What Venture Capitalists Want in a Marketing ExecutiveNovember 15, 2012 by Derek Singleton
Are you leading a company seeking venture capital funding, but don’t yet have a marketing executive on board? That shouldn’t be an issue, but you’ll want to understand what venture capitalists (VCs) look for when recruiting a marketing exec.
Or maybe you’re a marketing exec looking to make the leap to a startup or expansion-stage company. In this case, chances are the VCs backing that company will have a say in whether you get the job. After all, the best VCs roll up their sleeves and help build out the executive team for their portfolio companies–and that includes vetting a marketing exec.
In either scenario, how VCs approach senior marketing hires is instructive. To get a feel for what VCs look for in a marketing leader, I spoke to several of them who focus on software and tech investments. As such, this post is geared toward the B2B tech world. Here’s what they had to say.
First, How Senior of an Exec is Needed?
According to Greg Goldfarb, Managing Director at Summit Partners, the seniority of hire is a function of company budget, complexity and depth of the marketing problem, and size of the existing department. Young companies don’t need a CMO, or even a Vice President of Marketing.
In the early stages, Bob Gilbreath, Director at CincyTech, says “you need an individual that is execution-oriented–someone who is willing to roll up their sleeves and go figure out Google AdWords, Google Analytics, search engine optimization, etc.” because young companies don’t have the budget (or need) for a senior hire.
Of course, at some stage of growth that will change.
Expansion Stage: Ready for the Big Shots
As your marketing efforts expand into multiple disciplines and revenues grow, it’s time to consider a VP of Marketing or maybe even a CMO. While there’s no absolute revenue stage for this hire, Goldfarb thinks companies don’t need a VP of Marketing until they’re bringing in at least $10 million.
In contrast to a Director of Marketing, a CMO or VP of Marketing needs to possess competencies across multiple channels. Whereas a Director of Marketing may only need to excel at some specific marketing disciplines, a CMO needs to be competent, at a strategic level, across analyst relations, online marketing, content generation, product marketing, advertising, branding, and sales enablement.
The ideal candidate profile will vary based on business model–the hire for a hardware company will be very different than the hire for an enterprise software-as-a-service company–but the VCs I spoke with shared five requirements, beyond the core ability to build and manage a marketing team.
1. They’re Metrics Oriented
VCs don’t like to see resumes with a high text-to-numbers ratio. That’s a sign that the candidate isn’t metrics oriented. According to Goldfarb, “Marketing is not a mysterious function, it’s not a creative-only function. It’s a function that has to deliver quantitative results to the business and drive sales.”
When reviewing a resume, VCs will look for claims such as, “Grew product XYZ revenue from product introduction to $58 million in five years" as opposed to something vague like, “Responsible for all marketing related to the launch of product XYZ.”
Of course, it’s about more than what’s on paper. Phil Dur, Managing Director at Investor Growth Capital, says he likes to see candidates demonstrate an appreciation for return on invested capital. This means being able to talk about things like the conversion rate and the number of marketing-qualified leads when hired at their past company versus when they left.
What does a great metrics-oriented talking point look like? According to Dur, something that would grab his attention is a candidate saying, “I grew marketing-qualified leads from 2,000 per year to 7,000 per year and reduced the cost per lead from $60 to $35.” But VCs also want someone who can tell the story of how these improvements were accomplished.
2. They Can Sell a Story
Effective marketing is about telling compelling stories to the market. When evaluating marketing candidates, VCs look at the stories they’ve told for other companies. If those impress, they often test candidates by asking them to critique the company’s existing messaging or, if there isn’t any yet, they’ll ask candidates to create some on the fly.
Goldfarb believes candidates “should be able to succinctly frame how your company can solve a customer’s problem, and why they should buy from you in 30 seconds.” If it takes 30 minutes to tell this story, they’re probably not the right hire. If candidates can’t do this, VCs worry that they’ll have trouble attracting customers down the road.
3. They Have Connections
Beyond storytelling ability, VCs want someone who is well-connected and has a proven track record of winning industry influence. For an enterprise software company, this would mean a candidate has analyst connections at places like Gartner and Forrester. What’s impressive, in Dur’s opinion, is if a candidate can say, “Before I joined my company, we had no analyst coverage and I helped them get into the top-right quadrant of the Gartner Magic Quadrant.”
VCs like established connections because it cuts down on the legwork of building the marketing function–and industry connections help drive sales. Beyond that, prior industry connections are useful for recruiting the right talent to build a great team.
A candidate with industry connections can quickly discern who is great and who is not worth the money. As an added bonus, the candidate will already know how to work with this individual so he can immediately contribute to the business. The same applies to vendor relationships.
4. They Know Modern Marketing
VCs tend to shy away from individuals whose sole expertise is in traditional marketing strategies. Candidates with a background limited to things like traditional advertising channels or using focus groups for market research are viewed as the wrong fit. Some VCs also shy away from individuals who focus too narrowly on traditional brand building. As Gilbreath says, “The brand is a fuzzy thing that you need more for giant companies like the Budweisers and the Pringles of the world.”
Instead, VCs want people who know newer marketing tactics and are willing to learn through failure–and then quickly adapt their marketing with new technologies. Dur says he particularly values proficiency with marketing automation systems like Eloqua, Marketo or Pardot because individuals who work with these tools are more likely to have experience in “tying marketing investment to a discrete return.”
Beyond that, experience with things like email marketing, SEO, pay-per-click advertising, and conversion rate optimization are much more valuable in VC-backed companies. VCs particularly value candidates who can take something like brand building and apply these newer marketing tools to improve brand awareness.
5. They Have C-Suite Approval
Goldfarb says that he wants “to hear references from CEOs and VPs of Sales, that [the candidate] can create highly compelling, empathetic and high impact stories for the product and business in a way that had a tangible impact on the company.”
Why do VCs value prior C-suite approval so much? Because CEOs and VPs of Sales are in the best position to judge the impact that a marketer has on a company, and are in tune with their contribution to top-line growth. For startup and expansion-stage companies, VCs are wary of candidates who don’t have C-suite references.
This isn’t an exhaustive checklist of what VCs look for, but it helps companies seeking VC funding understand how to hire the right marketing exec. And it should help potential candidates understand what will be expected of them if they hope to land a job at a VC-backed company.
What’s your experience with hiring in the VC environment? Please share any tips you might have in the comments section below.