Sramana: What is the price point of the offering?
Phil Fernandez: The lowest end customers pay $1,000 a month. The largest spend 100 times that a month.
Sramana: What size customer do you cater to?
Phil Fernandez: Our target market are companies that spend a million dollars or more a year on sales and marketing. There are great products for local markets, and they serve that market well. We have a very large presence in venture-backed companies up through some of the world’s largest companies like Fidelity, Citibank, Southwest Airlines, and Dell.
Sramana: What has been your revenue ramp, and what was your strategy to get there?
Phil Fernandez: We opened the doors to Marketo on January 2, 2007. We raised money on a business plan rather than an angel funding because I was well enough connected. We put $3 million in the bank and opened the doors. We had our first beta product by the end of 2007 and sold our first deal in March 2008.
My co-founder, Jon Miller, likes to say that he started search optimization before we had a product. He did a remarkable job of finding customers and educating them so that they would be ready for our product when it launched. We sold to 15 customers the month we launched our beta.
Sramana: How did he find those 15 customers?
Phil Fernandez: Search engine optimization is really content marketing. He started a blog talking about macro trends in the market. He talked about how Google was changing the job of a salesperson and how to conduct new sales techniques. He built a phenomenal blog with classical search optimization techniques to get us found. We had a great website with whitepapers and resources.
We did not have anything to sell, but we had resources for people to register and give us their contact information. As the product got closer, we started doing our own webinars and gave people some sneak previews of what was coming. We became our own beta user. We adopted content drive and social driven marketing strategies, and we did for ourselves what we do for our customers now. The day our product was ready for launch he was able to give our sales people 50 names of potential buyers.
Sramana: Do you recall who the early adopters were?
Phil Fernandez: One was Thomson Reuters. A Boulder, Colorado, company called Simplified was one. Most of them still exist, but a few were small businesses and don’t exist today. Most are thriving today with Marketo.
Sramana: What was your product development strategy?
Phil Fernandez: I am a huge believer in the Agile philosophy. We identified two specific features of our product today. One of them is the ability to rapidly let people create landing pages for Google AdWords. We took that feature and built it into a product. We had that ready three months after we took our venture funding.
We gave that product away. We had a couple of hundred users who had to give us their name in order to use it. That was in April 2007. It was not a revenue-based product but it was part of our demand generation strategy. We used the first year to build the product that we were going to charge for. That went beta in December 2007. We did our first revenue customers in March 2008.