Welcome to Episode 3 of The CMO Show, a podcast about brand storytelling and the future of marketing. Our guest is Andy Lark, a self confessed “opinionator” who thinks most CMOs are struggling to get content marketing right.
Andy is CMO at cloud accounting software company, Xero, and is widely known for his previous role as CMO at Commonwealth Bank.
He joins Mark Jones, chief storyteller + CEO at Filtered Media, to talk about his new role and his theory that early adopters eat the laggards.
Host: Mark Jones (MJ)
Guest: Andy Lark (AL)
MJ: So Andy, for people who don’t know Xero, the Cloud accounting company, describe it to us. How are you different than others in the space, and what has attracted you to this company?
AL: The first thing that makes Xero really different is when you’re a Cloud based company, you’ve built your technology in the Cloud; you’re born in the Cloud and you can scale in the Cloud. That’s radically different than most of the incumbents who start at the disk based software; software you buy and install. The real magic of being born in the Cloud is the culture and the cadence at which you run the company. So even if you manage to migrate legacy technology to the Cloud, it’s really hard to change an entire company’s cadence and culture to also reflect the Cloud. An example would be: many of our largest competitors release software on a very slow moving annualised cycle but nothing overly substantial. At Xero, we’re literally launching new features, updates, upgrades, every single week, so it’s not enough just to be in the Cloud, you actually have to optimise the entire business model for the Cloud, and that’s really what makes Xero different.
MJ: You have this slide which I’ve seen pop up in the media: Early adopters eat the late. Tell me about that?
AL: Having spent a chunk of my time in Silicon Valley, everyone is focused on the traditional bell curve around early adopters and laggards. I started asking: “Does the bell curve exist, like statistically does it exist?” I mean, it looks beautiful, it’s convenient – but I am immediately skeptical, because it just sounds too easy. So I started questioning the curve. There’s no doubt to me that something like that might exist in the consumer market, where a lot of people are confined by the economics of their life. You only have so much money to spend on technology every year, so there is this natural curve in the consumer market. But in the B2B market, it’s become increasingly clear to us that what happens is that the late majority actually don’t exist at some point. There aren’t many bookstores left on the streets of San Francisco; there aren’t many record stores, and not many of them are present in the cloud now. So it’s not like they shut up their front of the store and all migrated to the cloud. They got eaten by Amazon. That’s what’s happening in the accounting and bookkeeping profession, because the people that have migrated to cloud platforms and who are able to deliver technology via platforms like Xero to their clients on mobile devices are so advantaged over the legacy players they tend to take their business off them to the point where those legacy players don’t exist. I just really encourage marketers as a whole, anytime someone presents you with something that’s as convenient as a bell curve to start asking questions and look for the data that proves that to be the case. Because you’ll find that markets are full of myths.
MJ: Obviously Xero is a challenger brand in some markets – are there any surprises that you’re looking for in terms of something coming behind Xero?
AL: There’s dozens and we’re building around them, and driving around them. It is very, very hard to build a large-scale software business that’s global and in multiple markets – it takes hundreds of millions of dollars. There is no short cut and if you look at the great software businesses today, the emerging software businesses; Lithium, Atlassian, Constant Contact, they’ve all raised hundreds of millions of dollars. It’s actually easy to be a challenger brand, because a lot of it is attitudinal and behavioural. It’s a lot harder to build a true challenger business, because it takes hundreds if not billions of dollars to do it. People are quick to look at a business, say Virgin Airlines, and say: “Oh it’s a great example of a challenger brand.” It is, but he raised billions of dollars. What we’re doing is at scale and it’s enormous. So when people tend to point at this little company over here that’s built a bit of accounting software and it’s a fraction of what a full accounting platform does, and they’re selling it for $999, am I worried? No. because they’ll have to also figure out a way of getting to a fully-featured product and they’ll also have to figure out a way of raising hundreds of millions of dollars and scaling their business to compete, because they’re competing against very, very strong incumbents.
MJ: Tell me about your strategies as a CMO, how are you actually changing the marketing game? There’s a big conversation going on about content marketing and in-bound marketing. How are you thinking about the broader task of marketing and how you’re dividing up your attention between certain strategies?
AL: Look it’s a hard question to answer, because I think any CMO who answers that question pretends – including myself – to have some kind of sophisticated answer. But generally you’re just juggling anarchy and chaos, and you’re trying to assemble some kind of math and logic around the various tactics that are in play. I was saying to someone this morning that it’s this unenviable tension between what I think I should be doing and what I should actually be doing. I sat there this morning going: “Oh my God, our presence on Instagram just sucks! We’ve never done anything except with Pinterest, and I’ve got about 30 ideas of amazing things we could do!”
The struggle is, so much of what we do that is great in its own right, but when you look at the overall return, the marginal improvement yielded, it’s actually relatively low.
The CMO Show production team
Producer - Nikki Majewski
Design Team Manager - Daniel Marr
Audio Engineering - Jonny McNee
Graphic Design - Chris Gresham-Britt