VCs Weigh In: An Inside Look at What’s Fueling the Sales & Marketing Technology Market

Devon-McDonald by

This past November, I had the great honor of participating in SiriusDecisions‘ Tech Exchange. Specifically, I was asked to share collective thoughts from OpenView on the ever-evolving sales and marketing technology landscape. Here, I’ve provided a sampling of the most insightful feedback gathered from across our firm.

What are the biggest changes in the B2B sales / marketing tech market you’ve seen over the past few years?

blake-bartlett-500-400x500“There is a lot of fragmentation in the market with players slicing off smaller and smaller pieces of the marketing tech stack. While this does create opportunity for best of breed solutions, increasing fragmentation is frustrating for marketers who need to bring the entire stack together. Essentially, sprawl is creating tool fatigue.”

– Blake Bartlett, Partner, OpenView

ariel-winton-500-400x500“The sales acceleration and enablement space went from non-existent to very crowded. VPs of Sales are gaining buying power, whereas VPs of Marketing used to be the main budget holders for both sales and marketing departments. We’re also seeing sales and marketing attempt to work together more closely, and technology is being built to support this new relationship. On the whole, go-to-market efforts are becoming more data-driven.”

– Ariel Winton, Associate, OpenView

arsham-memarzadeh-500-400x500“Two key trends in marketing tech, mostly around email marketing, have emerged. First, we’ve transitioned from triggered content to personalization and automation. We’re now seeing a demand for more personalized and individualized content that doesn’t just follow a rules-based approach in terms of when to push content to whom. Rather, companies are beginning to leverage machine intelligence to automatically optimize for engagement based on behavioral customer data.

Second, we’re moving away from standard email marketing to a new medium for customer interaction. Most vendors simply try to make the next best email marketing solution, but the next generation MarTech vendors have realized that consumer email engagement rates have been on a steady decline. The next channel, not surprisingly, is chat and messaging. Companies like msg.ai and Digital Genius are harnessing this trend by enabling companies to speak to their customers through social apps like Messenger, Twitter, WeChat and the likes, as well as over texting. They have a chance to make marketing sexy again.”

– Arsham Memarzadeh, Associate, OpenView

kyle-poyar-500-400x500“For buyers in the space, there’s a push-and-pull between whether to simplify into one main platform or go with multiple platforms and best of breed point solutions. Buyers are finding that, on the one hand, startups are becoming more niche and hyper-specialized, and on the other hand, the platform players are trying to round out their portfolios to be a one-stop-shop.

Tech giants are taking advantage of opportunities for consolidation across sales and marketing. In the past year alone, Salesforce has made about $5B in acquisitions including Krux (data management) Demandware (digital commerce), Quip (word processing), BeyondCore (enterprise analytics), MetaMind (AI) and more. Adobe recently purchased Livefyre (community engagement) and TubeMogul (AdTech) and has Neolane (cross-channel campaign management) and Omniture (analytics) in their suite of product offerings.”

– Kyle Poyar, Market Strategist, OpenView

What are your thoughts on the IPO market and its current / potential future dynamics?

blake-bartlett-500-400x500“The IPO market ebbs and flows. We can’t let today’s dynamics inform early stage investment decisions that’ll look to access the public markets five to seven years from now. We don’t worry too much about fluctuations in the short-term.”

– Blake Bartlett, Partner, OpenView

arsham-memarzadeh-500-400x500“The IPO market is always open for companies with fundamentally strong growth metrics, sound unit economics and a road to profitability.”

– Arsham Memarzadeh, Associate, OpenView

What categories within the sales and marketing space do you find particularly interesting?

blake-bartlett-500-400x500“Automation and intelligence leveraging categories like AI or machine learning are particularly interesting. Manual rules-based systems are last generation. New companies that will actually have staying power will optimize for you, rather than putting the impetus on the marketer to create yet another set of rules-based workflows.”

– Blake Bartlett, Partner, OpenView

ariel-winton-500-400x500“I find software that uses AI to increase CRM adoption (e.g. Troops.ai, Heighten) interesting because collecting data on sales activity is crucial to giving leadership insight into what’s happening and where there’s room for improvement. Products that predict CLV to inform lead segmentation (e.g. Zodiac Metrics, Custora, Simon Data, Amplero) are also really intriguing because they allow marketers to spend their dollars more efficiently. Lastly, software that employs NLP to coach sales reps on their conversations (e.g. Chorus.ai, Gong.io) has the potential to be game changing.”

– Ariel Winton, Associate, OpenView

kyle-poyar-500-400x500“API-first companies are really interesting because instead of creating yet another tool, they integrate seamlessly with whatever platforms companies are already using. One example is Clearbit, which builds data APIs to help companies understand their customers and prospects. Companies with a product-led growth strategy, because they have very capital efficient growth, are also very relevant.”

– Kyle Poyar, Market Strategist, OpenView

What do you look for in a tech company when you invest?

blake-bartlett-500-400x500“I look for differentiated tech and large potential platforms rather than small, narrow applications or best of breed features, which is unfortunately what you see today with all the fragmentation.”

– Blake Bartlett, Partner, OpenView

ariel-winton-500-400x500“I look for a big vision that can turn into a large and enduring business, a passionate CEO who tells a compelling story, and a large market. Strong product market fit, often exhibited by a clear customer profile and examples of customers who are paying and fit that profile, and early signs of a repeatable go to market strategy are hugely important as well to prove that a company is at the expansion stage.

– Ariel Winton, Associate, OpenView

arsham-memarzadeh-500-400x500“I look for thoughtfully crafted products that are solving deep and widely felt pain points. When a problem is so acute and common, achieving product market fit becomes that much easier, and scaling becomes that much cheaper. ”

– Arsham Memarzadeh, Associate, OpenView

How do you find new candidates for investment?

blake-bartlett-500-400x500“I ask the best marketers in the world what problems they have and what tools they use to solve those problems – or ask them what a dream solution would look like.”

– Blake Bartlett, Partner, OpenView

ariel-winton-500-400x500“I spend time with people in the community and learn about what software they’re using and excited about. I keep up with news about software companies (through newsletters, online publications, conferences, etc.), and learn about interesting companies from other VCs. Once I identify an area of interest (typically sparked by a company that I’ve met), I try to learn about all of the companies that fit that theme and / or thesis.”

– Ariel Winton, Associate, OpenView