Early Hires Of The Internet Native CMO
There was a great article on Monday on the rise of CMOs with engineering degrees that made the rounds with many of our friends and advisors. It struck a chord with us given the proximity to our thesis and our belief that the older generation CMOs are being replaced by the younger, internet native generation of CMOs. While the article didn’t directly speak about it, one of the most interesting things we see today are the hiring practices of the internet native CMOs. If they are getting hired into the next generation of B2B companies who are they bringing on to their teams?
The Writer – Now more than ever before B2B marketers today are focused on the top of the funnel and lead generation for their sales teams. They often times hire writers first to help them develop content to feed their marketing automation machines. Sometimes this is farmed out to contractors or companies like NewsCred but most of the time if you are serious as a CMO about content you bring on your own writers.
The Front End Developer – Complimenting the writer is almost always a front end dev hire. Building out email templates and landing pages and having someone dedicated to the CMO is almost a must in today’s environment. While many folks get away with using their internal eng team developers the smartest CMOs we see at emerging B2B companies have been through the bottlenecks and pains already and know they need a dedicated resource for themselves.
As the article talks about we also see a number of quant folks as the first hire but usually the internet native CMO is so programmed with data collection and analysis that they do this themselves. In the past CMOs hired their assistant first and then likely a VP of Brand or someone to help with trade shows and designing print campaigns. Today is very different and the tactics have shifted noticeably where we are starting to see real change in the hiring tactics of the internet native CMO.
Thoughts on Mandiant + FireEye
Most folks saw the news on Friday about FireEye’s acquisition of Mandiant for $1B+ in cash and stock. This is a huge deal in the security space and one that has gotten a lot of attention given the combination of two prolific industry folks in Mandia and DeWalt as well as the fact that it is an almost perfect acquisition given the compliments of the tech. From my view, there were several interesting things that we at Bowery Capital talked a lot about that I thought went unnoticed and relate to building next gen enterprise software companies.
- What Is Your Customer Number At $100MM In Sales? We think about this a lot at Bowery and it was interesting to see how high Mandiant’s numbers were. They did $100MM in sales in 2013 with about 500 customers. Effectively a $200K ACV. This is a huge number when you think about it. I don’t know what the churn numbers are (assume low) but at these ACVs in a services business (i.e. high margin) it is no surprise how they were able to get profitable so quickly.
- Building To $100MM In Revenue Still Takes A Long Time. Kevin Mandia is one of the most respected and successful folks in the industry today. He built a killer solution for the market and and it still took him about 9 years to build a $100MM company. Building real enterprise software companies still takes a really, really long time in our view.
- This Is One Of The Highest Comps In The Space. The deal is basically valued at about 10x their $100MM 2013 revenue which is an incredible deal for Mandiant. While they do have IP in various tools and technology and say that 50% of their revenues come from endpoint products, the business is a lot like Accenture or PWC where a team shows up and does custom research and consulting and charge professional services revenues. 10x is pretty much at the top end of the spectrum and basically as big as the Checkpoint deal and there is a lot of research on comps in the space. Even if we are wrong by a margin it doesn’t even come close to the larger deals like Sourcefire (5.5x), Fortinet (8.7x), Symantec (2.0x) or Websense (2.3x).
- Never Underestimate The Value Of A Good Case Study. As most folks know, in February Mandiant become incredibly famous when they released a great report linking the Chinese army to a coordinated campaign of hacking attacks against U.S. companies and government agencies. This no doubt put them on the map in a big way from a PR and marketing standpoint and our guess is that many customers and likely acquirers came calling.
Overall the deal is a huge win for the industry and we are excited to see what the combined company ends up doing in the space. In addition we believe there will be more consolidation in the space and this is likely more the ‘tip of the iceberg’ as more and more specialists in the category get acquired.