?

[00:10:16] Markus: Yeah. Yeah, that's good. So we, we really started from this very simple solution with this advertising format, like that you can advertise, do this native advertising to like you know, specific audiences. And then we built a DSP, which then gave, gave us like more like let's say accuracy and like more optimization in terms of their targeting.

So then customers started seeing like really good results in terms of the, you know, low cost per like, engagement and, and, and, and, and so forth. And then eventually, like we let's say the third stage of evolution was that, that we added like several features or capabilities into our platform that actually made us

Platform rather than just an advertising tool. So intent data was one of those important, important capabilities that we added, added, and, and then I think at that point like we were like on par with the or we became on par with the, with the market with this big box players. Until that point you know, we had been just, you know, you can use us for account target advertising.

We have these unique ad formats. You can get great results, but, and then some analytics, but you can't really kind of do the full like ABM implementation. So, so that was, that was kind of the third, third stage now.

[00:11:27] Omer: So in, in terms of the ad piece, just explain how that was working in, in, in simple terms.

So you, you, somebody you know, buys the product and they wanna do some kind of advertising, what are they setting up? What platforms or where are these ads showing up and what, what sort of results are they trying to get?

[00:11:45] Markus: So it's, it's a content based format. So you create an article, which is 1,500 to 2000 characters long, and you basically see it as an advertisement.

So, so you go to, let's say, Forbes and then you see a scrollable article there, which is talking about, [00:12:00] you know, something about the advertisers, you know, B2B product. And when you scroll it, our system is tracking the scrolling. So we'll know who is interested. The content. So it's not about impression, but it's actually about the engagement with the content.

And in terms of where it's shown, like we used programmatic already in the, in the beginning, but we used third party DSP, so it could be essentially anywhere where you see ads like we were targeting those accounts like that you want to target, like you select the accounts you want to target and then like they can see these ads basically anywhere they go where you know, ads could be visible.

And this, this eventually became the way that we optimize, optimize this like advertising you know, delivery or distribution. That since we can learn. Who is interested in specific content? Like let's say you are targeting a CFO within a, like let's say an IT company, you'll have a certain kind of article, certain kind of content, and you know, if, if you have another persona, like let's say a marketing person, like they're not interested in that.

So, so this way the system learns who is interested in the content and, and this way the results keep, keep getting better over time.

[00:13:05] Omer: Great. And how do you, how do you tie it back to helping the customer understand who's actually engaging ? With this content. So you know, knowing that it's, it's potentially somebody from this company or it's a CFO versus a marketing person or maybe even like individual level trying to figure out, okay, it's, it's a person in this, you know, the CFO of this company.

How far or how specific are you able to get?

[00:13:34] Markus: Yeah, yeah. This is a good question and there is a big difference in, in in international regulation in, in Europe. Like it's absolutely not possible to get to the top title level that we would know who the person is without having a consent. And obviously nobody has consent or.

For the CEOs or like C-level people. So, so then we know that it's this company and like they're interested in this specific content. So it's, it's up to the user to create content that is relevant to, to a certain persona. Of course, we don't know it for sure, like, you know, you can have a channel who is interested in, you know, financial things, but like most likely it's it's like somebody from the finance department in the US Then again, like we can go to the subtitle level.

So basically selecting the, the like subtitles you want to target and also get the get the like analytics on the, on the subtitle level. So that's, that's possible in the US where you don't have so strict regulations in terms of their privacy.

[00:14:28] Omer: Great. You, you mentioned getting some customers early on fairly quickly.

How long did it take to get those first 10 customers and, and how easy or hard was it?

[00:14:38] Markus: So my and my co-founders experience were really in sales, so it wasn't, I'd say super hard, like we had like we had our like former venture where like, which was about B2B it included this B2B publishing.

It's more like a publishing like a company. And through that we were able to get some pilots which served as earlier references for us. So eventually, I think during the, I'd say still it probably took the first year or so, like to get get this first 10 customers, but we had huge churn back then.

So it's like it was very hard to keep keep customers. Also, it was more like a campaign type type implementations that they did rather than, rather than us being able to retain them for a long term.

[00:15:23] Omer: Yeah, let's talk about that. So you, you, you know, you're doing a great job getting finding these customers, getting them excited about the product, and then you, you're, when they start using it, they're not really getting the kinds of results that they were hoping for.

And then, so they're churning, tell, tell me a little bit about what was going on and what wa what, what was the problem behind this?

[00:15:44] Markus: So maybe I might just fast forward a bit because like you know, talking about that early solution, like maybe better to talk about like a bit bit when we had a bit at more advanced solution.

But, but we still face the same problem and it is really related to first of all the expectations that the customers had. So we were able to we actually packaged our like offering into this three, three month. Paid trial. So customers commit to three months, they pay us, you know, quite a bit.

Typically, like 20,000, 30,000, something like that. For that pilot. As an annual? No, no, as, as, as during that three months. So, so we were really like pushing, pushing this like kind of, it's, it's, you know, from the advertising spend pushing it quite high. And then their results, expectations from customers were huge during those three months.

And what we learned the hard way. And it, it, it, it just took very much time to really kind of understand it. That that when people first time when when they hear ABM they think lead generation and like, you know, whatever, like they're doing within ABM, often they're still waiting for those form fields.

Like there's this idea that, that previously they were doing spray and pray, just targeting anybody on Google or, or Facebook or whatever. And then, you know, they get a certain conversion rate, certain number of, of, of leads, and now they're expecting, okay, with ABM we'll just, you know, get still the same number of leads and it's just going to be from this great companies and it's going to be this great, great like you know, personas from the companies.

And obviously that's not going to happen, happen. So, so this is something we learned that, that like in order to get value from ABM, it takes time. Like it takes, you know, six months, 12 months, even 18 months depending on our sales cycle. You need to get your sales on board, like to really get value from ABM.

Typically also, whether it's CEO or whoever is leading the go-to market, that person needs to be . So it, it, it really takes a lot of a lot of effort from customers. So we realized that we were kind of overpromising under delivering from customer's perspective. And then we switched this more in a way that, that we started telling customers that, that this is not easy and the product is not going [00:18:00] to be solving all of this.

You also need to do a lot of things like within your organization. You need to change. We are going to help you hold your hand, like and, and what you're going to have to, you know, listen to us like and if you don't and, and if you are not willing to change, then you are not going to get this result.

So we don't want to make it sound hard and definitely we not want to say, make it sound that like, you, you shouldn't start today, you should start today if you are not doing it. But like at the same time, it's not going to be easy. Like, it, it's going to take like a lot of effort. And I think that was the main.

One of the main learnings that we did from the start and then like actually quite far away in the, in our journey that, that we realized that, that like you know, we just, we just need to ensure that the customer understands how they get the value and and, and that we are there like for them like to, to support them from start to finish.

[00:18:51] Omer: Yeah. Yeah. I, I've seen you, you mentioned, you know, getting the sales team on board, and I've seen this in, in the past, working with, with different companies where you know, from, from from AC level, there was this desire to have some kind of ABM you know, motion in place. You can get, from a marketing perspective, it looks good because you're, you're really targeting the companies that matter.

But there was, there was a lot of resistance from sales where, you know, the, the, the spray and pray kind of approach was like, okay, they're, they're doing something. They're getting out and reaching people, sending a whole bunch of cold outreach and it, it, I think for many of them it seemed like this ABM stuff, it just sounds like we're wasting a lot of energy and cycles doing this stuff that doesn't result in leads.

Right. So there's this thing about setting expectations and getting people on board about the value of doing ABM, but then if they're not getting leads out of this, what were you promising them? What was the outcome that they, you know, you said that this is what you're gonna get from doing this.

[00:20:00] Markus: What you're going to get, like if you do things right, is that you're going to get more like of these high A CV customers.

Normally you should have at least 50,000 as the annual contract value or 30,000 to for ABM to make sense. So you're just going to get more of those great, great fit customers. But it is exactly like you said that if, if sales is used to dealing with those marketing leads. Then they expect that it's going to be super easy.

They just get the lead, they do the meeting qualification, and then, you know, create the opportunity or disqualify. It's super easy. They don't need to do anything. But then with ABM, you actually need to do prospecting. So it's, it's actually closer to code outreach than to this inbound leads. So it's just, it's warm outreach.

So in, in code outreach, sales is you know, needs to prospect these accounts. They need to find who to contact, they need to send messages, you know, make calls and so forth. But these are code accounts, whereas in ABM, the accounts are warm already. They know about you. They've visited your website several times.

Maybe they've interacted with your content on LinkedIn. They've seen your, you know, ads and so forth. Like, it, it's kind of they already know about you and which, you know, should be clear sign that this is going to be an easier process for sales than, you know, doing a cold outreach. But, but this is what many companies don't understand, or let's say many salespeople don't understand If they just have this experience of doing doing like that marketing, it's going to help us with, with providing, providing leads.

[00:21:29] Omer: Yeah. Yeah. It's a, it's a tough sell 'cause you, you've gotta sell the product, but you also gotta sell this education piece and you've gotta make sure culturally the organization is ready to, to do this, you know, across, across the board. Let's talk about, okay, beyond the first 10 customers, let's talk about getting to the first million in ARR and how you got there.

And in, in many ways, you are having to apply the same principles and strategies that you were talking to. Your customers about and from, you know, from you, when you and I were talking earlier, it, it seemed like that you, you yourself, weren't that clear about your ICP initially. Is that right?

[00:22:06] Markus: Yeah, yeah. So, so we had somewhat of an idea of what the ICP is.

It's like, you know, we started with the tech software companies that are still our ICP, but the problem that we faced and that many companies face is that when you do it in such a three-wheel simple way just to define the industries and company sizes, there's like, you, you don't really have an ICP, you have a 10 or target addressable market.

So, okay, you can sell to these companies and they can buy from you, but that's it. Like they are not really an ideal fit. So then, like we face this like over many years, that's that. Like we don't, we don't really get great conversions. Like, especially from cold outreach and, and like even with our ABM networks, like we were not able to, to really kind of hit the message, like get the message home, like to this these accounts.

So the important realization was that that ICP actually means like why is this company within the tam like a perfect fit for your product? And for us, what it meant was that we realized that that companies who get most value from our products immediately are those that are already spending like significantly on digital ad advertising.

So if they're spending, let's say, 50,000 on LinkedIn and Facebook and Google and so forth, like they are probably wasting a lot of money. Like if they want to go up market because like LinkedIn is the only channel where you can do targeting, like in a precise way that it's actually the account based.

But not every company is using LinkedIn. So you can't reach everybody. Then you use Facebook, you use Google, like you're going to do. It's almost like spray and pray. You, you're just going to target like a lot of, a lot of you know, different accounts and then just hope that something goes to the right, right?

ICP. So then we realized that, okay, by refining this ICP our, of our into, into these like companies who are actually big spenders, they're advertising a lot we can get very easily to the discussion, okay, let's reallocate, let's say if you're spending now 50,000, let's reallocate 20,000 to ABM.

And that's an easy decision. And it's also very easy to show the improvement, like compared to what what they did before. So I, I think like the, the call out here is that, that tam is not the same as ICP and at least my advice would be to think about like, how can you optimize certain metrics like a CV in, like in our case, like how can you find companies that are really good fit for your product and for your offering in terms of like this this event show revenue metrics.

[00:24:33] Omer: Great. You, you talked about a lot of really interesting things there, and I want to drill down a little bit more into that. Let's start with the the ICP. So you, you've, you've figured out over time who that ICP really is. You talked about the ad spend and and so on. How are you figuring out who these people were, how much money they were spending and, and all of that sort of stuff?

[00:24:57] Markus: Yeah. That's a good question. So, so we call this but there are these visible attributes and dark attributes, and this is their dark attributes. So, you know, nobody advertises on their page that, you know, this is how much we spent to do advertising. And there is no databases really like that, that would include this for, for B2B.

So usually in this kind of cases, you need to think about proxies. So there is something in public data sets that correlates. This attribute with this dark attribute, which is high spend in our case, like it's, it's a very simple simple metrics. So the question, or like, what, what we have found is that like for instance, LinkedIn, they have ads library, like where you can see for any company, once you can see which ads they're running and the number of those ads they're running has a direct correlation to their ad spend.

[00:25:42] Omer: That's smart. I I think Facebook has something similar.

[00:25:45] Markus: Yeah, Facebook and Google has it as well. So it's, it's required because of the, this, you know, political ads like and, and the transparency.

[00:25:52] Omer: So, okay, so you're basically saying, okay, this is our ICP. Let's go and find some of those. Let, let's narrow down that list of, of potential companies.

And then let's take a look at like the LinkedIn ads library. How many ads are they you know, do they have, how? Maybe, maybe I think you can even tell like I. How recent they are or something like that, right? So you get a general idea of, okay, this wasn't like some ad stuff they did like 20 years ago.

Like they're actually, you know, doing this stuff. Now. I, also really liked what you said about going in saying, okay, well they've got this big ad spend and they're probably not getting a great return on that. Or, or I, our ICP is hopefully not getting a great present on that. And so we're not saying to them, you need to find additional budget to invest in our product.

You're talking about reallocating ad spend budget to this. How did, how did you come up with that? Was that like something you discovered over time or you, you were pretty, you, you knew early on, this is the way we need to try and sell this?

[00:26:49] Markus: No, it's, it's really over time. The way we approach this is that we we come up with hypothesis every quarter to our ICP.

We want to test certain things. It's, [00:27:00] it's typically, it's, it's based on some ideas that somebody has, like intuition or then we have some, some like just insights like from, from some data, okay, let's, let's see, does this, does this hold? Like and, and this was one of those, those cases where we, we just decided to test, let's see you know, if it, if it works or not.

And it did work, so then it stuck. So that's, that's how we do it and that's actually how I recommend anybody to do it. So you shouldn't change your ICP constantly, but like at least the way we approach this, that every quarter we do this iterations, but, so it's an iterative process. Like incrementally improving it based on the current situation and current data that we have instead of you know, overhauling it completely you know, every quarter or, or even like more frequently than that.

[00:27:45] Omer: So a lot, a lot of the we talked about LinkedIn and so you, you, you can use that as, as targeting for your ICP. You are running, you start running LinkedIn ads and I think you had, you were successful at doing that. I think a lot of founders I talk to always say, tr tried ads, never worked, waste of money, blah, blah, blah, whatever.

But you, you got to the point where you were clear enough about your ICP, you figured out how to target those people and then you're running LinkedIn ads, but you are also doing your . You were using N.Rich as well alongside it, right? Can you explain what you were doing?

[00:28:25] Markus: So this is one of the interesting sides of being in this business that, that we actually like do the same thing.

For our own GTM as we are like offering to our customers, like drinking our own champagne. It also took, took quite a bit of time like to, to really get it working. So we even have had challenges, challenges with the, you know, like getting the sales and marketing aligned. But generally, like the way we do it is that that's we have the ICP defined we use LinkedIn as a, it's, it's a very effective channel because we can be so targeted and, but then you can't target everybody on LinkedIn.

So then ABM is there, like it, it's a more you know, it doesn't cost so much to run like ABM ads, programmatic ABM. So it's, it's kind of a constant. Nurturing like that we do like in both, both channels. With our product, we can also go into more granular like details. So like, based on the stage of the buyer journey, like some accounts are called, some accounts are like closer to buying, or some accounts are researching online based on intent data.

So then there's a different message, different campaigns that are being run, run to those camp those accounts. And eventually the target is to get those accounts from code to hot. But that can take a lot of time. And, and this is like you know, when you say that advertising doesn't work normally, it means that you didn't get any leads.

That that's normally the thing. Like you're just doing this tactical short-term thing. But with ABM, with the ICP based approach, you need to be prepared to doing it for like two years or something like it. It's a, it's a very long cycle. You are looking for this big fish. Not, not, not for this, you know, transactional small deals.

So you need to be prepared to building awareness, investing to it, you know, for six months, 12 months. Even for individual company, it's still cheaper than doing code outreach. You know, it's, it's much more scalable and, and marketing doesn't cost so much, but if you have sales trying to, you know, close or like, you know, even generate opportunities from those companies, nothing is going to happen when you reach out to this code accounts.

[00:30:19] Omer: So when you're running these ads, you're doing the LinkedIn ads along with this, this programmatic ABM ads through, through, through N.Rich. If you are not focusing on leads as the KPI, what were you focusing on? Was this mostly about just engagement with the right people?

[00:30:38] Markus: Yeah, so, so here we get exactly to the point that we actually try to get these accounts from code to hot.

So when they're hot, then sales conversions increase. About a. 10% points, like we can say that, okay. It's, it's like significantly better conversion that sales is getting, like when they are, when they're targeting accounts that already know us and already engage with us. So it, it's actually quite simple.

Somebody might call this marketing qualified account like MQA rather than a MQL, but I think this warm versus code is a better comparison because like when you compare to MQL, then you immediately start to think that you have something tangible like you have a person who wants to talk to you, but here you don't, you just have a signal or like an indication that this account is likely to be ready to talk with your sales and interested in your, in your offering.

[00:31:26] Omer: Right. And, and you were doing a, a combination of on, say on LinkedIn paid ads as well as organic. And so, you know, you, you posting regularly members of the team posting and, and trying to use that as a way to build authority in relationships as well. Right. And I think you still do that today, right?

[00:31:46] Markus: Yeah. Yeah. Yeah. And that's, that's actually a super important thing. Something I, I really recommend to, to everybody. So I started, personally, I started posting every day last summer. And it's, it's very clear that it is working well. So we are like we get to the radar of these ICP accounts.

Of course, we need to connect first. And it's, of course not just me. It's, it's like, you know, we, we want to, it's not all of our management team members, but like, that's the direction we are going to, so that everybody's posting quite frequently. And it's all about content. Like, it's all about like when I guess everybody who, who uses LinkedIn actively knows that, that when you start seeing the same people,

Having smart comments or smart, you know, posts, then you start to kind of feel like that you know them. Like, you know, okay, this, this guy again, and then he has good, good ideas and, and, and this, this like leads to a kind of a relationship. Of course, it's not, you know, real like, you know, one-to-one relationship, but it is, it is in a way that they recognize you and know you and that that's, that's really like a strong like and, and, you know, absolutely free.

You just, you just build, build your audience. You, you just keep posting and, and like you know, I. It's surprisingly easy. I have to say that, you know, as a CEO, I would have expected like when I started posting that we had a board meeting where like the board board members were like, you know, just pointing out that, you know, you are posting so frequently.

And I, I was expecting that they then, you know, they'll be telling me that, you know, you should stop it and, and, and, you know, focus on some something more important. And you know, it was, it was the other way around. They said that, that's great. Like that you're building authority and, and, and so on. So yeah, that's that's, that's really important I think.

[00:33:24] Omer: So you started the business in 2015. It took about a year to get the first 10 customers. I, think getting to the first million in ARR was somewhere around 2017, 2018. And then 2020 was the big milestone, I guess for you, for you, because you, you were running a multiple seven figure business at that time.

You raised your, your series A around which we, we talked about, so things are starting to look good, right? It's taken a little bit of time to, to get to this point. You've, you've got some traction, now you're generating decent revenue. You raise the series A and then kind of things started to fall apart a bit.

What happened?

[00:34:07] Markus: Yeah, so first of all, it's, it's good to like tell everybody that, that we were self-funded. So we, we didn't have any funding. So we were like, basically you know, funding this from our own pockets. And then also we got some funding from, there's like a Finnish government and like this institution where you can get grants and, and like funding.

So, so we didn't have this like luxury of having like pre-seed or seed financing. And, and we were always with my co-founder, like very strict on money. Like not, not to overspend or, or, or something. Then we got our like round first 2 million and then like a few months later, two, two more.

And then we just, you know, like there was this. Idea that, okay, now you need to burn money. Like you just need to spend it, you need to be really fast and like just, just you know, start investing it. And that we did just in a very, let's say, not an ideal way. So, so with my co-founder, we always were kind of the brain of the operation in all of our all of our companies.

And like instead of hiring like a team and like kind of building this management structure gradually, like we instead, like we just hired a huge number of like SDRs, sales development people in Philippines, like I think at first we had maybe 150 people like we were first like, you know, 20 or so, like when we got the funding.

And then like, we probably in six months like we grew to 150 people. Like so having this huge team, which was not managed properly, we di didn't get any managers like or management level people there. So, you know, you can imagine how it went.

[00:35:39] Omer: It was like the two of you trying to manage this remote team of like 150 sales folks and

[00:35:47] Markus: Yeah.So, so I'm, I'm not super proud of that, but it's always good to learn from your mistakes. So I'm, I'm happy to share this, this, so nobody else does it. So. Like and our idea was that that like it was just kind of excel money in a sense. Like you know, this is how much one SDR brings, and then, you know, you just multiply it.

And, and we actually did it, like we actually like, you know, implemented this, this like so we had every month we had a batch of new candidates coming in and how to train them. Obviously the, you know, it. There were people who, who then managed, managed that, but not everybody was kind of grown from ground up.

So first there were SDRs and then they, then, then they moved to training and, or, or managing a, you know, a small team or, or something. Anyway, that was like, a lot of, took a lot of money and a lot of effort. You know, even if it's Philippines, it's, it costed, you know, it's cost a lot. So it's not really like something that, you know, I could recommend to anybody.

And then eventually, like not maybe, yeah, 10 months after, after we got the financing, my co-founder got diagnosed with cancer. And that was completely surprised. Like, so he is really, he was, you know, there was nothing, nothing to indicate, indicate that which was of course like a huge, huge shock.

And it. Then like there was an operation, and then he was able to continue, continue still for like maybe seven eight months. And then, then like, just had to, had to like leave the you know day-to-day operations. And then I was left running this organization my by myself. And then after a second operation, like after a year from the diagnosis, he eventually died.

And then like you know, that was the situation. Obviously we weren't anymore, like having 150 people in, in Philippines. It was like much less already. But we had burned almost all the money, so there was not, not a lot like left. So it was pretty. Let's say challenging situation, like to kind of had to, had to rethink a lot of a lot of things at that, that point.

[00:37:43] Omer: Sorry to hear that. That's, that's a really tough situation. And your, your, your co-founder, you, you two had known each other for a long time and worked together on, on a bunch of different businesses, right?

[00:37:57] Markus: Yeah, correct. So we, we started in maybe 2002 like with, with our first, or maybe 2004 with our first venture, like, and, and just, you know, worked together really like kind of we called it almost like symbiotic, like we had a very different, different roles in every, every company like that we were running.

So, so it was like a huge change then. Like when he was when he was gone.

[00:38:20] Omer: So I'm just trying to paint a picture here. So you, you, you took the series A money. You, you kind of, you guys threw it at, you know, this kind of army of salespeople in the Philippines. That wasn't working. Your co-founder gets a diagnosis and you know, he's kind of focused on, on, on that.

And obviously I think that that means that the momentum that you guys were building probably slows down anyway, right? It just has to, and, and then you, you end up losing your co-founder. So you're dealing with that loss. And then you said you spent all, you know, pretty much most of the money that you had raised, what was going through your mind?

Like, did, did you, did you, like, how did you get the energy back to then go, you know, go back and start saying, okay, I, I'm going to do this alone. I'm gonna go and rebuild this business and get it to where it needs to be.

[00:39:19] Markus: I had the intention. So I think like, this is one of the things like, I have, like, when I want to do something, I, I will really like you know, put effort to it.

It was, it was hard, but like also I had like a very clear vision and, and, you know, intention, like to, to start doing it. I'd say like within four months or so, five months, like it was already clear like what the direction, direction is, what, what the direction is going to be. So, you know, there was still enough like of, of this funds like left.

So, you know, we could, I could start hiring people. So like, started hiring like you know, proper sales team team first, like AEs like supported then by the, by the SDS who were remaining at that point. And then like expanding, to getting an SDR leader, getting customer success like manager who, you know, quite soon became the leader Revenue operations.

Like we kind of expanding like gradually like to all the core functions that you need for functional go-to market. So that was, that was kind of I think it, it, it happened quite fast and like I think like surprisingly easily like even, even with this, this like you know very difficult situation at that time.

[00:40:33] Omer: Okay. So you started building this in-house team around you and it was a much smaller team than what you were trying to do in the Philippines, that that time.

What you, you said, you also mentioned this idea, but like being very clear about the direction. Was there something about the, the business or the product or just, you know, your kind of go-to market motion? What, what, what were the, the two or three things that you said, okay, I'm gonna build the team around me and then I'm gonna do these other things strategically to, to move the business in the right play direction?

[00:41:09] Markus: Yeah, so I think like it kind of gradually became clear like what the, what the direction is. I think like the first point was about, you know, like realizing that, that it's a good idea to build this team. Like we had actually like our, like sales director, eventual sales director who was like the only ae like back when we had this big Philippines team, like like

Was ramping up really nicely, like to to the sales director role. And I think that was, that was like one of the you know, where, where I saw that, okay, this actually actually can work and, and this, is this the way like I should do it. So, so I think like we, we had this early.

Indicators that, you know, this is working like we are getting some results. I'm like I could have selected as the, also as the quote this like you know, short term predicts long term, which usually works like when, when you start to see results with any decision, like in the short term, like then you know, it, it's probably going to continue to the long term.

But when you, especially when you don't see results in the short term, then like, you probably need to do something about it quite quickly. So this is also something I, I think this is one of the, one of the things that like you know, I realized that, that this needs to be this needs to be happening.

Mm. In terms of the other, let's say strategic things, I think this came a bit later. So there was still one important milestone here in the, in the process before I could really kind of focused on like, you know. Long term and strategy. And that was a, a situation like, you know, after I started hiring, like these people, of course, you know, it's, it's much more expensive like, than than like the, the, the Philippines team.

So I, I like started looking at the balance sheet and and like and, and like p and l and, and just realized that, okay, you know, every month we have 200,000 less, we had 800,000 in the account, and every month it's 200,000 less. Everything looked good from like the let's say accounting perspective, but like cashflow was like the problem.

So, so it, it, it looked like that, okay, now if, if, if I don't do something like we are going to run out of money in, in just a few months. So that was a big. Shock. And I, I realized that okay, now, now something needs to be done here. Like I, I, I did a lot of, you know, calculation myself, and I think I built some kind of a system like to just you know, mitigate it.

But then I had to hire the, like a finance, actual finance person who can, who can work on this like, and, and just, you know, ensure that, you know, we have the money. And, and that's when we built this system, which is based on cash flow. So like you know, we just invest what we have money for.

And like now we are in a stage that we, we can already predict a bit. Like we can al already invest like you know. Next quarters, like you know, revenue. But yeah, at that point it was like you know, really close. It felt like that, okay, now, now we can go, go bust even like if, if, if we don't do do something about it.

So at that point, like once we got that, that sort of, then, then it, it became possible to actually start looking into, into the future and into more strategic things. Cool.

[00:44:13] Omer: You, you, you, you just going back to like hiring the sales team earlier we talked about getting a sales team on board with, with ABM and having marketing and sales alignment, you know, and, and making sure that customers are set up to do that, to be successful.

That turned out to be an issue. In your own company as well, right?

[00:44:35] Markus: Yeah, yeah. It's like yeah. It's, it's maybe surprising, but, but we were like very sales led. Obviously you can understand it also from this like from our background. And then on the other hand, like from the fact that we had such a big, big team around sales.

So we had one person in marketing and 150 people in, so that was kind of the, that was kind of the situation, you know, back at that time, I, I don't think any kind of alignment would've been even possible, but like, eventually, eventually, like when we started having some kind of a reasonable team, we started working on this more like alignment initiatives and just realized that that sales is not really realizing like what the value what value marketing can bring. And then on the other hand, marketing didn't really know like what sales is doing. So it, it took a lot of time before we actually got to a point where we found a solution of, like how marketing and sales should collaborate.

And the solution was actually quite simple. So like so we had those. Inbound opportunities. So those who come like only, you know, through marketing, somebody is filling a form and then like just, you know, sales is qualifying and then opportunity is created. Then you have the code outreach.

So sales is reaching out to the account. There's no signals, there's no, I mean, there's no data about them interacting with us. We spin the website or interacting with the ads. And then, you know, we just came up with this third category, which is warm outbound or mixed influence we call it. So marketing and sales work together with this category.

So marketing tries to warm up as many you know, accounts as possible. And sales prioritizes those high those accounts. So they first go like and, and target those accounts. The main I think one of the main innovations there was that, that instead of splitting the commission in a way that, you know, marketing gets half and sales gets half, we actually pay a hundred percent to marketing and a hundred percent, 120% to sales.

So, so we actually pay two times two, 2.2 times the commission that that like normally we would pay, and this was the way to really communicate to the sales that you should focus on these accounts. And then of course it was it was motivating for marketing as well, and it was a profitable decision in the end because the conversion rates of these accounts is much higher than, than po those quote code outreach.

[00:46:52] Omer: Right. So, so just to be clear, you mentioned like three different types, but the, the incentives were all around them going after the warm leads, right?

[00:47:02] Markus: Yeah, yeah. And it's warm accounts, so it's, we don't have the contact and that's, that's, that's what makes this like a bit challenging from sales perspective always, because you just have.

A name of company you have, you know, like what they did, like, which, you know, pages, which ads they engaged with, where, where this engagement comes from, like on a city level, but then still you don't know who it is, so you still need to do prospecting, find the contact, get in touch with them, like you know, do the, you know, all, all this what, what sales needs to do with outreach.

So.

[00:47:30] Omer: Yeah. I mean I think it's, that's, that's a pretty clever solution. And it turned out, as you said that the ROI was there. It's kind of interesting that on, you know, on the one hand you're already like every month, okay, 200,000, gone, 200,000 gone. And then it was like, oh, let's pay twice as much to sales and marketing for, for the leads.

It's kind of, it's, it's a, it is a creative solution. I'm, I'm glad it, it kind of worked out, but I mean, we could talk more about that, but there's a few other things I wanna cover. So let's, let's kind of keep moving. You started initially, I think focusing on customers in Finland. You, you, you, you had customers in Europe that you were kind of growing and then now you're spending a, a lot of time in the us.

I just wanna understand like, where, where is your focus, which, you know, what's your biggest market today?

[00:48:13] Markus: Ah, yeah. So actually like very early we did like focus to Finland maybe first, second year. But then after that it, it was already like quite international. Like you said, in recent like recent years, US has been growing fastest.

And what we see in the US market especially is that, that companies. Are more aware of ABM and they realize that they need it, they understand what it is, but then like the solutions that are out there are too expensive, too complicated it or so. So we like yeah, so we, we put a lot of focus into, into the US market at the moment but also the European market.

So this, this is a very, let's say, . Interesting market because like there are so many companies who don't do ABM yet who know that they should be doing it. And like if you look at Gartner Magic Quadrant, there are only like you know, there are two of these so-called, or three of these big box players and then like, there aren't so many so we are there, which is like you know, really good place to be.

So, so we want to be this you know, challenger, challenger in the market. And yeah, that's, that's why we get like you know, that's why we get nice, nice growth at the moment.

[00:49:23] Omer: Yeah. Awesome. Love it. Alright. We should wrap up. Let's get onto the lightning round. I've got seven quick fire questions for you.

Are you ready? Yep. What's one of the best pieces of business advice you've received?

[00:49:36] Markus: So this is something that came from my co-founder. So he pointed out that, that we should always think about return on investment. So, so if you invest 1000 it's unrealistic to expect that you get a hundred thousand in return.

So like the ROI should be, you should have that in mind when you invest. So, or when you like count your calculate your expected returns. So if you expect a hundred thousand in return, maybe like investing, you know, 20,000 always al already would be a huge ROI. So I think that was a really, really important and clever advice.

[00:50:08] Omer: What book would you recommend to our audience and why?

[00:50:10] Markus: So there's a book I read a while back. It's called Presenting to Win. Think it's written by Jerry Weissman. So I learned to present thanks to this book. And I see a lot of people who are not very good at presenting, creating slides, creating narratives, and that's why, you know, I recommend this book to anybody like because e especially in this like today's world being like almost all online, you need, you need something to, you know, like tell a story.

You need something that people, people really kind of can relate to and attach to, and like yeah, that's, yeah, that's an important very valuable book, at least for me.

[00:50:47] Omer: What's one attribute or characteristic in your mind of a successful founder?

[00:50:51] Markus: Tenacity is the word I would I would select here.

So, so this entrepreneurship is always like a rollercoaster. So, so like you always, you know, [00:51:00] can expect that after you get high then you'll get low as well. So I like this metaphor or like approach that many cold color, colors have that every no takes you closer to a yes. And it is kind of this way that, that you just need to like take those, you know, series of no’s because eventually there will be a yes.

And I think those people, those entrepreneurs who are willing, you know, to, to burp on a very long term, like they're the ones who are gonna win.

[00:51:27] Omer: No, is the way, right. what's your favorite personal productivity tool or habit?

[00:51:32] Markus: I was thinking like about this and I think I. I, I have this focus time in my calendar.

So I like I, I, I book half a day every day Tuesday, Wednesday, Thursday from my calendar to focus time. And generally I don't take meetings during that time, and that has been huge. Being fully remote, you know, you have a lot of meetings, you know, I have up to, you know, 40 meetings to 50 meetings a week.

So then it's, it's really important o otherwise you have no time to think not not time to really work like so that has been super important, at least for me.

[00:52:06] Omer: What's a new or crazy business idea you'd love to pursue if you had the time?

[00:52:09] Markus: There are so many. There are so many. Like I just had a today, like a great chat with our discussion with chat, GPT.

But at the moment, I would say like what I'm like I would be, let's say top of mind for me would be this AI based marketplace for AI solutions. So basically for B2B buyers like who want to leverage AI to make their organization more efficient. Like to, to be able to find those because it's super hard.

Like there are a lot of solutions out there, but you know, you just don't know like what is the right fit and what does know the right thing for you.

[00:52:41] Omer: Yeah. Yeah. It's kind of a, it is like a gold rush right now with all these crazy tools and it's really hard, I think, for people to make sense of all of that.

What's an interesting or fun fact about you that most people don't know?

[00:52:53] Markus: So my both parents are professional or were professional at least track and field. So father is shot putter and mother is runner and like they were both like in the international level. My dad was even in the Olympics.

But I, I didn't there was enough like sport in, in the family back then, so I, I didn't do anything like that. So I, I kind of found sports later, later. And nowadays I couldn't really live, live without it.

[00:53:22] Omer: Love it. And finally, what's one of your most important passions outside of your work?

[00:53:26] Markus: Yeah, so it's it's, it's it would be running. So I and, and sport in general, like doing this like exercise. I think it's what I realize when I'm ill or like when there's a lot of stress like that, that it just accumulates without, without having, having this like you know, way, way to get it out.

And like especially running this long, like I do half marathons quite often, so that's that's like a good way for me to, to kind of reset and also get my thinking going. Awesome.

[00:53:55] Omer: Markus, it's been a pleasure chatting. Thank you. Thank you for making the time. I think we covered a lot here.

Hopefully we give people listening, some, some ideas, some insights that they can take away and, and apply to their own business. Hopefully we got people also, if they're not already doing ABM, a little bit more interested in, in that with a realistic set of expectations on how to succeed with ABM.

So if that's awesome. If people want to check up more learn more about N.Rich, they can go to nrich.Io. That's n letter rich.io. And if folks wanna get in touch with you, what's the best way for them to do that?

[00:54:34] Markus: LinkedIn. Definitely. So you'll, you'll find me there. Awesome.

[00:54:37] Omer: Thanks man, it's been a pleasure. Wish you and the team the best of success.

[00:54:41] Markus: Thank you very much. Thanks for having me. It was great.

[00:54:43] Omer: Awesome. Cheers.