Dan Wernikoff rose to become an EVP at Intuit and general manager of its small business unit and consumer tax group. In both cases he scaled the business-within-a-business from small groups of early adopters to huge hordes of happy SMBs and consumers, by relentlessly measuring early indicators, leveraging core strengths, and focusing on long-term growth goals.
In this conversation with TCV General Partner Tim McAdam, he shares:
Lessons about how selling into SMB markets
differs from enterprise
The best metrics for tracking success, and
Why empathy and understanding matter more than
slick ads and sales techniques.
He also explains how to infuse human expertise
into SaaS models in a way that fits the SMB/consumer mindset.
For these insights and more, settle back and press play.
Dan Wernikoff is a former Venture Partner at TCV.
The views and opinions expressed are those of the speakers
and do not necessarily reflect those of TCMI, Inc. or its affiliates
(“TCV”). TCV has not verified the accuracy of any statements by the
speakers and disclaims any responsibility therefor. This blog post is not
an offer to sell or the solicitation of an offer to purchase an interest in any
private fund managed or sponsored by TCV or any of the securities of any
company discussed. The TCV portfolio companies identified above, if any,
are not necessarily representative of all TCV investments, and no assumption
should be made that the investments identified were or will be profitable. For
a complete list of TCV investments, please visit www.tcv.com/all-companies/. For
additional important disclaimers regarding this document, please see
Depending on where you look, the number of connected devices, or ‘things’, out there is now in the region of 8.4 billion. That’s a large number, but it’s barely the start. By 2020, Gartner expects this total to jump to over 20 billion.
Importantly, this staggeringly fast growth of connectivity for consumer and enterprise use cases necessitates a high-performance network infrastructure and services and 5G will help take the industry to this next level.
In an era where just about everything will be connected—from the familiar smartphone to the connected robot, car or enhanced media distribution—there is a demand to share more wireless data.
3G arrived at the millennium, bringing us a major step forward in wireless connectivity speed. It offered connection speeds of around 380Kbps. The arrival of 4G networks built on that to deliver up to 100Mbps—the performance level many of us are familiar with today.
Even though 5G will be 10 times as fast, it won’t replace 4G in the same way that 2G (and gradually 3G) have been superseded since 4G’s arrival. 5G and 4G will work in complementary fashion to handle different types of traffic most efficiently. 5G remains in a technical trial stage as the standards for mobility and network interoperability continues being developed. Early commercial deployment is expected to start in late 2018. Yet, once the standards are set, there’s no turning back – 5G will be a catalyst for new applications and new opportunities that are just waiting to be imagined.
At the leading edge of this industry is Cradlepoint, an international market leader providing wired and wireless connectivity and networking solutions for distributed and mobile enterprises. Founded in 2006, the company has been at the forefront of providing 3G and LTE networking solutions for enterprises. The company was first to market with LTE routing solutions. It now has 18,000 customers worldwide and has shipped more than 1.7 million cellular routing platforms.
Doug Gilstrap: If we believe everything we hear about 5G, it’s all expected to really start happening in 2018. Is that hype or hope?
George Mulhern: The technical trials are underway as we speak. The commercial production testing will start in 2018. There are already many 5G trials taking place around the world and 5G-ready base stations have been deployed by the major vendors. They’re already using some of the new spectrum for 5G both licensed and unlicensed spectrum, and the expectation is that it will be commercialized in 2019 and 2020.
Doug Gilstrap: When (and how) does 5G displace 4G? When will it be the new norm?
George Mulhern: 5G and existing LTE technologies are going to coexist for quite a while.
We’ll start to see some limited early deployments in 2018, and it’ll grow from there—but it’s not going to completely displace 4G. In fact, some of the early deployments will be based on the LTE core—so they’ll coexist. That’s going to be important for customers because they’re looking for a transition.
It’s not going to be a light switch moment where they wake up one morning and 5G is everywhere. It’s going to be expanding over the next two, three, four years. It’ll be a significant improvement to the wireless capabilities as it gets rolled out.
Doug Gilstrap: What’s 5G’s selling point? What benefits can 5G adopters expect?
George Mulhern: Efficiency. We see 5G offering significant cost savings to operators and end users.
Our customers with many sites, branch locations and IoT needs (buses, police cars etc.), can expect better performance with advances towards 5G. This means no lead time to connect and wait for broadband digs, so any new high-speed broadband connectivity can be met instantly.
Also, with 4G Advance and 5G inter-workings, some of our enterprise customers will have better performance compared to the existing fixed line infrastructure in place today.
For customers with massive amounts of logistics and transportation needs, the new 4G/5G data plan charges plus our hardware and software solution makes the implementation, the monitoring, and the usage tracking affordable. And the productivity gains will be impactful. This technology will be price competitive and offer a variety of physical and logical diversity for all our clients.
We’re seeing the operators charging hard into the mobile enterprise space as the next wave of market opportunity, and we are here, hand in hand with our solutions to help make it happen.
Doug Gilstrap: Is everything going to be wireless with 5G?
George Mulhern: Because of the 10X performance improvement, 10X latency improvement and capacity improvement, 5G is going to be a tremendous technology. It’ll be a dominant last mile technology, but I don’t think the wires are going to go away entirely.
It’s like when email first hit, and people predicted the post office would disappear. Email opened the way for a whole host of new applications and capabilities, but didn’t completely displace the older technology, although its role in communications has been significantly diminished.
Any time you get something as flexible as wireless that provides the kind of performance and capabilities people need, I think they’re going to naturally migrate towards that. It happened on the LAN with Wi-Fi. It’s happened in the Personal Area Network with Bluetooth. And it will happen on the WAN as well. I would bet Doug’s paycheck on it…
Doug Gilstrap: Thanks…! Do you expect there’ll be a different take-up in different countries, unlike 4G?
George Mulhern: The race to 5G is full on right now. It is likely that many of the same countries who led the way to 4G/LTE will be early to the 5G market. Carriers in the United States, Korea and certain countries in Europe were early movers in LTE and are investing very heavily in 5G right now. Japan is also investing heavily in 5G and plans to have the network built out when they host the Olympics in 2020.
5G is very important to the carriers/operators because it opens up a much broader set of applications and markets to them. The mobile phone market has been a tremendous growth opportunity on the consumer side and especially the evolution to mobile broadband (3G+/4G), but it is saturated, and the operators are now really focused on growth in the wireless side for the enterprise. Examples include fixed wireless access to the enterprise, which is core to Cradlepoint, and we look to provide solutions for growth in other areas as well. 5G will provide opportunities in Fixed Wireless Access (FWA) for enterprise and residential (video), Internet of Things applications, autonomous vehicles, etc. That hits home for companies like Cradlepoint who can help deliver these new applications and services to the end customer.
George Mulhern: Now, let me ask you, who do you think will benefit the most, consumers or the enterprise—and what industries will be early adopters?
Doug Gilstrap: I think both enterprise and consumers are going to benefit tremendously from this battle among carriers to get solutions to market first. We have seen the industry pull in their timelines for 5G from what they were, and they’re currently selling 5G-ready radios and are in 5G trials with many of the largest operators. We’ll see the commercial first movers with the device versions in the latter half of 2018.
For the enterprise specifically, there are a lot of use cases that will need lots of bandwidth, so operators are utilizing different options across the 5G spectrum such as 3.5 gigahertz and 28 gigahertz because more capacity is needed to meet enterprise needs—and not just speed, it’s throughput as well.
Think of mission-critical applications for the enterprise, where there’s a lot of imaging needs and where a lot of data throughput has to be in real time with no jitter because people are using that data to make decisions. Or think of the oil and gas or utility industries which have remote diagnostics and imaging requirements.
There’s also healthcare where imaging and X-rays need to be shared because professionals are doing their work remotely. It will also be massive for video distribution to the enterprise or to the consumer residential markets. These require high-end bandwidth and low latency for quality of service. Any mission-critical application that requires that fits 5G very well.
On the horizon are consumer applications such as augmented reality, virtual reality, and the autonomous car. If you consider all the sensors and the data transmission that has to go back and forth—from the speed of the car to the cars on the road and changing road conditions—there’s so much going on. It’s low latency and high throughput.
Doug Gilstrap: How should enterprises think about preparing for the deployment and adoption of 5G? What are best practices and pitfalls to avoid?
George Mulhern: My advice for enterprises preparing for 5G would be: Don’t wait.
Start incorporating LTE into your organizations now. With gigabit LTE commercially available on multiple operator networks, you can get much of that performance already. In the digital economy, it’s the companies that can move with speed, agility and gain insight that will succeed. Incorporating wireless into their business today not only prepares them for 5G, but they’ll start to reap some of those benefits much earlier than their competitors.
Doug Gilstrap: How do businesses really take advantage of LTE and 5G? Because it’s not easy. You can’t just say, “Oh, I’m going to implement 5G, and we’re ready to go.” It’s gigabit LTE as well.
George Mulhern: Each customer has their own priorities and strategic goals. We have customers today using LTE as their only WAN source for their branch offices. Others are using it for temporary networks (a pop-up store for example), or air-gapped networks for security reasons. Smart City applications like connecting traffic lights, Wi-Fi in businesses, connected police cars, digital signage, surveillance cameras, kiosks, the list of “things” being connected now is endless.
What’s ideal for retail and transportation can be different than what’s needed in the public sector or in financial services, however high speed, secure mobile access fits in with each of these verticals.
It is our view that this next generation of edge networks need to be much more agile and flexible. They need to be able to expand, contract, and incorporate new applications as business needs dictate. We call it the Elastic Edge. These networks will be Software-Defined, Cloud Orchestrated, Wireless and much of the time delivered as a service to the customer. Therefore, 5G will be a game changer in terms of flexibility, agility, performance, and cost.
Doug Gilstrap: George, what’s the fastest chipset that you will have in your routers from a theoretical chipset speeds standpoint for 4G advanced next year?
George Mulhern: Today we know that there are many operators that have commercially launched LTE Advanced 1 Gigabit services and our solutions will support this gigabit speed. As 5G moves above the 1 Gigabit level to 10 Gigabits, so will we, supporting gigabit speeds on our platform in 2018, as those networks become available to the enterprise.
Our goal will always be that our solutions will be able to operate as fast as the networks will support.
TCV is an investor in Cradlepoint and Doug Gilstrap serves on the board of directors of the company.
Michelle Peluso has spent the past two decades helping to forge a new relationship between people and technology. She started her first company, Site59, with a group of friends in 1999 and later sold it to Travelocity, where she served as CEO during the “roaming gnome” era. Peluso became an Executive Advisor to TCV before joining Citibank as Global Consumer Chief Marketing and Internet Officer responsible for the digital experience of the bank’s 100 million global customers. Peluso then took the helm at fashion pioneer Gilt, which she later sold to Hudson’s Bay Company. She became IBM’s first Chief Marketing Officer in 2016 — a move that highlights the transformation of marketing into a core corporate capability.
Still an Executive Advisor to TCV, Peluso remains committed to discovering how marketing can redefine relationships with customers, a transformation that requires curiosity, agility, innovation, persistence, and resilience. In this exclusive interview, Peluso discusses:
How the CMO’s role has changed in the last decade
Four trends that continue to revolutionize marketing
How the rise of ‘augmented marketing’ will challenge CMOs as never before
TCV: It’s widely acknowledged that there has never been a more challenging time to be a CMO. How have you seen the role change since you founded Site59 in 1999?
Peluso: It’s no wonder the average CMO tenure is only 2–3 years and has seen a drop over the past two decades. It’s a hard and incredibly dynamic role, as marketing has shifted from a thoughtful, functional discipline around creatively amplifying the company message to a much more dynamic, real-time, analytical — and creative — driver of client experience, revenue, and company performance. Expectations have never been higher for marketers, and the new seat they have at the table is an amazing opportunity for the best of them to grow and lead.
TCV: It’s easy to say all these changes have been driven by the rise of the internet. But there are several distinct trends that are reshaping marketing…
Peluso: Clearly four major shifts have shaped, and are shaping, how we can connect with customers, how we can analyze our effectiveness and drive results, and how we need to lead our respective organizations. First was the era of digital. For me, this was the beginning of the internet, making transactions and content interactive, convenient, and more personal. Then, we entered the era of social, which has been all about engagement and authenticity. Social toppled the notion of hierarchy and forced brands to think differently. Third, we have seen the era of mobile, which began with mastering the art of a smaller screen but evolved into much more as the focus has been about location and real-time and always-on engagement. These three eras have dramatically reshaped every industry while elevating the role of the individual, with far-reaching consequences.
TCV: That’s three…
Peluso: Right. We are now on the cusp of the era of cognitive learning, or as we call it at IBM: Augmented Intelligence (AI). We’re building fast and smart systems that understand vast amounts of unstructured information, such as natural language and imagery, recognize data patterns to create recommendations, continuously learn from these recommendations and many other sources of data, such as books, medical records, and conversations with humans and finally, interact with humans in a natural way. AI lets us better understand and engage with our customers; it enables us to make more precise bids on advertising and improve ROI across every dollar spent, and it will fundamentally shift the paradigm of how consumers interact with websites. Arguably, we are already starting to see this with new AI home devices and natural language interaction.
TCV: This new vision will require an entirely new way of doing things, which is a significant change for any company, much less for a massive organization like IBM. How does a CMO drive these kinds of changes within such an established framework?
Peluso: The cognitive change is no different than any other large-scale change management program. To be a cognitive company, you need to be clear about your mission — what challenges do you want to solve? What decisions do you most want to improve? You need to have the assets, which are all about your data sets but, even more, your team, marketers, developers, and data scientists. And, of course, you need the right tools. Companies new to AI should identify a handful of specific problems they want to address and apply AI tools to solving those problems. Then, repeat the process to address new challenges. This way, a corporation will see meaningful and measurable results as they evolve into a cognitive company. Patience is required. Companies must learn how to use AI, and these systems also require learning, so “training” the system is critical. It’s a classic crawl, walk, run.
TCV: How does this new approach to marketing change the way you look for and hire the right talent for ‘augmented marketing’?
The traditional marketing waterfall process — develop a creative idea, send it to advertising, media, and a CRM team, and then analyze results — can no longer keep up with the pace of the market today. I take a lot of inspiration from the Agile movement, which fundamentally reinvented the technology development process. At IBM, we’re applying Agile to our marketing function, and that means creating small empowered teams with the right skills, clear accountability, sprints, and a constant focus on prioritization. When you adopt Agile, you can see how different marketing becomes, and the emphasis it puts on hiring Agile teams that have a strong mix of creative, process, digital, and data science skills.
TCV: What role will marketers have in identifying and developing new technologies for the augmented marketing era? Or will that function remain within the realm of the IT department?
Peluso: AI is about man (or woman) AND machine. Users of all sorts, not just developers or CIOs, can use AI in small and big ways to help them solve the most difficult problems. That’s the promise, and we’re starting to see this at organizations all over the world. Marketers will play a critical role in how AI is developed and applied. One of the many things I learned while working with the TCV team and their companies is that it’s fundamentally important to be insatiably curious about technology because the most successful marketers are as analytically rigorous as they are creative.