OWN YOUR FUTURE – LIVE 2020 took place live (from our homes) on July 9th 2020. The video included here was recorded at that event.
Ellen is the Managing Director, Digital Strategy, Higher Education at Harvard Business Publishing. She has an extraordinary track record across marketplaces, financial services, and photography working as the VP & Head of Marketing at 500px, Vice President & General Manager, iStock at Getty Images and Exec Director, Strategy at Dow Jones.
Ellen also advises startups and established companies with go-to-market, branding, and operational decisions and has an MBA from The Warton School.
Scaling up big
We all struggle with go-to-market plans and what decisions to make next. Ellen has led marketing and growth strategy for marketplaces and content companies of all sizes, from venture-backed startups to global brands like Getty Images and The Wall Street Journal. Learn how to think about scale even when you are small, and how to put your company on the path to grow.
Video Transcript
We’ve got another exciting speaker ahead of us. I’ll give her a quick introduction and we’ll get to it. Marketer, strategist, general manager, she’s a problem solvers, she’s a growth builder. This next presenter helps organizations from startups all the way to establish companies spot their big opportunities, and solve their big problems. She has extensive experience in a wide range of digital business models, including e-commerce, subscriptions, advertising, data services, brand licensing. She herself served as the VP and head of marketing for 500 pixels. She’s a Vice President and GM at iStock at the Getty Images and was also the Executive Director of Strategy for Dow Jones. Currently, she serves as the Managing Director of Digital Strategy for Higher Education with Harvard Business publishing, and I am really really excited to have her with us here today. Everyone, put your virtual hands together for Ellen Desmarais.
Thank you, Ben, and thank you for that nice introduction. I sound so much more impressive when you say it like that than I think of myself being–
Oh, don’t be humble, it makes sense.
But I wanted to say I think some of the context of which I was really interested in talking about scale today is in this context of marketplaces. As Ben kind of talked through a bunch of my background, a lot of where I really have foundational experience and scale is for working through a variety of different digital marketplaces. And so I thought that might be helpful to sort of use some examples as we talk through the importance of how you think about scale, because one of the really unique things comes when you’re running a marketplace business is you’re having to think about a two side of the equation that needs to scale together, right?
You need to think about your purchasers as customers, but you also need to think about your suppliers as customers. And so a lot of things that I have formed around an understanding of scale comes from trying to actually I must use that double sided part of your brain figuring out how to build your business board. So let me share a brief PowerPoint with you that just kind of guide us through this conversation. Sorry, you’re all like watching me but my technology reality of here we go today.
So I have five kind of basic tenants I like to think about when I think about how I advise entrepreneurs on scale. And I share these tenants in the context of I’m sure you’ve heard a lot of speakers today comment on scale at different stages. How do you think about getting your first 100 or 1,000 customers? How do you think about getting into the millions? What I’m gonna share with you is more what I’ve learned that actually applies at every single stage of scaling, and it’s like the five things that you really need to know about.
The first is how do you know your customers? It’s an amazing advantage in your early days to think about how you take advantage of that time to get to know your customers. Thinking really about what their requirements are for your product or service. And not only think about what are the requirements, but what are the ways you can actually surprise and delight them? And as you think about your customers, how do you start to identify how you’re gonna unlock your customers as advocates? Word of mouth is one of the most powerful ways for companies to start to achieve scale in the early days.
But what are the things that really matter about your product that is gonna get them to tell you, and to get about what is important to them, and what are the things about your product that’s gonna get them to tell their friends? So one of the other things that’s really important about knowing your customers is knowing who to listen to. Because it’s not always your early and most passionate customers they’re gonna be the customers that get you to scale.
Early customers are often early adopters. They may be highly passionate about your product, but when you look at your market opportunity, who is your customer that fits that like mass market profile that are gonna be the core customers you’re gonna need to scale. That’s really important to start to understand and to know your customer phase. It’s also the thing that really tells you if you actually picked an idea that can scale.
As you think about your business, the question you should always be asking yourself is what is the problem that I am looking to solve for my customers? Are there enough customers out there for me to build a scalable business? And will they actually pay me enough money for the privilege of doing so? And one of the things to about knowing your customers if this isn’t just an early stage behavior, I think the most successful marketplaces have built this into their way of operating. And the company I usually really like to hold up as one of the best case examples of this is Airbnb.
Airbnb has this built into their operating model. It probably doesn’t get more classic of an entrepreneurship story than throwing three air mattresses on the floor of Ben Chesky’s living room and saying, “Talking to those people next morning, “how is sleeping on my air mattress for you?” Like that’s literally the origin story of Airbnb, but the really unique thing about Airbnb is that they have applied this model at every stage of their growth of really getting in very close to their customers, taking a very human centric approach to understanding the profile of those customers, and constantly asking them, “What can we do to deliver an amazing experience for you?”
Because one of the things that Airbnb is understood very well is the path from knowing your customers is the path that leads to retention. And as I said, it is the path that led them to amazing customer advocacy. They turned all of their customers basically into an advertising engine for yourself. So one of the most important things you can do in terms of figuring out to scale is know your customers, and it is never too late to know your customers, because a lot of us are struggling with how to like run our businesses in isolation time.
You know, as we’re on lockdown, we can’t travel, I run a global business. Normally at this time of year, I’d be traveling to India or Latin America to talk to university customers. I can’t do that now, but I can certainly get on the phone with them, and talk to them about their issues and problems, and the things that they’re struggling with right now.
As I was saying to one of the complimentary concepts with know your customers is knowing how you’re gonna make money. And that sounds really simple to start, but as somebody who’s worked in a lot of media businesses you start to understand that there’s a lot more to unpack than you really think about how to make money.
A great example of this is I worked at the Wall Street Journal, and one of the things where we were constantly debating as we created new forms of content was do you put this content out in front of the subscription wall for free as a way to attract new customers and you would monetize them through advertising? Or do you put that content behind the subscription wall and use it as a reason why customers should subscribe to your product?
So there’s a lot of things to think about when you actually start thinking about how you make money, and that’s both the business model, as well as, actually how you price. If you’re building a marketplace that is based on a usage model which was what I did at iStock, we had to make decisions about, how do you price this product from an all cart purchase, a one off by versus somebody who wants to potentially use this product over and over again, do we actually look at subscription models?
The other piece of knowing how you make money is understanding the cost side of your equation. And that’s, I think one of the most key underlying business concepts that entrepreneurs have to wrap their heads around when they’re trying to achieve scale is kind of two pieces of the cost side is first your cost to acquire. And oftentimes, it’s really hard in your early days to actually understand what your cost to acquire should be.
So your first effort should be trying to understand how much do I actually have to pay to acquire a customers. And over time, you’ll start to learn better, how much should I be willing to pay to acquire those customers? A lot of it comes as you better understand your customers lifetime with you so you can understand their lifetime value. The other thing about the costs that go into running your business while your operating the cost.
As somebody who’s worked through a lot of different early stage businesses I’ve become a big advocate for going manual until manual is almost ready to crush you. There are amazing tools today to be used when you’re running digital businesses that can allow you to unlock value, but can also be really difficult to actually know at earlier stages of your business, where you need to invest in order to create value and reduce cost. So an example would be right you can buy Salesforce right now if you wanna you can try it, you think you might need a solution for managing all of your customers. You could be buying accounting software to, you know, manage your books and things like that.
There’s so many different solutions, but oftentimes, it’s great to really start with a manual effort first. Start in a Google document, start tracking these things, figure out what parts of your business are causing you as the lead entrepreneur the most friction, or what are the things that you can invest in reducing your cost of operations that we’re gonna create more value for your customers.
A great anecdote that I love to share around this is I started my career at Capital One, the big credit card company, and Capital One was the credit card company that actually innovated the concept of a balance transfer. Now, the idea of the balance transfer is kind of obvious to us today, right? That opportunity to take your credit card balance off one of your credit cards and transfer it to another credit card. The Capital One was actually the company that first came up with the concept. And as they started to work on the concept they very much understood that in order to get to their millions of customers that they wanted to operate this service to, they were gonna need a technological solution to get their that and there were complexity to that they both needed to be able to take those payments and from customers, and then they needed to pay the other bank in order to complete the balance transfer.
But one of the things Capital One also realize is that other banks in the marketplace are starting to figure this out, and speed to market was really important. So rather than wait till they had built this technology, they chose to take a very different manual approach which it kind of became a legend within the company called the bubble gum and band aids, you know that. And bubble gum and band aids was kind of their analogy for like, “We’re doing things scrappy in a way “that nobody thinks is ideal, “but make sure that we can go to market “as quickly as possible and make sure “that our customers have a good experience.” So what they actually did to start doing balance transfers before they had the technology in place, is they hired an army of temporary workers. They put them at tables in the corporate cafeteria, and each of those temporary workers literally wrote out checks by hand to pay off the bank balances in order to be bring that to market. It allowed Capital One to be the very first company to bring the balance transfer concept to market, and give them a huge advantage over competitors in the space.
It was something that they identified had huge first mover advantage, and it was worth taking that approach to begin with. And that point about first mover advantage is kind of a great transition point to my third what you should know, and that is you should know your competition. And some entrepreneurs like to say to me, “I don’t have direct competition, “I’m actually inventing a market.” And that may be true but in that case, you wanna understand what your substitutes are.
So if you don’t have direct competition right now, what are your customers potential using in place of the solution you’re gonna provide? But more often, you’re potentially in a position where you are gonna have some direct competition, and so you want to really start to build a profile of that competitor. And one of the things that’s key to understanding is how closely linked your strategies are, how much will you react to each other? That was one of the big challenges of being in the credit card space is, as soon as, Capital One changed an offer, you know, dropped an APR to them to let’s say, 5.9% to be competitive in the marketplace. Literally two weeks later, we would see that all the competitors had the exact same offer in the marketplace.
It was very, very hard in that space to make your price actually be your advantage point in the market. So that’s one of the things you really need to think about as you think about knowing your competition is what is the advantage that you are gonna have over your competitive set? And a great example of this for me actually comes from my time at Getty Images, I was running iStock, our e-commerce business, and our main competitor at the time was Shutterstock, you know, a very similar competitive photography and image marketplace.
Shutterstock was newer to the market, but they had basically built an excellent competitive playbook that made it very challenging for me as the general manager for iStock to compete with, because somebody at Shutterstock had gone through and basically figured out the weakest points of the iStock business. They had built their marketplace platform to be SEO first, while we at iStock were having to play catch up. They developed a new pricing model to offer subscriptions which allowed high volume customers to achieve much greater discounts on their images. We did not have that as an offering, and one of the third things they did is they really developed a playbook for how to scale internationally. Shutterstock developed a very methodical approach to how they would approach every single new market they went into.
They knew exactly what to do. They understood where to use it at the marketing approach, what you did in sales and they were very aggressive in that regard. And so I say this is very an interesting example of the point of know your competition from having being caught on the other side of the equation. When I was being chased down by a competitor who had figured out all the weaknesses in my business in order to use them to their advantage. And over time, at iStock we figured out how to fill in those weaknesses. We used our brand strength as an opportunity to fight that competition. But my advice to anybody who is figuring out how to scale their business is to figure out how the competitive market plays into your decisions, and how to turn some of those things to your advantage points.
And actually think about them that advantage point, it kind of gets us into the fourth thing that’s helpful to know and that is your company. And when I say your company I really think of that both as your people and your capabilities. You as the entrepreneur or the CEO, leading your team on a journey. And it’s your responsibility to bring people along with you and tell them where you’re going. And so one of the key things is you know your company is do you know why your company exists? Or to say it differently, do you have a well defined mission about what is the problem your company is there to solve? In my experience, teams that are trying to scale or do their very best when everybody is looking at the same North star. Here’s the big picture of what we’re all aiming for, and how are we gonna get there together?
It’s very hard to scale when people aren’t in complete alignment about where you’re all trying to go together. And as you go through these different stages of scale, the thing about scale is it’s really hard. It’s really hard at that bubblegum and bandaid stage when it’s everything is manual. And that’s also really hard when you’re figuring out how to get to massive scale that’s enabled by technologies and new operational systems. It takes different mindsets at times, so she will evolve along that journey. You may need people in your company at an earlier stage who are a jack of all trades, they can wear a bunch of different hats.
But as you grow over time, you may finally need to bring in more specialized expertise. But it doesn’t change the point that every single stage of your company you need to be assessing, what are the capabilities that are really gonna drive me toward both success and scale? And how do I make sure to continually make sure that I hit the right people for the stage of the business I am in. And it’s also helpful to make sure you actually have somebody in your team who has seen scale. You know, I’ve definitely been part of early stage teams myself, and I’ve also advised other early stage CEOs, and this is often one of the most challenging things on the path to scale.
When there was kind of nobody that was part of that foundational team who has ever seen what a company looks like at scale. It’s not to say people can’t get there but if somebody on the team at least doesn’t have that experience it’s worthwhile to think about how you’re gonna get exposure to that and bring it in. The other thing, I’d also like to call out that when you think about bringing people onto this team who have experienced the scale is making sure it’s valued by the team, right? Oftentimes, sometimes entrepreneurial culture loves, you know, to value sort of the early stage team, and all the benefits that come with people who’ve been kind of grown up in a growth and entrepreneurial oriented culture, but it can also be really beneficial to have somebody in the team who is gonna be able to tell you, you know, when we get that big we’re gonna need a platform for that, we’re gonna need a solution for that.
You know, we’re gonna need software that does this, you’re gonna need to build a process for that. And so I share that too as an anecdote of some of my experiences with early stage growth is, for example, when I was at 500px, you know, as part of the leadership team, probably our greatest friction points as an early stage venture was really about alignment around the leadership team about what is our North Star. I joined right at the moment in time where 500px was pivoting from having been a pure photography community to starting to build a marketplace business.
And at the moment I joined I realized not everybody was actually aligned toward what the North star should be. And that makes it particularly challenging because the how of scaling is hard enough. There are so many different ways to talk about what is the right way to scale, and what might be the priority that your team wants to focus on. It’s even harder when you don’t even agree about where you’re aiming to. So that’s always the advice that I would give a CEO of an earlier stage company as they’re figuring this out is how clear are you on the North star of your company? How clear are you in terms of the problem that you’re there to solve?
It’s much easier to navigate disagreements with your team on the how you’re gonna do things rather than the what of what you’re trying to achieve. And that kind of gets me to my final fifth point, and last point is there’s something in all of this that means you need to know yourself. I’m speaking to all of you CEOs in this context, maybe you’re a part members of leadership teams, or you’re a team of one right now. But it doesn’t change the point of one of the things you can do as part of being the leader of this journey is to know yourself. And that means knowing both your strengths and your blind spots. And it can be really valuable to make sure that you have people as part of your team who offset you.
So if you’re a very creative, visionary person, you might wanna make sure you have somebody on your team who is that analytical, operational thinker. If you are somebody who is naturally a perfectionist or loves complex issues you might want somebody in the team who always tries to simplify things.
You have to then understand for yourself, how to give yourself room to listen to that person, but it can be part of how you make your team great is by understanding who you are, and then I should have an opportunity to build out your team around you. How do you make sure that you’re complementing your own strengths that are gonna allow you to go forward and scale the business? And one of the questions I sometimes get asked is, “well, how do I figure out like who I am “in that environment? “How do I learn more about myself?”
There are obviously like plenty of tests and assessments out there, you can do Strength Finders can be a great one, even Myers Briggs when entire team does it can be a great way to have a dialogue. But the other thing that’s probably the most simplest thing you can do is ask people. Ask people you trust how do you react when you’re under stress? How did you respond to the last really complex or difficult decision the team had to go through? And you know, oftentimes, it can actually be your family and your friends who can be hugely insightful in terms of contributing their own insights to you. So people who have oftentimes seen you in a moment of stress are sometimes the people give you the best advice for you to figure out how you’re potentially behaving in the workplace. And so I think it’s a good thing too as an entrepreneur, you always have to be very conscious of surrounding yourself with people who will tell you the truth. And the responsibility is often on you to be able to ask for that feedback. But this is something that helps you to lead from the front.
And the other thing that’s really important about scaling is keeping yourself healthy, and figuring out what that means for you, for some people, it’s getting enough sleep, for other people it’s getting a ton of exercise. Maybe it’s eating well, whatever is important to you, because the thing is scaling is a marathon, you do not achieve scaling in a business by sprinting. You’re, for some companies this takes years, and years and years. So you’re gonna be on a long journey for this and so you have to figure out how you keep yourself healthy and motivated looking forward in all this.
The other thing about knowing yourself is scaling at the end of the day is a game of risk. And I was just using, you know, the analogy of saying, “You’re about to run a marathon.” But if you really think about it one of the things competitive marathoners do is they really plan their route.
They are typically run when you run, you know, a competitive marathon it is a well known route. Those runners have an opportunity to analyze every step of the way. They know when they’re gonna take breaks. They know when they’re gonna switch their stride. They know where their challenge points gonna be. You as an entrepreneur get none of those benefits, and you start to recognize that every single stage the way I’m gonna be faced with challenging decisions, and I’m gonna be faced with having to make risky decisions where not all the information is available to me.
So the other advice I like to give entrepreneurs is build your own personal board of advisors. If you’re somebody who has taken venture capital, you may have a board that’s there for your company, but you should also think about how you complement it with the board for you. Who are mentors and advisors and people you can go to when you’re trying to work out really complex decisions about your business and even in your personal life.
How do you build relationships with people you can trust who are gonna keep you honest to move you forward. Because at the end of the day, you’re the CEO of this business you are the North Star, you are the person who is gonna lead this forward. And you’re gonna have to make the decisions about where you want to delegate, and where you wanna be in the details.
The more that you sort of build your understanding of yourself you lead to this understanding of your business, which then allows you to kinda understand the market that you are entering into. So with that, I hope that’s a little bit of helpful and ending kind of a nice note of the five things that’s good to know about yourself, your company, your competition. And with that, if we have time then I’m happy to take some questions.
We have a couple moments. That was fantastic, thank you, Ellen, I really appreciated that. Let’s see there’s a few from Beck one was how do you know when it’s time is from your first point is when do you kind of have an idea when you tell a company that it’s time to start spending money on solutions and stop doing it as much by yourself as you can, is there kind of any signals for that?
It’s a great question that I wish there were super easy answers to, but a lot of it probably comes down to, you know, sort of understanding your company. I think also to like realizing you’re typically always gonna feel under resourced, right, as an early stage entrepreneur. You may have to be make a decision of do I install this piece of software that makes the internal teams life easier, or do I go and spend this money on acquiring new customers by adding paid media channels?
So part of it, I think, really comes to that point of like, no fee, you make money. What actually you can account more for you in the end term if there’s actually sort of, sometimes people underestimate the value that gets created when you install some of those internal things when you suddenly realize, “Wait a minute, I just freed up “like 40 man hours this month.” Rather than needing to go and hire a new person in order to, you know, complete the accounting tables every month, I instead can funnel that money back into marketing. So I usually when I look at this with entrepreneurs kind of sit down and understand not only what is the decision making about that particular investment point, but what does that potential investment look like in the larger scheme of their business?
Yeah, interesting. You know, one thing you talk about a lot, kind of in the know, every aspect of that is having a North star, you know, for yourself for your company, whatnot. Such a hot word in business these days is pivot.
Yes.
What do you tell people when they’re like, “Oh well, we’re pivoting to do this,” or we, you know, I mean, it’s essentially people shifting their North star like, what’s your opinion on those concepts, how do you know if you should?
It’s a really great question and as I say, I’d like share the experience when I like worked at 500px, we were going through a pivot and let me just, I would share pivots make me nervous. They making the, I think there have been really amazing stories about entrepreneurs who’ve managed to pivot their business, but at the end of the day the thing that makes a pivot successful is understanding the to from step, and what is the asset that you really carry over from where you started to where you’re going. So for a lot, and for a lot of businesses that successfully pivot it’s they retain the customer relationship, and they actually retain the way they make money. Sometimes successful pivots also get oriented around, or let me say different most, I find that a lot of successful pivots aren’t actually about the change in the North star. They’re often the change in how you’re solving for the business problem.
Interesting.
So part of it can come from down likes at 500px, you know, if you’re like our job is to make photographers lives as easy as possible, as an example of a North star. The decision on how we actually make their lives as easy as possible ’cause sometimes people–
It’s more like changing the roads than actually changing where you’re coming from–
That’s a great way to say it. You’re actually like changing the path that you’re on rather than the North star. People really start changing their North star and obviously there have been some meaningful examples of that. I think Instagram is a great example of a company that I think also everybody says nobody can aim to be Instagram. A lot of things kind of came together to make Instagram what they were. But the majority of companies I think that successfully pivot are less changing their North star versus they’re changing how they pitch themselves out of the problem.
Yeah, interesting, TikTok will probably be in that discussion as well in the way that they’ve changed over time. Just a tactical question, what were sort of the difference in growth tactics at 500px versus iStock?
Yeah, it’s a great question, one of the things that was inherently different kind of in the early stages with 500px is it started as a B2C business and then we kind of built a B2B business on top of it, while iStock was kind of always just a B2B business. And one of the things that was actually really meaningful for unlocking growth when I was at 500px interesting enough was Instagram. And the when I joined 500px as head of marketing I was in a situation where the company had not chosen to use Instagram and as a marketing channel. And one of the key reasons for that was that debate about substitutes. If we were putting our stuff out on Instagram, would it mean that people didn’t wanna come to 500px as a platform? So a way we approach this is we actually did some like smaller scale tests of starting to put some things out, because there was a very different way to frame that question saying, ever, like the vast majority of successful photographers out there are using Instagram in order to promote their services, how can we not be on Instagram and be part of the photography community in that way. So once we figured it out at 500px the way to unlock Instagram that made sense for us, it was actually then one of our most significant growth channels in terms of reaching new photographers. And as we were doing that we were actually starting to reach clients. One of the places 500px was awesome was successful in the early days, but they focused on a very specific part of the market and they focused on travel photography. So Instagram was a really meaningful way to actually kind of connect with people who were looking at new travel photography in the market. So it turned out that we kind of had found this sweet spot between what was the marketing channel that both allowed us to add new photographers to our marketplace, as well as to allow new people who wanted to buy travel photography to discover us.
Yeah, that’s interesting stuff. We only have I don’t know, honestly, we don’t really have any time left but it’s just me coming up next for a quick recap, so I just wanna ask you just one more question if you have a sense, what are some ways that you used to understand the strengths and weaknesses of competition?
That’s a great question, because like I said, it’s really helpful not to be discovering that out, that when they’re actually firing their guns right at you.
Yeah.
And like I said that that experience I had was kind of a lot of almost iStock having to look in the rear view mirror and said, “Wow, we should have had been investing in SEO “on the platform several years ago. “Wow, it turns out there was a market need “to build out a subscription product.” So one of the things we had actually then tried to do is a little bit of like I say at iStock then we were kind of playing the reverse game, and we kind of really sat down in the methodically started to analyze Shutterstock, and almost a little bit of a similar framework that we just kind of went through first off was, are their customers actually any different than ours? Are we really fighting for the same customers?
Secondly, how are they acquiring their customers? Like, are they spending a ton on media? Like, are they spending a ton of advertising? Have they built partnerships to, they, have they plugged into other platforms? That was one of the most meaningful ways we’ve found to actually really get into the heart of our competition, because it allowed us then to through that process of understanding their customers, and understanding how they’re acquiring them to get into a lot of the solutions that they had built. That was actually how we figured out they invested so much in SEO as we tried to kind of like reverse engineer with our growth numbers to figure out where they were coming from.
And then we did some market testing as an example, right, we put out a few ad campaigns on Google AdWords, and we noticed Shutterstock kept beating us. So there are some interesting ways if you’re competing in a purely digital marketing space that you could actually be doing some testing to actually reverse engineer what some of your competitive stuff may be doing.
Yeah, super interesting experiments you can run in there, I like that.
Absolutely.
Fantastic, thank you for joining us, Ellen, that was super informative, Ellen.
Thank you for inviting me. Thank you all, I hope you had a wonderful day.
