Democratizing Marketing Automation: Act-On CEO Raghu Raghavan (Part 4)

Sramana: Did your conversations with Subrah about that WebEx problem set lead you to start Act-On?

Raghu Raghavan: We talked about starting a company although I was not sure if it would be a big one or a small one. We started talking to a few of the venture firms in the Valley, and after we described the problem set one of them offered us a term sheet. We turned that down because Subrah decided that he would fund us since the problem set was so instrumental to WebEx. WebEx did not have a VC arm, which made things a bit complicated. While we were working through those complexities Cisco came in and bought WebEx. Cisco then brought us in and told us that we fit their vision, and they also had a venture arm. So, while WebEx started down the path, we were actually financed for $2 million from Cisco.

Sramana: Was the channel deal with WebEx still in place?

Raghu Raghavan: On paper. The execution of it was different because there is always turnover when an acquisition happens. After six months we had a working product and prospects loved it. I hired a guy from WebEx to be our channel guy in July of 2008. In September of 2008, I opened the Wall Street Journal website and saw “Cisco to go after 34 billion dollar collaboration market” in the headline. All the screenshots were of my companies product, but we were not mentioned by name.

I thought that it was surreal. We did not have the marketing collateral or the trained salespeople, so we were not ready to launch the product. We did not have the support side lined up. I knew that if we waited on Cisco’s timetable to roll it out that we would be out of money. We decided to just enter the market ourselves with a single salesperson and to just start selling. We did not know whom we were going to sell to, who the competition was, or even what the price point should be.

Sramana: How did you message the problem that you were addressing when you went out to sell it?

Raghu Raghavan: We did not go out to sell email marketing. We did not go out to sell a broad marketing solution. We did have a phenomenal email marketing piece in there. If you look at email marketing companies like VerticalResponse, Constant Contact, and others, you will see that they have a far more sophisticated view of email than the marketing automation guys like Marketo and Genius.

We had top-quality email marketing, but we did not want to sell email marketing. We could not differentiate in that space. We did recognize that the big market opportunity there was still with WebEx because it was purchased by every marketing department, but it still was not an enterprise system for those companies. It was more like a utility than a system; they would use it for the event and then abandon it.

We brought the deep integration effect into play. You could run an event, set up an email drip engine for your event, maximize attendance, pick up data from attendees, and flow it back to the sales force. The integration of WebEx and the tools that the sales team used, like Salesforce.com, were the key offering. That is how we did our first ten deals.

Sramana: What kind of customers were you going after?

Raghu Raghavan: They were all over the map. We did not know what we were doing. Progressive Insurance was a customer. They picked us up because they were struggling with WebEx and getting ready to kick it out. We asked the WebEx guys if they had customers who were mad at them because they did not have a full solution and we asked WebEx to introduce us to those customers. That is how the first handful of our deals took place.

This segment is part 4 in the series : Democratizing Marketing Automation: Act-On CEO Raghu Raghavan
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