Help Wanted: Name Your Price
Venture capitalists are warming up to tech marketers in a big way
By Jeffrey M. O'Brien

Shelley Harrison has reaped many of the benefits Silicon Valley has to offer. As the new senior vice president of marketing, retail and operations for Compressent, she owns an expansive loft in the exclusive Pacific Heights neighborhood of San Francisco. The loft is filled with dramatic art and artifacts, like a 5-foot-by-6-foot giant cast of Athena from the 1915 Pan Pacific Exposition perched two stories up in her foyer. She commutes three days a week to Compressent's San Jose offices--a drive that will become more bearable when she signs the papers on a new Mercedes--and travels in a circle of high-powered friends and colleagues.

How did the 37-year-old Harrison get to where she is? Well, she's articulate, energetic, not afraid to roll the dice and in her own words, "has a bit of marketing savvy."

She's one of those rare finds--a marketer who has become a hot property for tech companies and the venture capital firms that stock them with talent. While "a bit" may be understating her marketing skills, Harrison believes some of the world's worst marketers still reside in Silicon Valley--too many are reformed techies who failed at writing code. So a little genuine marketing talent will take you places. She's one of those rare finds--a marketer who has become a hot property for tech companies and venture capital
firms

In eight years since leaving Hewlett-Packard, Harrison has bounced from startup to startup, invariably taking stock as her primary compensation. She was the eighteenth employee at cc: mail, pushing it from anonymity to more than 50 percent marketshare when Lotus bought it at a handsome price. She launched authoring tool company Vermeer, garnering enough attention for the company to attract Microsoft as a suitor and an estimated $130 million; she also ran marketing at PaperPort manufacturer Visioneer and has consulted with a score of other young companies. At Compressent, which markets color/image compression products, she's watched the company's stock rocket from less than $6 a share in October to almost $20 early this year.

Harrison's voice mail is still full of job offers. What's different now, by her own account, is that those calls are coming in from headhunters who represent venture capitalists, or from the VCs themselves. "Interest has gone way, way, way up [among VCs] in marketing recently," Harrison says. "I get phone calls now saying 'We're looking for a vp of marketing for Marimba,' for example. I say yes, well, and they say 'No, no, you see, Kleiner Perkins [Caufield & Byers] wants you specifically to interview for this job.' I never would have been on their radar screen a few years ago."

There are a few reasons why traditionally technology-centric VCs are paying attention to marketing these days. Most important, some argue, because they rarely have in the past. They've learned that technology for technology's sake is no foundation for a company.

Broad snafus like the fizzled pen computing revolution, the slow adoption of PDAs, object technology and more recently, VRML, as well as individual failures of companies unable to find their markets, have proven that without a way to get to a market, even the coolest technology doesn't sell. Essentially, their attitude mirrors the way the industry has progressed: Saleable technology has become less differentiable, so marketing has become more important. "VCs have figured out that [often] the best technology doesn't win. Look at Microsoft. It's all about who has the better distribution and the better brand, not the better mousetrap," Harrison says. "Venture capitalists are looking back asking 'Who did we make money off?' and it's usually not the technology play."

That's one reason you see so many VCs beating their drums in public. More ink has rolled off John Doerr, general partner at Kleiner Perkins and Ann Winblad, general partner at Hummer Winblad, of late than off a printing press. Mayfield Fund has named a PR firm to get its share. Why? Fundamental marketing, really, in a seller's market. Money and technology go hand-in-hand in Silicon Valley like sunshine and strip malls. But too many VCs have been burned by faulty business plans in the last few years, so they're seeking out marketing help, and they'll press every palm in Santa Clara county, call on everyone they know and raid the offices at every behemoth to get it.

"Marketing is one of the key hires a company can make, and certainly one of the most difficult," Winblad says. "It's easy to know if you have a good vp of engineering or vp of sales, but marketing creates the climate for sales. Marketing assesses the strategic envelope of the entire company."

Few work a room, or the press, better than Winblad. She's been lauded everywhere from Upside and The Red Herring to Vanity Fair for her technical expertise and clout. No one accuses her of being a marketer's VC, but she knows she's investing in the promise of under-served markets. To get the right people to take any product to such markets, Winblad needs to fill her database.

"First and foremost, we're investing in market opportunity, not technology. The most important thing a company can do is define the scope of opportunity--how large, how accessible is the market? Have a clear positioning statement and an understanding of virgin real estate," she says.

Winblad had a hand in luring Kirk Cruikshank to the vp of marketing post at Sunnyvale, Calif. enterprise software company Arbor Software. Cruikshank says the company needed some real strategic marketing help when he arrived from Grid Systems--not the least of which was defining the market. So, Cruikshank began partnering with Arbor competitors to move the whole platform forward--a move many on staff may have thought counter-intuitive, a move that took vision.

Doug Mackenzie, a partner at Kleiner Perkins, says that's the kind of vision he's looking for in companies, whether from the vp marketing or elsewhere. "Marketing is extraordinarily important in our funding decisions, but excellent marketing can come in many flavors," he says. "A technical entrepreneur can come to us with a product plan that reflects a deep understanding of a customer need and has all the makings of a successful startup company. The best ceos are excellent marketers, top-notch leaders, general managers, and have excellent salesmanship."

Few if any all-around talents are available, of course. Given the option of having a technical ceo or a marketing ceo, Kathryn Gould, a general partner at Menlo Park-based Foundation Capital, picks a marketer. Gould's resume boasts stints as a physicist at Argonne National Laboratory, engineering slots at Data Systems Design and Bell & Howell and the vp of marketing post at Oracle in the mid '80s--so she knows both sides. "The vice president of marketing slot is the hardest position to recruit for right now. It's more the intuitive side of marketing than the operational side [we want], really," she says. "What makes a great startup opportunity is when you have a good vision for who the target customer is. You need to know how to reach through distribution channels, how to create demand. Of course, the converse is true, too; you do need the technology."

More marketing-oriented entrepreneurs are setting up presentations these days at InnoCal, a Costa Mesa, Calif. firm and Mayfield Fund in Menlo Park. Officials at both firms agree it's important to look below surface-level marketing rhetoric. Bill Unger, a general partner at Mayfield, says everyone knows the vernacular now, thanks to the Geoffrey Moore books Crossing the Chasm and Inside the Tornado. "He's made a phenomenal contribution because he's given us a common language," Unger says. "But just because people can speak the language doesn't mean they can walk the walk. We want to invest in people who want to win more than they want to be right. If we really like the idea, we'll help them build a team, but we're looking for marketing smarts in the team. We don't want an engineer who says 'I just build them, let marketing worry about everything.'"

That's one of the reasons InnoCal general partner Harry Lambert brought on Joe Jennings, founder of a San Francisco-based PR firm, which he sold to GCI. Jennings has the task of poking holes in paper-thin business plans for InnoCal and luring in big thinkers. "I am the proverbial person in the room saying 'So what? Who cares? and How much?" Jennings says over clanging glasses, a plate of risotto and a bustling lunchtime crowd at San Francisco's Il Fornaio. "If I ask 'Why?' three times, I can destroy almost anyone. It's not pretty, but it works."

Now, Jennings is not a grumpy man, but he does not suffer gladly the vacuous business proposal. "If you look at some old business plans, the marketing section is one page and says 'We'll market to the Fortune 500 community through indirect channels,' with no clear statement of who the target audience is. Now they all have a market section and third-party market research data--but a staggering number, when asked who their competitors would be, still say 'We don't have any.'"

So, what exactly does a Joe Jennings look for by way of validating an idea? First off, your idea must be three-to-five years out from Microsoft over the horizon. Second, you have to have a clear sense of partnering and business development--don't just say Andersen Consulting is going to help without knowing anyone there or having confirmed it with them. Third, you must have a specific sense of audience, market and benefit, as well as beta testers. "The best thing they can do is set up potential customer meetings," he says. "Go into Levi's over here or Bank of America and figure out what they need. I've had people ask me to sign an NDA so I could ask no one about their idea. Why would I do that? For an idea to succeed in the marketplace, it has to save time, money or allow the user to do something he couldn't do before."

To be sure, InnoCal also puts prospects through the technical version of Jennings' regimen, which makes a VC meeting a harrowing experience for many. "The big joke in the VC community is we usually want to leave 10 minutes into the meeting. If only we could leave then. You know the meeting is going to be bad if the ceo opens with 'This is the most exciting technology you will ever work on,' or 'We're going to be the next Netscape,'" he adds.

Also, all VCs warn: Every firm will have a different take on ideas and business plans. Case in point: While both appreciate good marketing, Jennings and Unger are on opposite sides when it comes to the potential of the recently-funded and about-to-go-public company Amazon.com. Jennings thinks the company has found a clear, untapped market, expressed its point of differentiation clearly and so has a bright future. Unger says it's only a matter of days before Borders or Barnes & Noble knocks Amazon.com from its stoop.

That's why Dan Putterman, ceo of automated tools startup Aeneid, San Francisco, is talking to many VC firms and, as MC went to press, hadn't decided whose money he would take. "We're a group of people who have a hot track record in this industry and there's a lot of money out there," he says. "There's more of an assumption now that the technology will hold up, so this is the first business where I'm putting more emphasis on marketing and sales models than technology. VCs are getting much better at articulating what they do. You have to know which VCs are better for what type of business--which can add to your level of sophistication, and what is the right amount of money you should go after. Also, I think if you're not looking for more than money from a VC, if you're not asking a series of value-add propositions about their contacts, [possibility of] board membership and team participation, then you better take a look at your fundraising strategy."

Which begs the question: Is going to a VC the best bet? Some argue a VC's primary interest is getting companies to their next round of funding, not long-term relationships. While Shelley Harrison, for one, has taken many consulting jobs from venture capitalists, she has never taken a full-time gig from one--and Compressent has no VC funding at all. It's just that her database will surely rival that of any VC, and she came to Compressent at the calling of someone she knew and trusted, the company's ceo, Abe Ostrovsky, whom she had worked with before. Joe Jennings says he has a VC friend who says he'll only work with those who have made him money before. Harrison has proven that that philosophy works for marketers as well as venture capitalists. [Shelley Harrison left Compressent after its successful IPO to re-launch Launch Pad.]

©Copyright Marketing Computers