Feature: Doug Pepper with Shasta Ventures

“It’s really exciting being in a role that’s so dynamic”

Doug Pepper was an early believer in MarTech. In fact, one of the earliest.

In 2006, he was convinced that the marketing technology sector was poised for big things. Pepper sensed that marketers were ready to embrace emerging digital solutions as a new avenue for engaging customers.

But it was a contrarian opinion. There were at most 10 companies in MarTech — total — when he made the leap as the first venture capital investor in a small marketing automation startup called . . . Marketo.

“Until then, marketing was an overlooked category,” Pepper said. “But now it’s a decade later and there are 5,000 companies in the marketing landscape. The growth has been dramatic because the role of marketing has completely changed. The marketer now has a seat at the revenue table.”

Pepper has played an influential role in the transformation as one of the leading VCs in the space. He has funded a dozen MarTech startups first at InterWest Partners and now at Shasta Ventures, where he is a managing director. His knowledge about why some companies become rocket ships is why Pepper will be a keynote speaker at the upcoming Ops-Stars conference in San Francisco.

During the last decade, his thinking has evolved in how to evaluate early-stage startups. Originally, when Pepper researched young companies, he focused on questions concerning the product, the market, the founding team. But today, something else is just as important: the Go-To-Market strategy.

“It’s often not the best product that wins, but rather the team that’s most adept at taking it to market that wins,” he said. “Within that Go-To-Market plan, of course, is sales and marketing operations. That has become crucial in whether a business wins or not.”

***

When Pepper says he was always curious about marketing strategies, he’s not kidding. At his childhood home, dinner-table talk often centered upon customer behavior.

DougPepper1.JPGHis father, John E. Pepper Jr., spent four decades at consumer products giant Procter & Gamble, eventually becoming the company’s CEO before later serving as the Chairman of the Board at The Walt Disney Company.

“We would watch early commercials of products that were coming out,” Pepper recalled. “We would stop at grocery stores and my dad would walk up and down aisles looking at the shelves. When visiting friends, he would look in their kitchens and bathrooms to see what products they were using. I just saw at an early age the importance of focusing on the customer and the power of great marketing.”

In his own business career, Pepper worked in business development at Amazon.com and corporate finance at Goldman Sachs. But he never lost that innate interest in marketing. B2C companies had long been at the forefront of scientific marketing – the melding of art and analytics.

Pepper believed it was only a matter of time the B2B sector adopted a similar philosophy.

“It always made sense to me that as new technologies came out and we moved toward a SaaS, cloud-based software world, that it could be applied to marketing,” he added.

***

Pepper notes that a series of companies explored the marketing automation space in the late 1990s, but ultimately failed. The biggest reason, he said, is they were simply too early for the market. Then came the bursting of the dot.com bubble in the early 2000s, chilling the tech environment. But by 2006, after Pepper moved into venture capital, the market fundamentals had changed.

The “why now?” characteristics were ripe.

DougBike“Things like email, landing pages and Google were tools that everyone was beginning to use to reach their customers,” he recalled. “All of that lent itself to tools automating those processes and making marketers more efficient.”

He was an early investor in Marketo, which ultimately grew into a billion-dollar marketing software powerhouse, and served on the board for 10 years. He also made other well-timed investments, such as Optimizely, Flurry, INVIDI and Appboy. At the same time, the sector boomed with more investors and more companies, building a cycle that continues to produce astounding innovation. In the process, marketing has become a strategic role moving well-beyond branding.

“It’s no longer just a form of art,” Pepper said. “It’s become a critical role that is scientific and produces revenue. Marketing really arms the teams overseeing the full lifecycle of the customer by managing all the data around the customer from cradle to grave. There’s a lot more technology that marketing executives need, opening up more and more opportunities for startups to meet those needs.”

Over the years, Pepper emerged as one of the sector’s most respected thought-leaders. He often is quoted in articles, speaks at conferences and is a guest on podcasts. More importantly, sales and marketing technology founders looking for funding, or simply a sounding board, reach out to Pepper.

“Doug is the real deal,” said Evan Liang, the CEO of LeanData. “Every technology company wants to talk to him to hear what he thinks. He has a ton of expertise. There’s a reason why he was there at the beginning of Marketo. Doug is just a good, honest guy who understands this world as well as anyone else.”

***

Pepper saw the potential of MarTech before most people. But he also readily concedes that it took him longer to appreciate how sales and marketing operations is now a lynchpin of success in this evolving world.

A decade ago, there wasn’t much discussion around the boardroom table about the importance of Ops.

“But how businesses reach their audience is changing so much, and operations is right in the middle of that,” Pepper said. “Sales and Marketing Operations understands how digital is transforming the company because they are the ones reaching customers all along the buyer’s journey.”

That’s why a strong commitment to Operations is a common theme in the companies he backs. At the very least, they are the practitioners implementing Go-To-Market strategies. And at forward-thinking businesses, Ops pros help design those strategies because they are the masters of data-gathering and analysis that drive smart decisions.

Like many, Pepper believes the MarTech sector probably is overfunded, populated by too many vendors and likely due for consolidation. But, he added, winners will keep emerging.

“It just means you have to work harder to surface the best opportunities,” Pepper said. “It’s part of the reason why it’s really exciting to be in a role that’s so dynamic.”

And the search for the next great MarTech company never ends.

Register here for Ops-Stars. The free event will be held Nov. 6-9 at Trou Normand and John Colins, both near the Moscone Center in San Francisco. They will be the places for sales and marketing operations pros to learn, relax and network during the Dreamforce conference. Pepper is speaking at Trou Normand on Tuesday, Nov. 7 at 10 a.m. about “How to Build a Rocket Ship.”




DougPepperHeadShot.jpg
Doug Pepper
Age: 43
Position: Managing Director at Shasta Ventures. Invested in 20 companies, including a dozen MarTech startups. Currently on the Board of Directors of Appboy, Spredfast, Highspot and Beautiful.AI
Home: Burlingame, Calif.
Family: Wife Kim; children Andrew (11), Katie (9) and Molly (8)
Education: Bachelor’s degree in History from Dartmouth and MBA degree from Stanford University Graduate School of Business
Career: At Shasta since February, 2016. Previously a general partner at InterWest Partners and worked in business development at Amazon.com and in corporate finance at Goldman Sachs, where he spent time in Hong Kong, working with technology clients in China, India and Korea.
Reason for Joining Shasta Ventures: The firm hosts a world-class enterprise software team with a great track record of investing in market leaders such as Anaplan, Zuora, SteelBrick, Glint and many others.
Blog: www.pepperspectives.com
Interests: Kitesurfing, skiing, mountain biking
Fun fact: Growing up, he spent four years in Italy and four in Brussels while his father was a Procter & Gamble executive in Europe.
Favorite book: “The Everything Store: Jeff Bezos and the Age of Amazon”
Favorite movie: “The Shawshank Redemption”
Best advice: It came from his father. “Work hard and have fun.”


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