John Rougeux:
Hi everyone and welcome to the flip my funnel podcast. My name is John [inaudible] and I’m taking over for Sangram as a cohost on the show for the takeover Tuesday series where we’re doing a four part series on category creation. Now, if you’re not familiar with what category creation is, don’t worry because you’re in good hands. Our first guests on the series is none other than Mike Volpe who joined HubSpot as part of the founding team and of course went on to build the inbound marketing category and establish HubSpot as its leader. So Mike has since gone on to invest in and advise a number of technology companies and he’s currently the CEO of lola.com and today Mike’s gonna share his thoughts on what it takes to build a category defining company. Mike, welcome to the show. Thanks for being with us. Thanks for having me on. I’m excited to be here. Sure. So I know a lot of our listeners will likely have heard of you. They’ll almost definitely have heard of HubSpot, but for those who haven’t, can you just tell us a little bit about yourself and your background?

Mike Volpe:
Sure. I I’ve been doing marketing almost all B2B for about 20 years now at a few different startups out in San Francisco and then moved back to Boston and worked at a company called solid works, which is like an engineering software company. And then was part of the, the sort of founding team, early team, first four people at HubSpot and grew that through IPO in like a thousand employees and all sorts of craziness. Since then I was COO at a cyber security company called cyber reason where we also grew a ton. We increased revenue about five X. And it’s a great size company now. I’ve raised a couple hundred million. I’m still doing phenomenally well. And then I just joined Lola about eight months ago as CEO. So I’ve done a lot of marketing, some sales. I managed a small part of the sales team at cyber reason and just, you know, love growth and all those types of things. Love startups. I’ve invested in about 35 or so companies as an angel investor. I’ve been on five different boards of directors. So I just love talking about startups and growing and all that. Everything’s that go along with that

John Rougeux:
Good deal. He got plenty of good reasons you cited for having you on the show today. Certainly kicking things off on the right note with your expertise and your background. You know, as, as, as I mentioned, you know, this series is about category creation and I’m going to ask all our guests the same question to kick things off so we have a little bit of a baseline. So to start things off, I’m curious to hear your own definition of what category creation is.

Mike Volpe:
I don’t want to be too circular about it, but maybe, I think one of the examples I often draw is that there’s in some ways sort of two fundamental ways to go to market and it’s sort of the category creation way or it’s the better mouse trap sort of business model. And the examples I was used are HubSpot and Zendesk. Both companies were founded within the same 12 month period, went public within the same 12 month period, are both worth kind of 7 billion or so market seven, 8 billion market cap today. So we’ll, you know, successful companies that created a lot of value, but they did it in very different ways. Hubspot created this category, rounded about marketing. And our sales pitch in the early days is very evangelical and convincing people that they were doing marketing in the wrong way and they needed to change how they thought about marketing.

Mike Volpe:
Zendesk on the other hand was just, we’re customer service desk ticketing software, but we’re just way better than all the other solutions out there. And there was no, so their sales pitch was much more about, they had a freemium model and the ability to just use the software very easily, easier, better, simpler way to do it. And so it was much more about the brand word of mouth and just, you know, showing people the product, letting them experience it for themselves, where again, as HubSpot it was sort of like teaching people a new way to do things. So I think not all, but part of category create creation is convincing people that the way they’ve been doing things previously is wrong and that they need to think about a new approach. So usually it’s more than just a product that you would purchase. Often it’s a business process and Zendesk, which was kind of a, just a better mouse trap, a sort of business strategy.

Mike Volpe:
Both companies were actually founded within the same 12 month period, went public in the same 12 month period. Both have worth something like seven, 8 billion in market cap today. But HubSpot sales pitch was that the way that you’re doing marketing is wrong and you need a new approach, you need to do inbound marketing. Zendesk sales pitch was your, your business process is correct. You’re just using the wrong tools. You know, today both companies are doing lots of different things. So it’s sort of evolved since then, but at least in the early days, that’s was sort of the core value prop of each company. And so I think category creation is often about telling people that the thing they are doing today is not the right way to do it. And they need not only to buy your product, but they also need to invest in some business process change as well. And so that’s what I think a lot of the core kind of cornerstones of, of category creation are.

John Rougeux:
So if I were to sum that up, it’s almost like if you’re building something better, the pitches, you have the right process, but you’re doing it the wrong way or you have the the wrong tool there’s a way to go about

Mike Volpe:
That process. But within your category, just the process itself is wrong and you need a new tool that doesn’t exist in your toolkit. And oftentimes that requires an entirely new process and something bigger than just buying a point tool, but a broader solution. Yeah, that’s right. And I’d also say that the category creation, there should be a way for people to embrace the movement without even buying your product. Hopefully your product makes it easier. And most of them that embrace the movement do buy your products. But for instance, you could do inbound marketing without HubSpot. We thought it was easier and faster and better if you did it with our product. But we were also happy if people embrace the idea of it. But still we’re trying to use WordPress. And SEO Moz and constant contact and sort of, you know, linking all these other tools together to do it.

Mike Volpe:
So you’re sort of selling people both on a philosophy and your products, but it’s, it’s not a requirement that both are part of it because ultimately the category has to be something bigger than just you and your own company. There’s a, like you said, there’s kind of a movement. Yeah, that’s right. And I think your goal is to make the category really big. In the case of Zendesk’s the other side, the category was also already huge and they’re just trying to get both new people coming into the category to buy them but also get people that are in the category of switch. You know, HubSpot day one, the size of the inbound marketing market was just barely greater than zero and the number of players in it was one and we were the number one player. So our goal was to make the market a lot bigger and remain the number one player versus again, the strategy for somebody like Dunn.

Mike Volpe:
Dusk is again great company, but just different strategy. And so your strategy there becomes very different. So HubSpot wasn’t your first marketing gig. I’m curious how you went about and marketing, how your strategy changed when you went from a more traditional better than approaching your past roles to when you switched to a different than a new approach and building a new category. How did, how do you go about your marketing strategy and your tactics with that new paradigm? It was really fun to do the category creation because you could do a lot of things that were different and unique and you’ve got to have basically an enemy like you’ve got to sort of pay and the enemy wasn’t a company, it was a, it was a process. It was an idea that the idea of cold calling and spam and sort of all those things and it was something people could get much more emotional about.

Mike Volpe:
I mean occasionally people get emotional about B2B software products, but not usually. But there are people that are very emotional about emo marketing and will say things like you guys starting the company and teaching me about inbound marketing changed my life, got me to take a new career direction, helped me accelerate my career. All sorts of things like that. I think that’s much more rare around a product. So I, it was, it was really exciting. I also think that it changes like the, the, I think you’re more likely to invest in a lot of more like top of funnel, like very, very top of funnel techniques. Like your, your goal in the early days of doing category creation is just to have a blog that gets, you know, 1,010 thousand, a hundred thousand a million viewers per month and to get more and more people to read your content, you want to, you know, a book that people read, you want webinars that people attend.

Mike Volpe:
Do you want your almost, you know, it’s like you’re preaching at the front of the chapel and you want more and more people to come into the chapel just to hear you preach whether or not they’re paying you any money. Whereas the market and the other side, if you’re doing kind of the better mousetrap, the market’s already been built, the chapel’s full of people and you want them to pay you money versus the, the other people that are also selling to that same audience. So it kind of, it shifts your focus to much more top of funnel. You have to have a lot more longterm thinking, I think. And you probably end up investing a little bit less than sort of bottom of funnel things because if somebody makes it halfway through your sales process, they’re probably bought into your philosophy. And if they’re bought in your philosophy, there’s not going to be a lot of other competitive products typically that will fulfill what they need.

Mike Volpe:
And so a lot of your work is kind of in the front half of the sales process. So does that mean you invested more of your messaging around the larger problem and kind of this idea of outbound is the enemy and shifted less away from HubSpot and all the reasons why it was so great itself? Yeah, in fact, in the early days, and again it shifts over time, like as you’re successful and you build the market and the market gains momentum on itself. But in the early days we did some research and we used to sort of joke and talk about this internally, that the number, like there was a huge number of people that had heard of HubSpot, a huge number of people that had heard of inbound marketing, but the number of people that are heard of HubSpot and could describe accurately what we were like software for inbound marketing or software for inbound marketing and marketing automation was very small.

Mike Volpe:
It was like 10% of the people that had heard of us. However, the audience of people that we had reached and had talked to inbound Martin talked about him about marketing was very large. And so what ended up like three or four years. Then we sort of started shifting and started talking a little bit more about how we helped people do inbound marketing and more customer case studies and all the typical sort of like lower in the funnel types of things. But we never would have been able to do that if we hadn’t already built a gigantic audience early on. Job number one is absolutely building out that category and the overall market. And then once it kind of takes a life of its own, then you can kind of shift your focus. But it was interesting if you compared us to like I would say like Eloqua and Marketo, probably in year three or four of those businesses, 10 times more people had heard of HubSpot or inbound marketing than had heard of the others, but probably only, you know, 10% of the people could describe accurately what we did.

Mike Volpe:
But for an eloquent Marchetto far fewer people had heard of them, but 90% of the people that had heard of them knew exactly what they did. You know it, you know what I mean? So that kind of makes sense. So like you definitely like you need to shift the attack. It’s kinda tactics probably three to four years in, once the, once the category gets treated and it’s pretty big and it’s growing. But in the early days it’s much more about creating the category than it is about properly defining exactly what you do. Like people will buy from you because they get excited about the movements. And then once they take a demo, then they’ll understand who you are. But you need to get a lot of people excited about the movement movement first.

John Rougeux:
Yeah. So in those early days, I’m sure you had aspirations of building a, a multibillion dollar company, but of course there were no guarantees. And I’m curious how it felt when you were first starting to evangelize this idea, this new idea of inbound marketing. I’m sure there were people who didn’t get it. Maybe there are people who had negative or apathetic reactions like it just, what was that like? Like what was going through your head? What, what kind of challenges were you facing

Mike Volpe:
In the first few months or even six plus months? It felt like we were standing on a soapbox in Harvard square and yelling at the top of our lungs and we were 50 feet away from the person yelling about the world is gonna end and in a way knew from the person, you know, yelling about climate change or whatever, you know, and, and no one was listening to us. So we were just a crazy person. People walk by and be like, Oh, what are they talking about? But then like, so it kinda starts slowly, but then like a few people stop and start to listen to you and you start to get some comments on your blog post and people start to retweet some things and a little bit like you kind of, there’s, there’s a little bit of like activity there and you start to get that like positive reinforcement.

Mike Volpe:
And then more people start to listen cause they see that other people are listening and then other people start to preach the message and then you sort of lose control of the message, which is good. And then it kinda like grows and sort of spirals from there, which is great. But I will say it is very, very slow going. Like you feel like you’re screaming into the abyss in the beginning and you just need to keep screaming. But, but it’s really hard because you get no, like very, very little feedback. I mean, I remember the first couple of blog posts I published and it was like crickets, right? But you need to keep going and you need that sort of blind faith. And so it’s, it’s, it’s sort of hard to do, like almost impossible to do like AB testing at that stage because if you’re testing like ABC D you’re going to get no response to all of them.

Mike Volpe:
But if you sort of say a that eventually someone’s like, yeah, Hey, and then, and then you’re like, Hey, and then two more people like, yeah, Hey, right. And so it’s more that you need to kind of, you know, you need, need to understand the buyer and the customer in the market well enough to know that you’ve picked something that’s the right category in the right topic. But then you just need to talk about it over and over and over and over. And eventually people will sort of like glom onto an and pickup on it. But it’s hard. It’s very evangelical. It’s, and it’s difficult to be an evangelist.

John Rougeux:
That’s interesting cause we, you know, so much of marketing now is around split testing or you know, data-driven and running experiments and seeing what works best. But sounds like when you’re trying to build a movement you can’t, you can’t split test your way into building a movement, have to kind of do your homework, think about the vision you want to achieve and then kind of go for it. Right. Yeah.

Mike Volpe:
And it’s interesting because you don’t know how big it’s going to be. Like I think there’s, there’s a thing of you’re trying to create category, creating a market, but it’s like, and we had no idea how big this one would be, but it ended up being like very big and, and allowing the company to sort of branch off into some other markets. Like, and it’s interesting because you might not want to, I don’t know that I have a firm answer this, but like once you’re really big, you might not want to create new categories. You might just be able to use your brand and get into other categories. Like if you look at what HubSpot has done, they now have CRM and then I’ll actually have service desk software that competes with likes add desk. Right. And you know, CRM obviously competes with Salesforce since the initial entry point.

Mike Volpe:
They’ve gone into other markets that are already preexisting markets and their strategy has been number one, it’s integrated with HubSpot. So if you’re using HubSpot for marketing, you should use it for CRM and service desk and all these other things. And then number two would be it’s integrated and then it’s like simpler, easier to use because it’s aimed at sort of like the, the target core kind of like, you know, mid-market, large, you know, medium sized business, HubSpot customer. It’s interesting, like I think when you’re really, really big you, you might not want to expend the energy to create an entirely new market because you can just, you’re much more likely to be able to go into an existing market successfully. Maybe.

John Rougeux:
Sure. It kind of goes back to that adage about it being to to sell more things to your existing customers and to go out and try to find new customers. Yeah, I think that’s right. And I think, you know, I’m curious to hear your take on this, but you know, Apple is obviously a classic category creator. Having created multiple categories but just, you know, recently they announced a slew of new product announcements and they were all in existing categories. There’s like a streaming music service, a credit card, a bunch of other items. And it sounds like that’s exactly the, the approach that you just described. As you know for them they have such a strong brand and such a wide customer base that if they don’t have opportunities to create new categories, they can, I guess in the meantime, pursue some avenues where there’s spaces that are established and they can just take their own play on things and convert a big number of customers and hopefully be successful in in that capacity. Yeah.

Mike Volpe:
Interesting. It’s like in some ways they’re category creators, but in some ways they’re not like MP3 players existed before the iPod, but they just, they kind of made the category a hundred X bigger because they made it simple and consumable wide normal humans and even on the cell phone side, like Blackberry’s existed and I would argue that the first version, the iPhone was much better than the Blackberry, but there wasn’t like a, Oh that’s a Blackberry, but 10 times better. You know what I mean? It wasn’t like, Oh, I’ve never seen this thing before. It was like all the things I wanted with my Blackberry, but are kind of hard to do. I can now do very easily because of the touchscreen interface and the mobile web and like all those things. So yes, they’ve created new categories kind of, but it’s in some ways they’re sort of doing the big company thing.

Mike Volpe:
I think they’re earlier, like they’re sort of seeing a category start to emerge and then they’re jumping in. It’s an interesting, it’s a, it’s also, I’m not sure that the parallels between consumer and kind of B2B software always 100% aligned to, but yeah, it’s interesting. So that balance between the, the big market and going into it versus timing it, right. Was sort of category creation. Every marketer has got their own set of skills and super powers. But I’m curious if, if a marketer wants to guide and create a new category for his or her new company, what do you think are the most important characteristics to have are? I don’t know. Yeah. I don’t know if it’s the market, the marketer, but someone in the company needs to really be super passionate about and an expert in that topic. So I think we got lucky that a number of us in the early team at HubSpot, we’re very passionate about and knew something about marketing and I think it would have been hard for us if it was like four engineers, even if we were 100% right, it would have been harder for us if we were, you know, four or five engineers to be able to talk to marketers in the way that they wanted to be talked to, to be able to understand their pain and sort of show them that we knew what they were going through today, but there was a better way.

Mike Volpe:
It comes off as sort of inauthentic and just sort of ungenuine if you’re kind of an outsider trying to tell this community that there’s a new way to do the thing that they’ve been doing, so that that’s probably the biggest thing. I think that you might assume that the right person to do marketing in that kind of a world would be like the sort of storyteller brand centric marketer. But to be honest, like that’s not, I don’t know that that’s my best skillset. I come from a very data-driven, analytical side of marketing and sort of my, my major is definitely demand generation and analytics. My minor would be kind of, you know, branded storytelling, but it’s not, it’s not the number one thing for me. I mean, I was an economics major. My first job was spent a couple of years in investment banking and those are not things you typically associate with, like you know, a brand storyteller market or you’d more expect an art major or an English major who then maybe spent a couple of years at a big agency or something.

Mike Volpe:
Yeah, that’s right. That, that’s interesting. How, if you’re going to get super passionate about this movement, it’s not something that an outsider, someone could just decide that they’re going to be passionate about. It sounds like there’s a real innate passion that has to exist. Otherwise, the efforts to evangelize and really develop that movement are just going to come across as inauthentic. You need, it’s important not to try to be something that you’re not. So you know, Lola, we do corporate travel software and we have a bunch of people here that are incredibly passionate about travel. And so right now our business strategy is definitely the better mouse trap. And we’re doing a lot of stuff like we have the best, you know we have tons of reviews that 50 reviews on G two crowd and same number I think around on a Trustpilot and all these other places.

Mike Volpe:
And we have like the highest ratings compared to anyone else in the market. Our strategy has been like we’re a better mouse trap. Here’s third party validation that shows you’re a better mouse trap. Here’s how passionate we are about travel and corporate travel and expense management and all these things. And we use sort of that engine we I’ve thought and we’ve a little bit about, is there a broader movement where maybe there’s a little bit of category creation on top of what we’re doing that would kind of take a different slant. And I and I, we have a few ideas. We’re not there yet, but we have a few ideas and that’s exciting. But the thing that I think we want to make sure before we do that is that we’ve got one or frankly multiple people that are super passionate about that new potential category. We can create a, before we really dive into it. Cause right now it’s like the sort of, you know, we do corporate travel travel better than anyone else. You know, we’ve got travel industry expertise here in the building. That’s working well. And while we, I think we could tie to a broader movement at some point, you probably will. I believe that in the company we have the passion around that new movement. I’m not going to dive straight into it.

John Rougeux:
Do you find that there’s kind of a different payback period in terms of marketing investments between a better than or a better mouse trap approach versus a category approach? You know, you mentioned it at HubSpot having to spend months talking on an empty soapbox and ultimately the payoff was huge. So I guess I’m, I want to know your take on how long does it take to see and validate whether you’re doing the right things with one approach versus the other. And along with that, what’s, is there like is one type of model more likely to be successful or is there like a greater or different risk reward profile there or is it just depend on a bunch of other factors? I think people should, people often conflate creating category with, Oh I need to do lots of billboards and all this other sort of non direct response kind of advertising. At least what we’re able to do with HubSpot was a lot of contents, a lot of owned

Mike Volpe:
Media, social media, PR, like all those things like low cost things that also had a demand generation component to it. So most of our blog articles ended with a call to action to download an ebook, do a white paper sign up for webinar or whatever it might be. We also created a free tool called website grater that generated a ton of activity for us and kind of diagnose the problems that people were having. On their website and at their company and in their marketing that inbound marketing was then a solution for. So we were able to kind of tie the creation of the category to demand generation so that we got a relatively short payback on our investments. I think there probably are categories that get created from you know, tradeshow, sponsorships and other, you know, more traditional types of advertising and things like that that get created over time that are going to have a much longer, a longer sort of time to pay back.

Mike Volpe:
But I think I would encourage people to think of you’re trying to create a category, what are the ways that you could sort of do it through demand generation. Like every time you’re sort of sending out a direct response piece of marketing, it’s also a piece of brand. Like it’s not just a bunch of rector spots cause you’re communicating something there and you know, 95% of the people that get it are going to see it and not respond. So there’s an opportunity there. If you’re saying the right things in the piece that every piece of sort of direct response is also a branding piece. Branding pieces are off often usually not also direct response. So there’s kind of like a, you know, an unequal balance there. And so I think especially when you’re small, there’s an opportunity to do a lot of more direct response kind of marketing that also helps you build the category.

Mike Volpe:
Hmm. So it’s not about just doing a bunch of super high top of the funnel brand new awareness campaigns, but focusing on demand generation tactics when possible and the weaving that that message about the category and it’s moving back down into all of those kind of tactical activities. I think it’s when you do the very top of the funnel stuff, make sure there’s paths that lead down the funnel. Again, every company’s different. But I think that if you’re a consumer company, it can be different. I think if you’re really, really big company, if your marketing budget is even as a software company, 100 million bucks, I could argue that 10 million bucks in billboards is actually a really good idea in that case. But I think if your marketing budget is 1 million bucks, I would have a hard time arguing that $100,000 in billboards is a good idea.

Mike Volpe:
Yeah, that’s some great advice to to wrap up this interview with. So Mike, before we go, I want to end the episode with one question that we ask all of the guests on flip my funnel. What is one challenge that you can share with our listeners to take away with them today? To me, a lot of it really boils down to the people and I spend a lot of time hiring or recruiting. I know we didn’t really talk about that today. Spend more time on hiring and recruiting for your company. I think most people give lip service to it and say things like hiring is the most important thing they do, but then they don’t allocate their schedule that way. So that’s, that’s one thing I spent a lot of time on that cause I really do believe it’s the most important thing you do as a leader and a manager in your company.

John Rougeux:
Mike, if any of our listeners wants to get in touch with you or find you online, what’s the best way for them to do that?

Mike Volpe:
So if anybody in there, they are, anybody in their company travels for business, they can check us out at lola.com. Personally, I’m on Twitter very actively and M Volpe those are probably the best places for me personally or for the company. I’m also all over LinkedIn and other places too.