Maya Szutan Azoulay of lool ventures on paying a startup marketing team

Maya Szutan Azoulay

Hi, how are you?

Maya Szutan Azoulay

I'm happy to. It's my pleasure. Thank you for having me.

Maya Szutan Azoulay 00:30

lool ventures, first of all, is an early-stage venture fund based out of Tel Aviv. We have about 200 million dollars under management, about 44 companies, and we're investing out of our third fund. Our check size is between one and three million. We lead rounds of pre-seed and seed, at various sizes.

A quick background about myself: I was born in Israel, grew up in Singapore, competed in the youth world championships in horseback riding, served in special forces in the army, and then started my own low-tech business in my hometown. Then I went into business school: corporate real estate, M&A, corporate finance consulting.

01:30 Then I went into VC. It was my first time with a little team, I was all about operating and building, bringing the flair of execution. I had no idea what tech was, and I can say that I found my passion. I was a principal on the team for three and a half years, and then I transitioned to the operating side, kind of bringing stripes onto my belt for myself, as you say. I joined HiBob to lead business development and the US market launch, doing everything from adapting the product from the UK market to America: sales on the ground, hires on the ground, strategic partnerships, product partnerships. Then I joined Venn, if you know them. They're a residential management system company, pretty big, started from holding the internal supply chain of the living experience, if you will, and today they're servicing multifamily customers in America. Very big. I was there in operations and as VP of corporate development for about three years.

We raised a significant amount, more than 80 million together, and led the transition from a consumer-facing residential experience to a B2B SaaS platform. The company's doing amazing. Then, for the past two years, up to rejoining lool, I was chief operating officer of EX.CO, also known as PlayBuzz, also leading the transition from a media revenue company to a technology, usage-based SaaS company, and the company's also doing very well, once that transition completed. Then, a year ago, when interest rates started going up, I found that the lool ventures partners and myself had been in really good touch along the years, and we found a unique opportunity in time for me to come back to the team and come back home. I'm very excited. I've been on the team for about a year. We're investing out of our third fund. I've led two investments so far, which I'm very proud of, very happy about, one still undisclosed, and we're still looking for stellar founders to work with. So founders, go talk to Maya.

Maya Szutan Azoulay

I think a marketing team, at the end of the day, has a multifaceted role. First of all, it's very attached to the company's brand and brand building. It's voicing the company's values out to the market, but also receiving feedback back: being able to read the market, read the competitors, and understand where the company is positioned and where it should strategically be aiming in the current landscape. So I'd say it's having one eye very focused on who you are as a company, and one eye on where that company fits into the entire market story, looking at the landscape all the time, and making sure the positioning is where the company wants to be. I'll say I think it's one of the only teams in the company that always needs to look two steps ahead, kind of paving the way for what the company wants to be in the near and farther future, and finding the right balance between finding product market fit and also conveying the bigger vision of who the company wants to be.

Maya Szutan Azoulay

I believe there's a premature question that needs to be asked, which is: what is a company trying to achieve with its voice out there? Everyone always wants to achieve more revenue and more growth and more signal, and for everybody to see the numbers and be happy, but at the end of the day there's a premature question founders need to be constantly asking themselves: what is the company catering for at this point in time? Is it trying to achieve education and awareness around the problem it's trying to solve, or around the solution within a very well-known problem? I think that's a very important question, specifically when you're handling earlier-stage companies, where, at my operator days, we would always be consumed by the idea that we're deep in our problem, and we're sure everybody knows about the problems we're trying to solve with our product. But the reality is that most of the time there's a lot to be done in educating the market about the problem you want to solve, because you're innovating, and companies are not always out looking for what kind of new products and innovations are out there.

Sometimes you need to prematurely even join forces, levering other competitors' marketing voices, to bring the importance of a given problem to the market, and only once the problem is very evident do you market the company's product on its own. I think the KPIs are, at the end of the day, lagging indicators. You want to know that you're performing against the goals you set out to accomplish, and answering whether you're trying to educate for a problem or for your product within a given problem is very important, because the levers you'll pull on marketing execution and operation are very different in each case. For example, if you're trying to educate for a given problem in a market that isn't very clear yet, you would run significantly more thought leadership, a tone of voice that in a way even compliments your competition, just to bring bigger awareness to the market as a whole: going on more stages, doing far more educational sessions, rather than voicing your own brand's value proposition. I think in that instance you get to enjoy two things: one, you're the thought leader of a new and upcoming space, and you're putting the flag there, saying this is my territory, and you're also bringing more attention to new value and new standards that are out there in the market.

Maya Szutan Azoulay

It really begs the question of what stage the company is at. I think, at the end of the day, if you're trying to drive your own brand within an existing ecosystem, it's much easier to tag a KPI: you're able to know what the customer acquisition cost is, how much it costs to bring in an ICP-qualified lead for, say, an enterprise software company. It's much more measurable, rather than just creating a general sense of awareness for your problem, and that becomes trickier because marketing attribution, as we all know, is a very hard nut to crack, up to not existing at all, today.

I think it's also tricky because there's a nice discussion to be had around the relationship between marketing and sales, because if you do your brand building and top-of-funnel customer acquisition in a very precise and good way: if you optimise for volume, you'll pay for it in conversion, and if you optimise for precision on ICP, you might miss customers who haven't surfaced their need at a given point in time but might actually buy a product, and you're narrowing your funnel too much. Whereas if you have sales and marketing working well together, and they complement each other, you need to find the right balance of how wide you spread your funnel, how much oil, let's call it, you put on the fire to bring in a wider audience, and really stress-test the boundaries of your ideal customer profile, the kind you're bringing into the funnel, and see how it plays out in conversion into actual sales deals at the end. I think it's constant trial and error, because markets change very quickly, companies and products change very quickly, and also the company's brand and tone of voice, how you market your product, should also keep evolving. There isn't a point where you say "this is my marketing, this is my narrative, this is my messaging, and now I'm going to run with it for three years." It's a living, breathing animal, because it speaks to a market that is living and breathing.

Maya Szutan Azoulay 11:12

Yeah, I think it's in percentages. If more than 20% of the company's budget is going on marketing at a seed stage, it's way too much. There's a very close-knit, low-hanging-fruit circle you want to engage with and discover, and it's usually lower-friction at that point in time, and very founder-led. If you find yourself needing to spend an immense amount of marketing budget at this stage, I think it begs the question of why that's required. You don't want to be fuelling sales at such an early stage, I mean, with marketing. But it also begs the question of how you define marketing budget. What comes into it? Are conferences part of marketing, part of business development, or sales? Is it purely ads and paid acquisition? Is it writing posts and thought leadership, LinkedIn management? It's become more fluid than it used to be, because paid resources are very different today than they used to be, and outbound is very hard to do, so you need to find creative ways to feed the beast, if you know what I mean.

Maya Szutan Azoulay 12:42

I think the later stage is much more open and wide, and very dependent on the type of business. If it's a consumer or SMB company, most of the budget would be marketing-focused. If it's an enterprise company, a lot of the spend would go toward driving enterprise deals and enablement, so you'll see more conferences, more travel, more handholding, driving both marketing and sales, and a lot of focus on brand rather than lead acquisition. My general notion around putting corporate overhead costs onto individual budgets is: do that. Make the corporate overhead as lean as possible, so that as management you're able to see the clearest picture of how much muscle you're pulling in a given direction, and how much you're getting back. Definitely, C-level salaries should sit on the marketing budget, same for sales. And if we talk about the

Maya Szutan Azoulay

I'll say that in earlier stages it's one of the hardest hires you can find, especially in our ecosystem in Israel. Marketing executives: everybody wants the perfect generalist, rounded on all corners, who can do brand, paid user acquisition, conferences, get on stages, run PR. It's a multifaceted position, and to be good at all of it is very, very hard. At earlier stages you usually want someone very hands-on, but someone with all those proven capabilities would usually not come in to run the LinkedIn ads on their own. They're expecting to build a team. So it's just kind of a rabbit hole you're going down. I think it begs the question of what you want to prioritise first. If we go back to the first answer I gave you, around what the company is trying to cater for: if the problem is clear and you're just trying to build your brand because the market is very evident, it's a clear position to hire for. You know what you want to be doing. I wouldn't go by ARR, I would go by market fit.

So if you have the velocity in sales, and you know your sales muscle is built, and you know who your ICP is, and you've exhausted your first cycle of low-hanging fruit, I'd say totally go for it, and create that sharper incline in inbound attraction to your business, and grow sales with that. If you're still in discovery mode, say you're going after a very fresh, green market, changing something in the industry, your ACV might be very big, so you have fewer, relatively large accounts. I think you can gain some more traction, you can even cross three, five, even six million in ARR before you go and hire a full-blown CMO. And if you're in Israel, it's also a big question of where you want them to sit: does it sit in Israel, in America, in Europe? Depending on your market, do you want an in-market persona who can speak the language and understand the nuances, or is it more of a paid, consumer-oriented company that can be managed from a remote position, or remotely for that market? I think there are a lot of questions to be asked, but founders need to hold on to understanding this marketing beast pretty well, before they put it on someone else's shoulders.

Maya Szutan Azoulay

Sorry?

Maya Szutan Azoulay

I think my two cents to founders, before I touch on the investor side of things, is: get whatever education you need to know every part of your business pretty well. There's a saying: go out and do the job before you hire someone for it. I don't know if you need to do it to that extent, but definitely get some education. Whether it's a fractional CMO or an advisor who knows the ins and outs of marketing, and can walk you through what levers you can pull at every stage of the company, I think it's very important. Just make sure it's someone who actually walks the walk and not only talks the talk. As an investor, there's a fine line, because at the end of the day it's the founder's yellow brick road that they need to go through, building out their company.

I can give my two cents if I were them, and at the end of the day let's call it: the company gets measured on results, so I think it needs to be handled with care. You want to know that the company you've invested in is gaining the right clout in the market, bringing the right tone of voice for the brand, and that its positioning is very clear. I think at the end of the day it needs to be measured by customers, by engagement with your brand and your business, because I can have a great opinion, we're all very opinionated people on the investor side, but the company really needs to be speaking to its customers, not to its investors. So I tend to handle that area with a grain of salt, and sometimes founders need to learn their own way, whether it's faster or slower, whether it's failing three times before getting it right, in bringing their company's marketing operations to where they want them to be. And sometimes you get it right the first shot.

Maya Szutan Azoulay

Yeah. So, when you outsource, you know, we have fractional CMOs, individuals who can advise on multiple startups and have very high proficiency, and I'd usually opt for this kind of arrangement in earlier stages. At the end of the day, an agency has employees, has offices, has its own corporate overhead, and it needs volume, so you're not fully attended to, while consultants come in to do a project, are very minded to your needs, and are usually catering to fewer companies on their side, advising fewer companies. I would definitely not bring it full time, in-house, in the earlier stages.

It's a very big commitment, and if you find out you've hired the wrong skill set, or optimised for the wrong needs for your company, it's a very long cycle to change that. The cost of the mistake is very high. And also, going back to needing to invest your own founder time, understanding what levers you're pulling and what's coming out on the other side, what kind of value are you able to drive with the trial and error, whether it's brand building or thought leadership, and what the impact of that is on the grand scheme of driving business. Once you have better data on those levers, at every stage of the company, it's easier for you to know, as a founder, what kind of persona of a leader you want to bring in.

Maya Szutan Azoulay

I think it's a natural evolution. Being an outsourced agency and expecting to serve a growth startup forever is an unrealistic expectation. It's like an SMB product: your customers are growing, and at some point they won't be an SMB any more, they'll move to a bigger, more enterprise-oriented product. I think it's a natural evolution. As an agency, not that I've been one, I think it's very natural to be seeding newer companies all the time, and to understand there's an evolution, even to the extent of embracing that change: staying in touch with good CMOs, and potentially partnering with them along the years, because roles change too. Even if I hired a CMO who's doing a great job, and let's say two people on the team left, you need someone to come in, someone who knows the company, to come in and fill the gaps. If you maintain a good relationship, you can regain opportunities to work again, in different capacities, with your former team.

Maya Szutan Azoulay

I think the stage of the company is one factor. The other is how critical the marketing team is to business success, and how proven that case is. In an instance where marketing is key and very evident, so a function you cannot do without, they'd be largely compensated, not very far from any other team. If it's CS or sales, it's more tricky, because the ratio between success-based compensation and base compensation is very clear most of the time, but I would definitely tie a significant portion of the compensation to results, and to bringing sales and marketing to work together in a cross-functional team, optimising for the same kind of goal, and taking away some of the friction and the attribution of leads, and who brought them in. I would rather have a double quota, a recognition for marketing and sales team, and compensate both, and gain more momentum on the business, rather than have them very separate and

Maya Szutan Azoulay

It's the expectation that someone comes in and takes away all this pain. It's not something you can distance yourself from: marketing, your company, its face, the brand, is something that, as a founder, as a CEO, COO, even in technical positions like product and R&D, you constantly need to be involved with, touch upon, be opinionated on, and be really in the weeds of what's going on. It's not like, "oh, I gave this headache of marketing to someone else, now go and drive thought leadership." No: you're the subject-matter expert, you founded the company, you know the space better than anyone else.

There will be a professional team, and a leader, to help you figure out the best way and the best actions to take, to drive your marketing to the best places possible. But you are going to be very involved in that. That means time allocation, spending time with those teams, and really making sure the communication in any channel coming out of the company is really in sync with everything going on, whether it's your vision, your product, in the way it currently is, or the way you're intending for it to be in the future. It's not going to have less time on your calendar, might even be more, but I think the change you can expect is that the output and the impact on the business will be much more significant.

Maya Szutan Azoulay

I think it's really about allowing myself more room to make mistakes, being more patient with those mistakes, and also setting the expectations with my colleagues, with my teams, both as a manager and as a counterpart. So, knowing that you're going to have a hypothesis for some kind of idea, a project, something you want to run in the company, and you might not hit it on the first try, most likely it's going to take two or three before you're really successful at what you set out to do, and that needs to be part of the expectation-setting. I think this patience really allows, on one hand, for failing successfully in those attempts, and on the other hand, really exhausting opportunities to their fullest, and actually winning on good surprises that can come along.

Maya Szutan Azoulay

Well, you didn't ask about the future. I think we're living in very interesting times, where a lot of the know-how we've come to rely on, in the way we've built companies, and a lot of the assumptions we've seen play out over the years, are changing. I think the key trait you should equip your backpack with, as you're going through your journey ahead, is flexibility, creativity and problem-solving, because reality is changing, very fast, both for us investors, for startup founders, and also for executives at later stages. Maintaining flexibility is, I think, one of the most crucial keys to success in the years we're going to be living in, in the near future.

Maya Szutan Azoulay

Thank you, Etgar, it was a pleasure.