Episode 45 of The Verblio Show
Serial entrepreneur David Cancel knows a thing or two about running successful software and technology companies. He has founded numerous global software companies, including Performable, Ghostery, and Drift. He has served as Chief Product Officer at HubSpot, where his leadership was described as “visionary” by HubSpot’s co-founder, and he is also currently Harvard Business School’s Entrepreneur in Residence.
On Episode 45 of The Verblio Show, David talks with Steve about the strategic lessons he’s learned over his many years of experience launching hypergrowth products and building highly efficient product teams. They cover the value of analytics and observations, why it’s so important to focus your attention on the right projects and goals, and why a blue ocean strategy doesn’t make sense.
???? Name: David Cancel
???? What he does: Founder and CEO of Drift. Former Chief Product Officer at Hubspot.
???? Get smart: “The things you talk about or give attention to are the things that you give oxygen to, and therefore are the things that grow.”
Great leaders—and marketers—understand psychology
When you attend business school or get your MBA, much of your core curriculum is focused on the so-called “hard skills” of business, such as accounting strategy and marketing funnels. What is often overlooked, however, is what David sees as the core of any leadership role: psychology.
“The CEO job is just psychology: psychology of your team, your community, your prospects, your market, and, most importantly, yourself,” he says. Effective leadership means understanding mindsets and motivations, and overcoming cognitive biases.
The same is true for marketing, David adds. “No one talks about psychology, but it’s all psychology. That’s all it is. It’s how you communicate, the words you use, how you want to connect with an audience, how you represent yourself.”
Red oceans > blue oceans
Readers of the popular business book Blue Ocean Strategy are familiar with the idea that red oceans are commoditized markets, while blue oceans are new markets with no competitors. Entrepreneurs looking to create the next big thing often seek out blue oceans, but David’s experience as a 5x founder have taught him differently:
“A commoditized market is really good,” David says. “That means there’s massive demand, and it usually means that there’s very low innovation.”
You can’t expect to make a splash in any red ocean, though. “You have to look for a change in the world—a behavior change large than your company—that lets you re-segment that red ocean to create a blue ocean out of that demand,” David explains. One example he gives is the change that happened around messaging—in which the entire world moved from phone calls to messages—that drove the creation of Drift in a commoditized ocean of martech tools.
How Drift was born not of predictions, but of observations
“We didn’t predict anything. We looked at the changes—they were obvious in the world if you looked for them—and we looked at the demand. The behavior change had already happened, right? The behavior change, in our case, was around messaging: moving from a world where you prefer to have a call or in person, to a world where everyone defaulted to sending messages of some sort, everyone from your kids, to your grandmother, to people around the world. Everyone defaulted to messages. The behavior change was undeniable.
So because of that, yes, we were right that we could finally use it for a marketing and sales context where it hadn’t been used before, especially in B2B. But we were right on that because it was already happening. Everyone had changed their behavior already. It was just that no one had figured out, ‘How do we apply this in this red ocean that exists today?’”
Don’t try to create a behavioral change
“The trap that most entrepreneurs fall into results in them wanting to create this demand out of nothing—thinking that they’re going to create some magical thing that everyone’s gonna switch to. …But the truth is, we cannot switch demand. We cannot change someone’s behavior.
And we can just look at the analogs in our own life, right? We can look at why is it so hard for all of us to maintain a certain level of fitness or desired weight, when we already know the answer. …The reason is that the behavior change is next to impossible. And entrepreneurs should see that pattern, it already exists in our lives, and say, ‘Wow, I should build on an existing behavior change, and not try to cause a behavior change myself,’ because most of us will die trying.”
The historic change in the buying landscape
“If you have as many gray hairs as me, you remember a day where within a company there was only usually one centralized buying. Procurement did all buying. Then you saw, in some cases, procurement, the CFO, or the CIO doing buying. Then you started to see the rise of the CMO. And then you saw more and more people buying. Fast forward to today. Most companies today, most of the people in the company are making purchasing decisions. And those people are not the procurement people of 20-something years ago—meaning they’re not professional buyers. So the only buying preference and experience that they have, and the pattern that they have, is this frictionless experience that they enjoy in their normal lives.”
On the absurdity of current CRMs
“There are no relationships in it. There are no people in it. There are no conversations in it. There are no true representations of activities. There’s only metadata about all those things. There’s metadata that a human entered that you had a conversation, not the conversation. There’s metadata about the activity but not the activity. …It’s like ‘No, we don’t have the conversation. We don’t know exactly what they said. We only know what this person maybe put in here that they said.’
And by the way, this person, if you think about incentives, is incentivized to not put anything in this thing because the minute that they put something in here, then their manager will be on top of them about that deal and closing that deal. And that’s why all of these people that have to enter stuff into the CRM have shadow CRMs where they actually keep their deals and they actually keep their activities. And they only put it in here at the very last minute. And this is the basis of all B2B companies in the entire world. This is the centralized source of truth. It’s mind blowing, right?”
Attention = oxygen
“The things you talk about or give attention to are the things that you give oxygen to, and therefore are the things that grow. Especially as a leader within a company, what you’re focusing on and where you’re spending your attention is so important because those are the things that you’re giving oxygen to. Those are the things that have a chance at growth. It doesn’t mean that they will grow, but they have a chance to grow.
And then the opposite is true, which is the things that you don’t seem to be paying attention to—visibly to the company and to the market—you are depriving of oxygen. Those are things that will naturally die.”
[4:29] “The CEO job is just psychology: psychology of your team, your community, your prospects, your market, and, most importantly, yourself.”
[10:48] “It’s important to always be a different version of yourself.”
[19:12] “When you have infinite supply, the power moves to the buyer because they have alternatives.”
[25:24] “If you can’t control the ego, you cannot keep learning.”