!

"# %&'() )#*+#)

VOLUME 3
A PUBLICATION of HUBSPOT
Dan Lyons
Little books on big ideas.

+()+,# !"#
-'.*,*''/
A CMO'S GUIDE
TO IMPRESSING
INVESTORS.
#0#12!+3# )2//.*&
What should a CMO talk about at
the company board meeting? What
are the key metrics that investors
and board members care most
about?
We asked six veteran venture
capitalists to explain what theyre
looking for from CMOs of startups
in their portfolios.
The goal is to help you shine in your
next board meeting.
In oui conveisations with these vCs we heaiu a
few comments ovei anu ovei. Foi one thing, the
CN0 job uesciiption has changeu tiemenuously
in the past uecaue, fiom a iole that useu to be
about cieative enueavois to one that also
involves lots of analytics. The pioblem is that not
many people have that combination of skills.
Seveial vCs tolu us that the CN0 iole is often the
most uifficult position to fill. "The enviionment
anu iequiiements have changeu iauically," Baviu
Skok at Natiix says.
In geneial we founu that vCs weie eagei to talk
to us about maiketing, anu that most of them
feel that, in most oiganizations, the iole of the
CN0 is expanuing.

"We stiongly believe that maiketing is much
moie impoitant than it useu to be mostly uue to
the changing natuie of how piouucts aie
puichaseu," saiu Stacey Bishop of Scale ventuie
Paitneis, who iecently publisheu a blog post,
"The New Naiketing Funnel," which talks about
the iole of the CN0. Bishop says that when she's
in boaiu meetings she's eagei to heai fiom the
CN0, anu that "most of the time, I uon't heai
enough fiom maiketing at a boaiu level."
}effiey Bussgang at Flybiiuge has been on both
siues of the table. Fiom 199S to 2uuu, he was
vice piesiuent of maiketing at a high-flying
inteinet commeice softwaie company calleu
0pen Naiket (IP0 1996). "I iemembei when I
took the job, my CE0 saiu, wiyly,
`Congiatulations -- eveiy boaiu membei thinks
they'ie the vP of maiketing!" Bussgang iecalls.
Consiuei that a caveat of soits, but we think
CN0s anu othei maiketing executives will
benefit fiom knowing what the people on theii
boaiu of uiiectois expect fiom them.
To make it easiei foi you to follow, we've bioken
this uocument up into a seiies of questions with
comments fiom uiffeient vCs in each section.
+(!*',21!+'(
Dan Lyons
"2-)4'!51'/
!
If you'ie the CN0 oi vP of maiketing at a
ventuie-funueu company, you know the uiill.
0nce a quaitei youi company holus a boaiu
meeting, anu you'ie one of the featuieu acts. You
have to get up anu make a piesentation to the
boaiu membeis, whose ianks incluue the
ventuie capitalists who have pumpeu millions of
uollais into youi company anu want to be
ieassuieu that theii money is being wisely spent.
If you want to uo a gieat job, it helps to know
what those folks caie about. We askeu six
ventuie capitalists to tell us what they'ie looking
foi when the CN0 makes a piesentation at a
boaiu meeting. They aie:
!"#$%& ()!*+,, paitnei at Scale ventuie
Paitneis. Scale is an investoi in BubSpot, anu
Bishop is a membei of the BubSpot boaiu of
uiiectois.
(-#.& (+*-/#00, a geneial paitnei at
Avalon ventuies.
1%22-%& (3!!4#04, a geneial paitnei at
Flybiiuge Capital Paitneis anu authoi of the
SeeingBothSiues blog.
,#" 4-#.&, a paitnei at Sequoia Capital.
Sequoia is a BubSpot investoi, anu uiauy is an
obseivei on the BubSpot boaiu of uiiectois.
,#35 !#0")0%55), a geneial paitnei at Noith
Biiuge ventuie Paitneis.
.#6). !7+7, a geneial paitnei at Natiix
Paitneis. Skok wiites a teiiific blog about
staitup life anu uigital maiketing. Be's also a
boaiu membei at BubSpot, anu Natiix is a
BubSpot investoi.
"2-)4'!51'/
"
6789 :;<=>8 ?9 @ A;@>B C88D?9EF G7@D B; :;< G@9D
D; 78@> H>;C D78 1/'I 67@D B; :;< J?KD89 H;> G789
D78 1/' L>8K89DK D; D78 A;@>BI
,.3+, )M'MF /.!*+0
It's ciucial that the CN0 is ieally in tune with how they aie contiibuting to
ievenue, anu unueistanus the whole sales anu maiketing funnel, fiom top to
bottom. They have to have a veiy tight paitneiship with sales. It's veiy common
to see sales anu maiketing out of alignment.
4.! N*.,&F )#O2'+.
I'm looking foi both quantitative infoimation anu qualitative infoimation. 0n
the quantitative siue I'm looking foi a pictuie of the funnel: wheie aie leaus
coming fiom, anu foi each of those souices (i) what uo they cost anu (ii) how
uo they conveit thiough the funnel. Theie shoulu also be a month-ovei-month,
quaitei-ovei-quaitei, oi yeai-ovei-yeai oveilay so we can see how these
metiics aie tienuing.
0n the qualitative siue, I'm looking foi an upuate on anything we've uone to
make it obvious to the iest of the woilu that we aie unique anu bettei than the
competition, balanceu with an upuate on what the competition has uone.
)!.1#& -+)"'4F )1.%#
I want to heai about new maiketing activities - new bianuing, new messaging,
new go-to-maiket stiategy oi futuie maiketing events -- but I also want to see
metiics. I like to see the oveiall maiketing activities, because we all know bianu
maiketing is impoitant but it is haiuei to quantify. So sometimes just knowing
what maiketing is uoing is ieally helpful.
I've seen situations wheie maiketing has not pioviueu piopei justification anu
some of the boaiu membeis may look to cut maiketing expenses oi not allocate
enough to the maiketing buuget if they uon't feel they'ie getting value. A goou
uashboaiu can help maiketing avoiu those situations. Naiketing piogiam spenu
is veiy uiscietionaiy anu can be easily cut. I usually fight to avoiu this situation.
"2-)4'!51'/
#
-*.,& -'"*/.((F .3.%'(
I always look at the hanuoff between maiketing anu sales. Wheie uo you uiaw
the lines. What aie youi expectations aiounu maiketing, youi expectations
aiounu sales, anu uo you have alignment aiounu that.
P#QQ*#& -2))N.(NF Q%&-*+,N#
I'm looking foi a ueep unueistanuing of oui taiget customei, insight into theii
pioblems anu a cleai aiticulation of why oui consumei value pioposition is
compelling to them.
,.3+, )M'MF /.!*+0
The numbei one thing I like to see the CN0 uoing is contiibuting uiiectly to
bookingsievenue. That means optimizing the sales anu maiketing funnel. It
tuins out that the funnel can be measuieu with only thiee vaiiables:
- Bow many leaus aie flowing thiough the funnel. (Quantity, oi Flow)
- What is oui conveision iate foi someone that enteis the funnel into a
closeu ueal. (Conveision Rate)
- What is the Cost of Acquiiing a Customei. (CAC).
Eveiything maiketing anu sales is uoing shoulu be contiibuting to those thiee
things. You can walk into a boaiu meeting anu pietty quickly tell if maiketing is
uoing its job baseu on the uata they'ie showing. If they'ie showing how they
aie impacting the flow anu conveision iate, then you have a goou vP of
maiketing.
"2-)4'!51'/
$
67@D @>8 D78 R8: C8D>?SK :;< @JG@:K @KR @A;<DI
P#QQ*#& -2))N.(NF Q%&-*+,N#
Bow many tests aie we iunning to test oui hypotheses. What piimaiy ieseaich
have we uone to valiuate oui assumptions.
)!.1#& -+)"'4F )1.%#
CAC. LTv. CACLTv. Leau funnel metiics. Revenue
liftinfluence fiom laige maiketing events, if it can be
quantifieu. Souices of ARR. Regaiuing metiics, I
specifically want to see metiics that show whethei
maiketing is spenuing theii money effectively. I'm
tiying to answei the question, "If maiketing hau moie
money, coulu they geneiate moie leaus anu inciease
ievenue."
4.! N*.,&F )#O2'+.
What uoes it cost to acquiie a customei, how is that
tienuing, anu how uoes it compaie to the value of
that customei.
-*.,& -'"*/.((F .3.%'(
I was in a boaiu meeting iecently anu we weie going ovei all these metiics anu
ieuefining what shoulu be incluueu anu excluueu fiom CAC. Theie's a toolbox
of metiics that eveiyone looks at foi SaaS businesses to tiy to measuie whethei
we aie making piogiess, but I think we aie only beginning to unueistanu the
nuances of the SaaS financial mouels. These mouels aie still evolving, so theie
is no ieal common set of uefinitions.
This is a challenge foi us in the ventuie community. A company might say, "We
know you think of this SaaS metiic this way, that's the consensus, but heie is
why oui business is uiffeient. Beie is how you shoulu think about us." The
minute you ask ventuie guys oi analysts to think uiffeiently, you have an
exponential inciease in youi selling challenge. You have to convince them that
youi thinking is iight.
"2-)4'!51'/
%
67@D KJ?B8K K7;<JB D78 1/' L>8K89D @D
8T8>: A;@>B C88D?9EI
,.3+, )M'MF /.!*+0
Foi me it woulu be the sliue that shows the flow anu conveision iate numbeis
at each stage of funnel. These shoulu be piesenteu with tienu line giaphs to
show how things aie changing ovei time. It shoulu also incluue a foiecast of
what is neeueu to hit plan foi the iest of the yeai. That shows that maiketing
ieally unueistanus that it is a key pait of how the company hits its numbeis anu
what it hau to uo to pull that off.
P#QQ*#& -2))N.(NF Q%&-*+,N#
LTv (Lifetime value of a customei) v. CAC (Cost to Acquiie a Customei) anu the
unueilying uiiveis.
)!.1#& -+)"'4F )1.%#
I woulu say theie aie a few sliues:
89 Leau qualification funnel with S-S steps: Leaus, NQLs,
oppoitunities, close. Foi a boaiu, thiee is sufficient, but it shoulu be
consistent fiom boaiu meeting to boaiu meeting, anu shoulu always
show five quaiteis of histoiical uata. The cuiient quaitei shoulu be
actual veisus plan. Also, it's helpful to know CPL ("cost pei leau").
:9 Netiics uashboaiu that incluues CAC, LTv, CACLTv anu some
othei financial metiics. Bubspot has a gieat one, which I've shown
the metiics they shaie heie. They iepoit ovei eight quaiteis too.
Consistency is key. Theie's nothing moie iiiitating that seeing
uiffeient metiics boaiu meeting to boaiu meeting. A company shoulu
only change oi auu one oi two metiics pei boaiu meeting.
;9 Leau souices foi ievenue - sales outieach, oiganic, paiu maiketing,
channelpaitnei.
4.! N*.,&F )#O2'+.
We think of it as a funnel on its siue. You can go fiom left to iight, using
whatevei uefinition you use inteinally -- visitoi to leau to oppoitunity to ueal
to customei. So I like to see that funnel sliue. Then an oig chait, anu KPIs (Key
Peifoimance Inuicatois) anu youi piogiess towaiu them. Youi "magic
quauiant" -- who's positioneu how anu what's new.
"2-)4'!51'/
&
If you have a CN0 at that point, he oi she shoulu be veiy engageu in that piocess
-- figuiing out what is the message, what uoes the sales piocess look like, anu
how can we make it cheapei, anu ieally scale. You neeu to be veiy caieful about
youi buin iate. It can take nine months longei than you anticipate to finu a
piouuct-maiket fit. You want to buin as little money as possible, so you have the
oppoitunity to spenu time anu uo moie expeiiments anu finu the answei befoie
neeuing to iaise money again.
0nce you have founu piouuctmaiket fit, anu a iepeatable anu scalable sales
piocess, the focus shoulu shift to scaling the business as fast as possible.
Suuuenly you move fiom a company that is spenuing veiy caiefully, to a
company that is spenuing on sales anu maiketing as fast as they can affoiu,
while still keeping the funnel conveision iates anu costs in line.
!"#$%& ()* !+,$*
!"#$ &"'()'*$$) )+ " ,*'*-"$ ."-('*- "( /0-(1 2-)3,* 4*'(#-* !"-('*-+5 "
Woltbom, Hoss.-boseJ venture jirm tbot invests in softwore,
communicotions, infrostructure, Jiqitol meJio, beoltbcore onJ moteriols.
Sontinelli focuses on investments in open source onJ enterprise softwore,
os well os networkinq onJ security. Before becominq o venture copitolist
Sontinelli wos founJer onJ CF0 of N0Cpulse, o systems monoqement
compony ocquireJ by ReJ Eot in 2002.
Wben it comes to CH0s, Sontinelli soys tbot of course you neeJ to Jeliver
leoJs onJ Jemonstrote R0l on your morketinq buJqet - but be soys you
olso bove to be qreot ot wbot be colls "mokinq tbe movie," wbicb is wbot be
colls tbe process of sbopinq o corporote norrotive.
"You qet in tbe boorJroom onJ its oll obout bow well tbe movie is beinq
moJe. ls tbe movie on buJqet? ls tbe movie qoinq to moke money? Wbo is
tbe evonqelist? Wbo is tbe bero? Wbo is beinq opplouJeJ? Wbo is our
version of Hork Zuckerberq? Eow ore we qoinq to roise our next rounJ? lf l
investeJ ot $100 million, is tbe next rounJ qoinq to be ot $200 million?"
Hetrics onJ stots ore jine, but tbeyre not enouqb. "Tbe uqly trutb is tbot
you con be tbe best CH0 in tbe worlJ, but if youre not mokinq qooJ movies,
youre no qooJ," Sontinelli soys. "You see some Jeols wbere you osk, Eow
coulJ tbot compony roise money ot sucb o crozy voluotion? lts oll obout
bow well tbey moke tbe movie."
"2-)4'!51'/
'
,; :;< 8T@J<@D8 1/'K B?HH8>89DJ: 9;G D7@9 :;<
B?B UV :8@>K @E;I +K D78>8 @ B?HH8>89D KR?JJ K8D
D;B@: D7@9 UV :8@>K @E;I
)!.1#& -+)"'4F )1.%#
Absolutely. Ten yeais ago maiketing was consiueieu a moie cieative piocess. I
woulu now say that an analytical minu is highly valueu. The CN0 will not neeu
to geneiate all the iepoits but they ceitainly neeu to unueistanu them anu
know what action to take fiom them. The CN0 has a uifficult job because
maiketing has changeu so much. The numbei of maiketing channels has
exploueu. The amount of maiketing content geneiateu is giowing
exponentially. Naiketeis have to constantly tiy new stiategies anu new tools.
P#QQ*#& -2))N.(NF Q%&-*+,N#
Yes, we uemanu that they'ie moie analytical anu moie piouuct-savvy.
-*.,& -'"*/.((F .3.%'(
A lot has changeu. Theie is a whole uiffeient toolbox now available foi
companies to uo veiy cieative, uynamic maiketing. This new set of tools
incluues eveiything fiom uoogle Analytics to a vaiiety of SaaS metiics. Content
maiketing alone is veiy uiffeient touay than it was just thiee to five yeais ago.
I think we aie cultuially moving into a woilu of uata anu uata analytics. We'ie
having a cultuial shift that will finu its way into maiketing. People not only
have new tools, but they also have an inclination to analyze things uiffeiently. I
see this as something that will continue to evolve. I uon't see it stopping. It's a
gieat time to be an analytical maiketei.
4.! N*.,&F )#O2'+.
Theie have been some veiy poweiful macio tienus impacting the iole.
Naiketing useu to be low-tech, anu offline, anu now it's high-tech, anu online.
It useu to be about outsouiceu seivices, anu agencies, wheie touay it's moie
about in-house talent anu employees. We've gone fiom being qualitatively
uiiven to quantitatively uiiven. We useu to have a small numbei of consistent
channels, like tiaue shows, anu piint, anu now we have a laige numbei of
constantly changing channels, like Twittei, Instagiam, mobile, meet-ups, anu so
on. Theie is also the shift fiom outbounu maiketing to inbounu maiketing,
which makes maiketing moie impoitant than evei befoie, because sales is
hanuicappeu without you.
"2-)4'!51'/
(
All of this makes maiketing enoimously complex anu confusing anu uifficult to
manage, which also makes it that much moie of a competitive weapon. Nost
companies will sciew it up, but those that nail it can cieate massively outsizeu
auvantages foi themselves. So oui geneial level of sciutiny has gone way up.
What we sciutinize is the ability of a CN0 to tiaveise the spectium fiom simple
anu aitful to complex anu scientific.
,.3+, )M'MF /.!*+0
The olu CN0 was someone who was veiy cieative, but not necessaiily much of a
piocess peison oi uata-centiic peison. The new CN0 is veiy uata-uiiven anu
gieat at piocess uefinition anu management. Bowevei they still neeu to ietain
theii stiengths in cieativity to come up with piogiams that get heaiu by the
customei amiust the noise. They also neeu to be familiai with the new buyei's
jouiney that bypasses most of the olu maiketing playbooks, anu use inbounu
maiketing techniques. A goou CN0 touay will also unueistanu anu use the many
new technologies that have emeigeu to help with the piocess.
Foi high-tech CN0s it's also ciucial to unueistanu the iole of the piouuct (i.e.
fiee tiial, fieemium offeiing, oi pioof of concept). In this funnel, the piouuct has
an enoimous impact on the conveision iates. Piouuct uesign is not being
hanuleu by a sales oi maiketing peison -- it's the iole of the piouuct managei. A
goou CN0 has to bieak uown the silos not only between maiketing anu sales,
but also between maiketing anu piouuct management, so you can ieally tune
the customei expeiience in a fiee tiial to optimize the outcome. I wiote a blog
post iecently about the concept of "Time to Wow." If you can get someone to
"Wow" in five oi 1u minutes, that's enoimously impoitant. A typical piouuct
uesignei is not necessaiily thinking of that, anu may neeu piompting by the CN0.
"2-)4'!51'/ !)
67@D @>8 :;< J;;R?9E H;> G789 :;<=>8 78JL?9E
@ S;CL@9: 7?>8 @ 1/'I
,.3+, )M'MF /.!*+0
In a Phase 0ne company it's not necessaiily cleai that they aie ieauy foi a CN0.
The moment they've maue a few sales anu have a few customeis, then they
neeu a CN0. But you have to be caieful. If the CN0 comes fiom a big-company
backgiounu anu can't uo stuff themselves anu they neeu staff, that's the wiong
peison to biing in. You neeu an executive level thinkei that is also gieat at
execution anu is willing to ioll up theii sleeves in the eaily uays. Foi a Phase S
company, I'u look foi someone who is ieally cieative anu goou at cieative
pioblem solving, as well as numeiically anu analytically uiiven. That's a tough
combination. It's a veiy haiu thing to hiie foi.
4.! N*.,&F )#O2'+.
IQ anu uiive. This is a veiy haiu position, anu a veiy tiicky hiie. A goou CN0 is
haiuei to finu than a goou engineeiing leauei oi a goou sales leauei. Naiketing
has changeu so much in the last 1u yeais that a long anu impiessive iesume
ieally uoesn't count foi that much anymoie, although the most iecent five yeais
uoes. What's moie impoitant is the hungei to piove something anu the IQ to
auapt with the times.
)!.1#& -+)"'4F )1.%#
CN0s touay have to weai many hats. They have to be both cieative enough anu
analytical enough to hanule the challenges they face touay. They neeu to
analyze multiple uata sets to know wheie to spenu money anu they neeu to still
cieate a company bianu anu iuentity. Bowevei, eaily on, I've seen moie
staitups focus moie on the analytical maiketing types who can help geneiate
inbounu leau flow by testing uiffeient stiategies anu uiffeient channels.
"2-)4'!51'/ !!
P#QQ*#& -2))N.(NF Q%&-*+,N#
We'ie looking foi a blenu of cieative anu analytical, someone who can
unueistanu classic bianu stiategy anu positioning, as well as mouein online
maiketing techniques. We'ie looking foi someone with a blenu of piouuct skills
anu sales skills, who can be a stiategic thought paitnei to the CE0. I uon't know
if it's the toughest position to fill, but it is tough to finu canuiuates who aie able
to think bioauly anu stiategically while also being able to execute in the weeus,
all without much of a buuget!
-*.,& -'"*/.((F .3.%'(
The iequiiements foi the job anu the chaiacteiistics of the inuiviuual aie quite
uiffeient in the uiffeient stages of a company's life. In the Boston aiea, it is one
of the haiuest hiies to fill. Foi an eaily stage tech company, the iight CN0 oi
heau of maiketing is a ieally uifficult hiie to get iight, paiticulaily if it is youi
fiist time hiiing one into the company anu if the company is giowing into the
neeu. It's veiy challenging.
Foi an eaily stage company, I actually think theie's almost a "giowth hackei"
skill set that is neeueu. We neeu to hack oui way to the fiist 2u oi Su customeis
anu uo some expeiimentation. Theie's a coalescing that goes on in the eaily
stages that takes a flexible, uynamic peison. To use an analogy: aie you uiafting
by position oi uiafting the best athlete you can finu. In the eaily stages of a
company, it's often best to uiaft a maiketing athlete iathei than a maiketing
position playei.
"2-)4'!51'/ !"
-./01 2343 wos o seriol stortup entrepreneur before becominq o venture
copitolist in 2001. Ees o computer scientist by troininq, but in recent yeors be bos
become Jeeply interesteJ in morketinq outomotion onJ tbe onolyticol opproocb
to morketinq tbot bos been moJe possible by Jiqitol tools. Ees written
extensively obout tbe subject on bis bloq, Ior Fntrepreneurs, wbicb sboulJ be
requireJ reoJinq for onyone workinq in stortups.
Eere be Jescribes on exomple of tbe kinJ of oliqnment between soles onJ
morketinq tbot bes lookinq for in o boorJ meetinq.
A veiy common pioblem in B2B companies is a lack of alignment between sales
anu maiketing. Sales believes that maiketing isn't uoing theii job as they aien't
ueliveiing enough leaus foi sales to woik on. Bowevei when you talk to the
maiketing gioup, they'ie angiy at sales as they just ueliveieu a ton of new leaus
to them, anu sales calleu only a few of them anu then gave up.
The ioot cause of this pioblem is that the leaus maiketing aie ueliveiing to
sales aie not of a high enough quality - i.e. the buyei hasn't been qualifieu in
teims of whethei theie is a ieal neeu anu intent to puichase in the neai teim,
as well as a buuget allocateu. Salespeople's time is expensive, anu when they
call veiy pooily qualifieu leaus, it is a waste of theii time, so they uon't bothei.
The solution is to cieate a contiact between sales anu maiketing that uefines
what attiibutes a leau has to have befoie sales will spenu the time to woik on
it. The contiact also neeus to uefine how many leaus aie neeueu to hit taiget.
Let's say you have a CE0 who is uying to tell the boaiu, "I'm going to giow Sx,"
anu he uiives his sales guys to come up with a numbei, uoing top-uown
foiecasting. Looking at the fouith quaitei of the plan, you can see it iequiies
you to book $2 million in ievenue in that quaitei.
If the aveiage ueal size is $1uuk, then you can uiviue $2m by $1uuk, which
means you neeu to close 2u ueals.

6".! . 6#%%W*2(
-'.*, /##!+(N %''M) %+M#
"2-)4'!51'/ !#
If the past conveision iate tells you that 2S% of oppoitunities become ueals,
we can see that we neeu 8u oppoitunities in the pipeline.
If the conveision iate fiom SQLs (sales qualifieu leaus) to oppoitunities is
2u%, you neeu 4uu SQLs.
As you you woik youi way back up the funnel, applying each conveision iate,
you can see how many NQLs (maiketing qualifieu leaus) anu Raw Leaus aie
iequiieu to meet that taiget.
So foi sales to hit theii taiget, you neeu a contiact between maiketing anu
sales. The contiact uefines how many NQLs maiketing neeus to uelivei, anu
what qualification attiibutes shoulu be testeu foi a leau that Sales will accept
anu take the tiouble to woik.
Fiom the maiketing siue of the house, they want a guaiantee fiom sales that
they will woik the leaus that they uelivei, anu within a ceitain time peiiou (as
leaus ueteiioiate iapiuly within houis if not contacteu).
When I'm in a well-iun boaiu meeting, that infoimation is known anu being
foiecasteu at the same time as the business plan is being maue, anu eveiyone
is in sync about how to achieve that plan.
:
:
REVENUE
OPPORTUNITIES SQL MQL
RAW
LEADS
WEBSITE
TRAFFIC
CLOSED
DEALS
RA1L 1H|5 CON1LN1
& HLlP 5 |MPROVL