From Back-of-the-Napkin to $2.7 Billion Exit: Sitting Down with ExactTarget’s Scott Dorsey
Scott Dorsey has had an incredible journey in tech. Starting out with a back-of-the-napkin sketch, he and his co-founders developed ExactTarget into a industry-leading interactive marketing software company that went public and eventually sold to Salesforce for $2.7 billion in 2012. In this episode of Founder’s Corner, Dorsey tells the story behind ExactTarget’s success, sharing some of the key principles that helped him overcome challenges, scale the business, build a world-class team, and develop a vibrant company culture.
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On starting ExactTarget without a technical founder
- “Three hustlers, no hackers”: The old adage is that to start a software company, you need a hustler and a hacker to get started. ExactTarget’s founders were three hustlers with no real technical background. Dorsey says that made it an “against all odds”proposition, but he believes the company’s core management and operational expertise actually helped the company grow quicker and more profitably.
- Surround yourself with technical people: When you start without technical expertise, it’s important to quickly build a development team that can ensure the technology will scale properly.
- Balance product knowledge with go-to-market expertise: To this day, Dorsey says he’s still learning about the technical nuances of building a SaaS product, and he doesn’t expect that education to stop anytime soon. For non-technical founders, it’s critically important to perpetually ramp up your technical proficiency because that understanding will allow you to make better decisions and establish a clearer product roadmap. But Dorsey says technical founders also need to invest time into understanding go-to-market strategy. Balance is key, and skewing too far one way or the other can spell trouble.
On deciding when to raise and who to raise from
- If you do raise early money, focus on small checks: ExactTarget raised a $200,000 seed round, but it was mostly a collection of small checks from family, friends, and neighbors. The reason for that strategy: Dorsey and his team didn’t want to damage any relationships if the company wasn’t successful. More importantly, Dorsey says taking less money early on kept the ExactTarget team focused and lean, and ensured that they don’t spend money on things they didn’t actually need.
- Choose investors based on the total value they can deliver: In 2004, ExactTarget raised its first VC round from Insight Venture Partners and chose that firm based on its value-add model. Dorsey said that partnership proved to be incredibly valuable because it allowed ExactTarget to tap into a critical support system and network of similar entrepreneurs to bounce ideas off of.
- Select the right investor for the right stage of growth: One of the biggest reasons Dorsey was able to successfully scale ExactTarget was his ability to surround himself with the right investors at the right stage of the company’s growth. Those people helped round out his areas of inexperience at each step along the way.
On building a vibrant company culture
- Focusing on Employee Success before Customer Success: ExactTarget’s approach back in 2009 was to create an atmosphere and an environment that exceptional people were proud to work in. While some companies focus first on customer success, ExactTarget focused first on employee success with the idea that if they had engaged and successful employees, then its customers would be very engaged and successful, as well.
- Making culture the glue that holds your company together: Ultimately, culture shouldn’t be a secondary goal — it should be at the center of everything you do. If your culture isn’t genuine and real and core to your business, employees will reject it. Once you’ve a solid cultural foundation that’s based on the pillars of your mission and vision, employees will take the baton and organically cultivate the culture you’ve created.
- Opening lines of communication and transparency: In 2007, Dorsey started sending out a weekly email to everyone at ExactTarget called “My Friday Note.” Typically, it included a variety of personal notes and photos from his travels, as well as reflections on the previous week, key company metrics (nothing was off limits), and important changes to growth strategy. In five years, Scott never missed a weekly email — even if he was on vacation, or dealing with the rigors of fundraising and scale — and that had a hugely positive impact on employee engagement.
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