There’s A $10 Billion Opportunity As Marketing Hits The Big Time

Pinterest Acquires Team From Hike Labs, Including Google Reader, Blogger Veteran Jason ShellenEditor’s note: Ajay Agarwal is a managing director at Bain Capital Ventures in Palo Alto where he focuses on early-stage SaaS and mobile investing.
Marketing is no longer the forgotten stepchild of enterprise software. Traditionally underserved and under-penetrated, marketing is finally receiving its fair share of attention by technologists, founders and investors alike. Gartner famously predicted CMOs would spend more on IT than CIOs by 2017. IDC estimates $32.4 billion in marketing technology spending by 2018, growing at 12.4 percent CAGR. Hundreds of new companies are emerging every year, and thanks to Scott Brinker, marketers now have their own dedicated technology conference.
Three years ago, I wrote a post that called marketing “the next big money sector in technology,” and predicted it will “give rise to several multi-billion-dollar companies.” At the time, Omniture had sold to Adobe for $1.8 billion but was the only marketing-focused technology company with an exit north of $1 billion. All other enterprise categories over the past 30 years have created several multi-billion-dollar software companies across functional application areas: SAP (manufacturing), Oracle (financials), PeopleSoft (HR), Siebel (sales) and Salesforce (sales/CRM).
What’s changed in three years?
While we have yet to see a dominant >$10 billion company emerge in marketing technology, we have seen tremendous changes and progress in this sector driven by digital, mobile, social, analytics and commerce technologies. We have also seen several big exits in the last three years. A quick snapshot:
CompanyValueAcquirerExacTarget$2.57 BillionSalesforceCriteo$2.54 BillionIPOResponsys$1.50 BillionOracleHubspot
Marketo$1.23 Billion
$1.07 BillionIPO
IPOEloqua $871 MillionOracleNeolane$600 MillionAdobe
Note: For public companies, these values are as of March 26, 2015.
The hottest standalone category to date has been marketing automation, which has become a “must have” solution for B2B CMOs. The two largest independent players, Hubspot and Marketo are both valued north of $1billion and are growing at rapid rates. Salesforce with its acquisition of Pardot is now a formidable player in the space as is Oracle through its purchase of Eloqua.
What’s next?
All of this progress now sets the stage for my next prediction: We will see the first $5 billion-plus marketing tech company emerge over the next four years (and likely more than one). Three key drivers will get us there:
Predictive analytics and machine learning: The sheer volume of data about buyers, channels and communities that marketers can now harness is astonishing – and it’s the largest opportunity ever seen for CMOs and vendors alike. With sales and marketing automation in place to provide core workflow and plumbing, an ecosystem of new startups and categories has emerged to deliver added value and insight across marketing functions and channels. The best of these companies use machine learning and data science to tap into the marketing and sales automation data sets – and troves of external third-party data – to deliver insights and capabilities. This is especially valuable for B2B companies, where lead times are longer and purchase decisions are more considered. Early pioneers in predictive marketing include Infer, Lattice and 6Sense*.Consumer identity and personalization: For B2C companies, identity is emerging as the backbone of user experience and digital commerce – similar to what lead management and marketing automation are doing for B2B. Most consumer purchases are quick, ephemeral in nature, and done with limited research. New B2C marketing competencies focus on user identity data and personalization, with a goal of having the right content and experience for each user (during the three seconds they are looking at that page on their tablet or mobile device). It’s the difference between a sale and a bounced user. Key players include Bloomreach*, Sailthru, Monetate, Optimizely*, Kahuna, and Appboy – all of which focus on optimizing web pages, mobile apps and/or email to drive the highest conversion and revenue per visitor.Consumer behavior and targeting: Beyond identity, consumer behavior data is becoming increasingly critical for B2C marketing and commerce – location, past purchase behavior, demographics, preferences, household information, etc. This challenge has become increasingly difficult in a cookie-free mobile world, which makes traditional desktop targeting techniques useless. As a result, marketers are relying on vendors that bring cross-device targeting capabilities and others that can ingest anonymous consumer behavior on your website. The best marketers are leveraging this rich information to build massive in-house databases of customer purchase and browsing history. Companies like Agileone, SmarterHQ, TellApart*, Retention Sciences and others are leading the way on this front.What this means for marketers
The core infrastructure is now in place to manage online and offline marketing: website and e-commerce management; customer relationship management; mobile applications; email marketing; and sales force and marketing automation.
The new frontiers for CMOs in the coming years will be data science, machine learning and behavioral insights, which then drives optimization and personalization. This represents the largest opportunity ever seen for both vendors and CMOs alike. All of which should set the stage for the first $10 billion-plus marketing tech company.
Note: 6sense, Bloomreach, Optimizely and TellApart are Bain Capital Ventures portfolio companies.

By: Unknown On 11:12

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In The Land Of Opportunity, Why Hinder Our Own Success?

Postmates Will Deliver Bastian Lehmann Via Bike To The Disrupt New York StageEditor’s note: Max Levchin is the CEO of Affirm, co-founder of PayPal, Chairman of Yelp & Glow, and Director at Yahoo and Evernote.
We often hear that America is a nation of immigrants, but some members of Congress have forgotten the simple truth – immigration is our country’s single greatest competitive advantage in a growing global economy.The primary driver of the U.S.’s position as the worldwide leader in innovation and entrepreneurship is due to tireless, talented, hardworking immigrants coming to our shores over the years to live their dreams and build better lives for themselves and their families. I know it, because I’ve lived it. But I worry that our current broken immigration policies are hindering America’s chances of success for future generations.We are at a critical juncture of our country’s future. The opening of the high-skilled H-1B visa lottery each year on April 1 is an acute reminder that we often fail to ensure that talented immigrants are able to create jobs and build their businesses here. We hurt our own success.When I immigrated to the United States in 1991, I held the same aspirations as many young people across the country: I wanted to go to college, start a successful company, and create jobs for others. I worked incredibly hard, and I was fortunate enough to fulfill those aspirations. Other talented immigrants who come to the U.S. want the same thing — to have a shot at the American dream.Unfortunately, many immigrants are not granted the same opportunity I was. It can be a daunting and expensive task to extend a visa, and the process is frequently so difficult that many don’t even try. Even for those who are allowed to stay and work here, something as minor as misplaced paperwork can result in deportation – a nightmare that has become a crushing reality for several of my employees.The H-1B visa lottery leaves to chance what we should want to guarantee for our economy: that the best and the brightest innovators contribute to our country’s success, instead of being forced out and likely given little choice but to go create jobs for our global competitors. At nearly every company I’ve been a part of, there has been at least one heartbreaking story of a hardworking immigrant being sent back to his or her home country.There is overwhelming consensus on the positive economic benefits that immigration reform will provide to the U.S. economy: over 3 million jobs could be created in the U.S. and $330 billion added to the economy in the next 10 years if Congress passed reform legislation.Right now in the U.S. Senate, there is a bipartisan jobs bill – the Immigration Innovation (or “I-Squared”) Act – that would increase the outdated cap on the number of H-1B visas granted each year to talented, highly skilled immigrants looking to grow their businesses here and create American jobs, and it would help companies to hire these skilled workers, too – providing a ripple effect of additional economic benefits and job creation for local communities.I hope other members of the tech community across the country will join me in calling on our elected representatives to support this common-sense legislation, because our competitors aren’t waiting on the U.S. to fix our broken immigration system – they recognize this weakness, and already use it to their own advantage to build immigrant-friendly policies while we waste time and lose out on jobs. That’s why I joined FWD.us: to work toward a legislative solution that fixes our badly broken system.I owe everything to this country. I want others to dream big, come here to start their businesses, and create American jobs. Increasing the arbitrary and outdated H-1B cap will help to ensure that talented immigrants have the opportunity to grow our economy here at home, and that the best and the brightest put their talents to work in the U.S., which will be absolutely critical to ensuring our continued global economic success.Featured Image: Antonio Gravante/Shutterstock

By: Unknown On 14:06

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The Next Billion-Dollar Market Opportunity Is Mobile Enterprise

The End Of Hardware Alley Registrations Is Nigh!Editor’s note: Kevin Spain is a general partner at Emergence Capital.
Enterprise mobile applications – like enterprise cloud applications a decade before – are poised to become a $100 billion market opportunity. I’ve worked with enterprise technologies exclusively for more than a decade and have watched as cloud apps took the enterprise by storm, giving businesses more flexibility and power than ever before.  Now, enterprise mobile is taking a page from enterprise cloud’s play book – but with a twist.
Obviously, mobile technology is less expensive, more accessible, and easier to use in many ways than cloud technology, and that makes it attractive to the enterprise. But what may not be so obvious regarding the allure of mobile for the enterprise is the degree to which it will democratize the use of technology for businesses in underserved sectors and far-flung locations.
There are more than 3 billion people globally who work in some capacity. Yet only 20 percent of them have ever had access to technology to help them perform their jobs more effectively. That leaves 2.5 billion workers not being supported by technology today. Some of them are in industries like construction, an $8 trillion a year space that spends less than 1 percent of its revenue on IT. Others are in manufacturing, the world’s fourth-largest industry with 40 million workers globally — it spends less than 2 percent of revenue on IT.
A significant portion of those 2 billion-plus workers without technology are in the developing world, with 50 percent in Asia-Pacific, 10 percent in Latin America and another 10 percent in the Middle East and Africa. This global opportunity is enormous, and mobile technology is uniquely poised to capitalize on this market as the heavy infrastructure improvements necessary for hard-wired solutions are expensive and time consuming to deploy.
Overall, we’re talking about some pretty staggering numbers, but just how big is the mobile enterprise opportunity? Consider this quick calculation. If we take the 2.5 billion workers that don’t have desk jobs and assume we can monetize each one at about $40 per year (a mere 10 percent of what is spent today on technology for a typical desk-bound worker) we’re looking at approximately $100+ billion in annual revenue.
This opportunity is vast in many ways – and it is also unlike anything we’ve seen in enterprise technology in the past. Any industry that would benefit from the features that smartphones now have can leverage an enterprise mobile solution. Industries like construction and surveying can empower their mobile workforces with camera-based technology to get fast and cheap quotes and communication to their central offices. Delivery and transportation workers can utilize mapping, billing and other phone-enabled mobile solutions to achieve greater efficiency. Healthcare is likely the largest opportunity, in India, mobile healthcare apps are taking off. In fact, 500 Startups has launched a fund dedicated to investing in mobile health in India, China and Africa.
What will it take for entrepreneurs who want to seize this opportunity and build a leading mobile enterprise company? Here are a few best practices that I have seen in some of the early leaders:

In order to best leverage the mobile platform, capitalize on what is unique about mobile devices. Consider the following:
Use the latest smartphone capabilities (e.g. sensors, cameras, GPS, voice) to your advantage. Great examples are how Shyp uses your location and that of its networked “shippers” and how Expensify uses the camera features to capture receipts.
Consider how some of the leading mobile platform providers, like Box and Salesforce can help you as you scale.
Mobile go-to-market expertise
This is just as important in the mobile arena as it is in other spaces, but there are some interesting differences.
Learn how to successfully manage app store optimization for a business user or for a business-oriented company. Tools like SearchMan, apptamin and Sensor Tower can all help you achieve optimization without a lot of time or resources.
Build a customer acquisition model that matches your offering, for example, mobile messaging company Cotap, relies on enabling viral growth through its interface.
Leverage word-of-mouth in vertical markets. PlanGrid in the construction space has grown through their customers spreading the word.
Global orientation
Most mobile enterprise developers today are not thinking much about international coverage, which can put you at a competitive advantage. There is a much more significant international opportunity in the mobile space than even in the cloud or SaaS spaces. Map out your global ambitions in the earliest days of your company, and plan how you’ll actually embed that into your organization’s DNA.
Global planning can’t be an afterthought because 70 percent of the opportunities you will be pursuing are outside of developed markets.
Localize your product or make it easy to localize. It’s very costly to retrofit a product.
Think about mirroring best practices of SaaS companies that have expanded internationally, and how these same techniques translate to mobile.
Consider a range of international go-to-market strategies before committing to one. There are different paths to success – working with a partner to be distribution arm, building local teams/hubs in each region or market, acquiring a company in another region that is doing something similar and make that your expansion strategy – choose which strategy or combination of strategies makes the most sense for your product after you have fully evaluated each.
Once in a great while, a revolutionary technology and platform comes along; one that changes the game in the enterprise. I think we’re in the midst of just such a revolution. When we look back in 2025, it will be incredible to think that the mobile enterprise sector had less than $100 million of revenues just 10 years earlier.

By: Unknown On 05:50

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The “Common Plus” Opportunity

Editor’s note: Jonathan Friedman is a Partner at LionBird, an early-stage fund investing in digital health, commerce, and enterprise software. He blogs at Venture Capital Point of View.
It’s become increasingly common for early-stage entrepreneurs to

By: Unknown On 22:51

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The Impending Opportunity In Real Estate Technology

Editor’s note: Josh Guttman is a Partner at SoftBank Capital based in New York City. He blogs at joshguttman.com.
Things are starting to simmer in real estate technology. The first phase of technology development in the category, which was primarily focused around listing services for the residential side of the market, has paved the way for industry leaders to broadly reconsider how technology can make their lives better.
For those of us in the technology world with some background in real estate, the opportunity may seem obvious. But real estate is a sector of the economy that’s created immense wealth without changing their workflows or processes for many decades, so there’s a predisposed lack of urgency to upgrade the ol’ tool belt.
Market Primer
The word

By: Unknown On 04:35

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