a16z Podcast - a16z Podcast: Messages and Movements in Politics AND Business

Episode Date: November 3, 2016

In business, as in politics, "the movement is the message" -- whether that "movement" is a product that's taking off grassroots-style in an enterprise, or is a political candidate. In fact, you can think of political campaigns in general as a lot like startups ... only there's no second place in politics! And you can definitely think of business -- and in particular go-to-market strategy -- as a lot like political campaigns: in allocating marketing resources, going up against incumbents, and much more. Ultimately, it all comes down to the message -- setting the criteria and narrative as tailored for different "buyer" personas, from developers/users/CxOs to the voters you have to persuade. But how do you tell a message is working? With such complex, coordinated efforts behind a visionary product or person, is there room for instinct in message development and discipline? And where does the competition come in? They're laying traps for sure, and while that's obvious in politics it may not be so obvious in business. So pay attention to political campaigns as a way to think about go-to-market business principles, argues a16z's Mark Cranney, with longtime political operator Todd Cranney (who is also his brother!) on this episode of the a16z Podcast, another one of our "hallway conversations". The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments and certain publicly traded cryptocurrencies/ digital assets for which the issuer has not provided permission for a16z to disclose publicly) is available at https://a16z.com/investments/. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.

The content here is for informational purposes only, should not be taken as legal business, tax, or investment advice, or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16Z fund. For more details, please see A16Z.com slash disclosures. Hi, everyone. Welcome to the A6 and Z podcast. I'm Sonal. And today I have with us the Brothers Cranny. And that includes our in-house operating head, Mark Cranny. who I actually am going to call Cranny, because that's what everyone here calls him, and his brother, Todd Cranny, who I'll call Todd on this podcast, because that's your name. And Todd, you're a political operator for a very long time. Like, what's your background? There's only one cranny in A16. I know that. And it's Mark Cranny. I got that. So I've worked on three presidential campaigns. I worked on President Bush's reelection campaign. I worked on both of Governor Romney's presidential campaigns. I work for Governor Schwarzenegger's reelection campaign. And I also work for Meg Whitman. when she ran for governor of California. So when you say you worked on campaigns, like what, there's so many different functions on a campaign? Like, what was your overall role?

Particularly in the political operation. I served as the Deputy Political Director nationally for Mitz campaign. I ran the Western States for MET the first time he ran. And then I also was political director for Meg when she ran for governor. So a lot of the focus for me has been on the political operation side of the campaign, the actual politics of the campaign. That's great. So those of our listeners who don't.

know the other cranny. You bring a ton of expertise on go-to-market strategy. And one of the things that you guys are both telling me from very different vantage points is that there's a lot of similarities between business and politics, which I think people can buy on the surface. But what argument would you make? I think, you know, if from an entrepreneur standpoint, your go-to-market executive or even a CEO, putting the politics aside, if you look at what's going on in these big campaigns, particularly now, and compare it to what you're doing on a go-to-market side, there's little things you can learn because it is kind of the Super Bowl of, you know, a big go-to-market.

If you think of how these started off as primaries and they had to go through this whole process, now we're down to the final two, it's a lot like enterprise sales for campaigns selling to, you know, large enterprises. You've got to get a lot of different people on board in these companies. complex selling situations, and essentially get them to vote for you on the tech sell side. So I hear the similarities that there's some lessons to be learned from campaigns or just thinking about them as the same type of thing, like getting to a vote, getting to someone to pick you essentially or pick your product. But break it down for me at the very basic level.

What's the product here? The product is the candidate. I mean, in politics, the product really is the candidate. Now, the advantage you have in businesses that the product is innate and you can improve it. control it completely. In politics, you can't control the candidate because it's a person, obviously, and they've got to learn and grow, and they're going to have their moments. But the product is the candidate, and that's what you have to build off of. And then you essentially have an organization, and it's a business organization, just like you have on the business side. I mean, you have a strategy team that's setting up in terms of what is the overall strategy of the campaign, the resource

allocation decisions have to be made. There's a political department, which is essentially the marketing department, you know, not exactly one-to-one, but it's very much similarities. You of a communications team that is doing all the PR and the outreach dealing with reporters and helping build the narrative, you have an administrative team that's taken care of all the legal and all of the compliance issues and everything under the sun and how the actual organization runs. And don't forget the finance team. Well, it's a raising the money. Yeah, raising the money of a finance team. I mean, it's a big business. But political campaign really is the ultimate startup. You come in with

nothing and you have to basically build a organization and you got to do it in zero to 60 and in a hurry. And it's kind of the ultimate startup and then shut down. So a political campaign, unlike a startup, when it shuts down, it just, it ends. I mean, startups actually shut down too. They do. Yeah. On a campaign, you have a finite period. Meg always would ask me, what's the biggest difference between business and politics? And I'd just say the difference between business and politics is that you can in business be competing with somebody in a quarter and come in second and still make a lot of money and still be in business for the next quarter. And politics, you come and second and you're done. It's over. So there's no second place. There are no points for second

place. You know, the other thing that is a similarity between business and politics is it, in particular on the cell side, is it's relationship heavy. I mean, it is, it requires a lot of building relationships, interpersonal skills, dealing with others, conflict resolution, solutions, less about innate objects, more about dealing with people. If you're dealing with the technology and the engineers are fixing the problems and working out the bugs and they can improve the product from feedback you're getting and really improve it dramatically. Well, you know, we're helping the candidate who is the product, right, and we're giving advice, but they're a human being. They have their strengths and they're not a technology. Well, I would argue that even

technologies have strengths and weaknesses. And Granny, Mark Cranny, I've heard you argue that sales and go to market is all about relationship building. Well, I mean, you know, kind of to that point in a startup is as well as in a political campaign. It is in the control of the go to market. team with what should that buying criteria be. You have the ability of helping a customer and or a voter show them what that criteria should be and how they should go about thinking about that. If you watch what's going on right now, both sides have two completely distinct views. I mean, there's X amount percent on either side, they've already set in their ways, but that middle piece is the one that's going to sway you one way or the other. And a lot of cases,

that happens, you know, and go to market, particularly in highly competitive situations where you've got, you know, a bunch of people going at it. And, you know, later on in the process, it might come down to the two finalists. You know, what is that criteria? Have you got the votes? When I've heard you talk about criteria, it's essentially saying, don't just look at what's right in front of you. There's a whole context that you're creating for this product and this engagement. How does that play out in the election example? I mean, we're not actually saying, hey, you're telling the voters what to think, obviously. Well, but you kind of are. I mean, the reality is you are responding to what the voters want. You know, sometimes voters don't know what they want. You know, just like buyers don't know what they want. You got to tell them what they want. And you can't tell them what they want. You can actually create a new paradigm with them.

Even for voters who seem like they know exactly what their views are on certain issues? I mean, there's definitely, you know, sets. I mean, on either side of the spectrum that are set in their ways and they're not persuadable. I mean, we talk a lot about persuadibles. Who are the persuadable that you could actually set the criteria with? I mean, he talks about criteria. what we would describe it in the political world is what is the narrative that you want to tell what is the there's nothing more important in a in a political campaign than the message that you want to deliver

what's the story you want to tell it's exactly the same terminology exactly from a marketing standpoint and there's different levels of that story if you're going after a large technology company you know there's all the users that might you know use your product there's kind of little mid-level management then there's executives everybody has a different set of buying criteria for a user than it is for an executive. So if I'm a seller of technology, I need to understand what all these three personas, the users, managers, and the CXOs, what they're going to care about. From a political standpoint, they need to know that too. And that's what we're doing. And you need to hit it from multiple different angles. And the amount of data on the voters that a political campaign comes up

with is enormous in how they go to market to either get out the vote and or get them to vote for them is is enormous all the way down to putting boots on the ground from a sales force standpoint we use an enormous amount of data to help us figure out what the message needs to be how do you craft the narrative off that message and then what are the channels of delivery that you use to get that message out i mean there's obviously the advertising route and the community you know digital route etc but then there's the on the ground field operations field staff working with volunteers who are sharing that through their channels. There's endorsements, validators, a products that are telling the same story and the same message.

Endorsments are reference selling, right? I mean, the other things he just went through is on the marketing side is, you know, the advertising versus digital, what is my ROI on the political side? Well, that's the same thing. A CMO has to answer from a technology cell standpoint as well. Am I better off doing this type of campaign or program? It's fascinating to watch a problem. presidential campaign, how do you unseat an incumbent? It's hard to unseated incumbent. And there's a

whole different set of strategies and tactics to do that versus starting from a level playing field. So what are some of the differences when you don't have two fresh new startup candidates or products and you have like say a David versus Goliath type of situation? What's some of the differences? I mean, both politically and in business. I've been on both sides of this. I mean, I was on the on the incumbent side with President Bush. And I was on the other side of this with Governor Romney, the parallels between 04 and 12 are pretty stark. I mean, it is a huge advantage to be the incumbent. The president has a ton of money and has been building up organization for four years, has been road testing that organization in a smart way. One of the biggest criticisms,

for example, of the 12 race of mid is digital in the investment in infrastructure. Well, the problem is we didn't have the money to invest in infrastructure in both field and on the data side because we were broke. You know, and we had four months over the summer, to try to redo all that sort of stuff, to build out a field, full field program, to invest in data and technology, well, four months when the president and his team had been spending four years, in fact, eight years that they'd run for president. And they'd done a great job, and they used that to their advantage. Data and technology and field operations mattered. The Obama campaign had plenty of lead time to build that organization out, to road test it and try different things.

And one of the things they did really smartly was they learned about this whole concept of virtual precincts and generally precincts are neighborhoods right you've organized you have one person in neighborhood they're friends with everybody and by the way in the business world the equivalent would be like territories i would categorize it in our world is you know real granular segmentation and targeting it actually you probably call it the same thing in your world i'd assume yeah and if you look at the political side of the shop i mean you get down to it there's you know a handful of states that really matter if i'm a startup or you know trying to take on the incumbent i'm starting behind they have account control. There's probably technologies and legacy in place, like in a political

campaign. So I need to go after not the states that matter, but I need to go out to, you know, do my segmentation and targeting type exercises to go where I can have an impact quickest if I want a chance to win and get the toe hold and then build from there. So sort of a beachhead strategy in that context. You know, to go spend a lot of money and if I'm not in a incumbent situation on states that don't matter and or accounts that are going to not, you know, they're not going to be their early adopters. I think to translate that, I believe more, is it when you're not the incumbent, you have very little room for error.

And you have very much, a much more difficult resource allocation decision to make. You've got to really know what's the 20% that's going to get you 80% of the way there. If you mess that up as an incumbent, you got a bigger leeway that you can probably deal with. And you can, again, road test and learn and fix it. If you're a challenger and the situation you're in, you just don't have that. room. Right. You don't have the resources or even the reputation. You have nothing. This smart strategy that the Obama team figured out was the influencer model. Instead of just picking one person in the neighborhood, they started figuring out through data mining and

email. Social. And social. Exactly. There's certain people who don't pay attention, don't really care. But they'll pay attention to the expert on politics in their neighborhood. But what does your neighborhood really look like nowadays? Well, your neighborhood could be nationwide. I've lived in, I don't know, 15 different places. I mean, I got friends all over the place. I don't necessarily have a neighborhood. Your neighbor could be your Facebook friends. And in fact, I don't, yeah, and in fact, my neighborhood right now that I live in, I'm hardly ever there. I don't even barely know my neighbor neighbors. There are certain people in those virtual neighborhoods that are influencers in politics. The Obama campaigned in a nice job of identifying those kind of people

who could then spread the word out and organize. That's an important part of sales, I think. Well, that's a, it's a huge. You've got, you know, the coach, you know, what's the difference soon a coach and a champion and, you know, a champion is actually going to go advocate on your behalf without you there and or in the marketing world on the, uh, on the tech side. The influences are very similar. And the point is they, they took business practices and applied it to politics. We're in basically the same business, but it's just different for different purposes. But look, you have to be careful with the comparisons. I mean, every campaign is different. Of course. And President Obama is more of a movement candidate than some others are.

Right. Everyone gets in love on politics on the digital and on the grassroots side, but you really have to have the right kind of candidate as well. That makes a lot of sense. You know, you still need to apply the same organizational principles or you lose it. If movement candidates can combine organization, like the principles we're talking about here, go to market strategies, basically, they can, you know, they can be pretty devastating in a successful way. But what is the movement? The movement's the message. So if you don't get the message right and you don't have the narrative right, it doesn't matter.

it doesn't matter after that. Okay, I would much rather have message and movement and take my chances on an organization, although I want both because you can't win without both, really. There's actually a good analogy on the movement, what I would say, the bottoms up type movement, which we see a lot in our world. A good example is in the DevOps world and open source world where the movement might start grassroots-wise. You mean like a viral app?

Well, they could be viral app. It could be, you know, movement from GitHub. users and or a slack, and then you've got to put your go-to-market team and strategy in place to move up market in size of companies as well as up into the executives to go institutionalize that across the whole company. That's a good example of watching what happens on the political side as well. I mean, just having a movement where I've got a bunch of rowdy fans, if you can't go put a strategy, a team in place to capitalize on that. it doesn't mean you're going to win, right?

Absolutely. It's really crucial that you have to be able to capture that energy and excitement and channel it or you just dissipates you and you lose it. A lot of times you have one but not the other. And you need both. And you need both. I mean, you know, and if you get in an environment where you don't have the movement and you're battling between two candidates that are both just traditional, then, yeah, you want the organization

because the organization can muscle the thing through and get you across the final. You know, the extra few points to go to the top. A field operation to us is paid field staff that are organizing volunteers. The grassroots organization, they could be worth two to four points in a close election race if it's done well. That was basically, unfortunately, the difference between us and President Obama. I mean, he made by three and a half points. It was him being able to squeeze out on his field operation.

And what they did was they maximized the technology and the digital to get there. And that was the key. Well, Cranny, for the sales and the go-to-market operation, what's the difference between the field and the inside? And do you have the equivalent in political campaigns? Yeah, I think it's very. Yeah, no, it's very similar. On his, I mean, you'll let Todd describe his side, but say we've got a bottoms up kind of viral thing going on and it could be both on the digital side, customer facing or B2C or on the enterprise side. You can have that, you know, that beachhead established. But if you're just

spending all your time going to establish another beachhead at another company, you're at risk of getting pushed out by the incumbent and or somebody that's got that organizational control. And that's going to be the incumbent or another startup that actually builds out that next layer to move upmarket in either size of company and or up market inside the big company that are penetrated in. But my point, though, is, I mean, you can have the best product in the world. You have the best candidate in the world. You can have the best story in the world.

But if you can't tell it correctly and you can't tell it towards reverend. to the parties that are interested, you're screwed. I have that conversation over and over again with working with a lot of startups where they have a piece of the message right for a particular audience. Typically, it's the users. But they haven't thought about what different level of that message is going to be required as they move up to managers, VPs, the CXOs, the CXOs, the CXOs, the CZs, the CZ. or the vPs or you have to know your audience right and there's multiple audiences and multiple layers

of organization process and messaging that needs to be in place to go grow a technology company if you don't think about that thing those things that the incumbent and or another startup is going to have an angle to come in and stunt your growth how do you guys know in both of your spheres that the message is working like is this is this do you just not get traction if it doesn't work? I mean, do you just keep redoing it? You look at the data. You look at the market research, basically. We do polling and focus groups, and that pretty much gives us a chance to really vet out and know kind of what works and what doesn't work. I think one of the worst things people do, and it drives me crazy still in this business, is that these people that want to go

with their get. I'm not a big believer about pulling things out of my ass. I may be, you know, really talented, you know, all those sorts of things, but I like to know the answer before I ask the question. So you know what the message is. You know it worked because you've tested it. it. But what'll happen is you've got to then stay disciplined on that message and not have this sort of thing where, well, I don't think that message works and the polling must be, I mean, and just kind of waffle back and forth. You just go back and forth. You have no message discipline. I just think it's a really crucial. A lot of people look at things and they'll say, well, my instinct tells me this. Yeah, you have to have instincts when you're selling it in a room and reading

a room and knowing how to deliver it and deliver it in the right way. But the message itself, you test it. You know what it is. You know what the data tells you. Now, that's the first part of it. then you have to have somebody who can deliver it, and someone who can deliver it the way it's supposed to be delivered. In other words, deliver it the way you tested it and then deliver it with some confidence and stay on that message and not wander all around. And, well, I think my gut tells me this and this and this. Message development and message discipline is crucial. I think everybody thinks, well, that's just going to come from the candidate only, but that's got to be. Or the founder's CEO. Right, right. That's got to be institutionalized. Everybody's got to be

singing from the same sheet of music throughout a, a, sales, a marketing organization and or a political campaign and how you communicate that, how you, you know, train and enable people and are you providing them, you know, the content and what that message is. And otherwise, you know, you lose, right? So far we've been talking about politics, candidates as products and technology as products. How does this all play out given the competitive landscape? It's the same principle that you have in business, right? You got to know your competition. You got to know their strengths, their weaknesses. You got to know what they're selling, how they're selling it, what they're saying, what they're going to do, because you've got to be

able to counteract it, obviously, but not just be defensive about it, but how do you go on the offense on this thing? And so there's a huge element, I think, of research and knowing your competition, knowing what they're saying, why they're saying it, what they're doing so that you know how to counteract that, but also look for opportunities, not just to play defense, but going to offense. And you got to also know, again, they're out there trashing you, obviously, in politics is pretty obvious. You see it on television all time, but you also see it at every level, all the way down to the field reps, all the way down to the local county chairman, blah, blah, blah, there are people out

there trash in all the time. So you have to be knowing that what is being said so you can fight, you know, you can push back. And sales and marketing in general, if, you know, particularly for earlier stage companies, they're so focused on what they, you know, what their message is and what what their value proposition is. They forget, you know, that they have their other alternatives. They might be the big incumbents. There's other startups they have to compete with. And if you don't really know how they're depositioning you, you can go through a whole cycle and come up empty at the end because they've laid the traps. They've set the criteria. And if you don't know enough about your competition, understand when you're walking into

a trap, then you're sure as heck not going to be in a position to be laying traps. And the best way of preventing a trap being laid is say, my opponent or my competitor is going to say this about me. Right. And there's such a lack of courage in a sales force. Usually that's due to a lack of knowledge of the competition. If you know what the competition is going to say, you should say, my opponent's going to say this.

And it's not that way because of this. And here's what you should be looking at because we're, you know, that's the, that's type of thing you need to, you need to be focused on and have the playbooks built out. So I know if I'm dealing with this competitor, this is the criteria. They're going to be trying to help the prospect bake into their process. If you're explaining, based on what your competitor said, you're losing. And that's a big saying in politics. What's a big saying?

If you're explaining, you're losing. And that's a big thing we say on your heels. You're playing defense. And what's interesting, too, is two points mark. makes he talks about you got to know your product inside now because you got to be able to inoculate and go after it. There's a next layer of knowing the product. You got to believe in the product and be able to deliver a belief of that product with sincerity and passion. Conviction. And you're not going to get that conviction if you don't really know what your

competitor and is and or what the as is environment is for, you know, whoever you're selling to and or running against and his Todd's world. I was actually going to ask an even more basic question about that. You know, in politics, it seems like if you work on a campaign, you have to believe in that candidate and that mission. In companies, we talk about employees believing in the startup's mission, which is why they work there. How does that play out for like the sales force? Do you need a sales force that's totally bought into the mission? Or do you actually want someone who has a bit of healthy skepticism? Like, I don't believe this. Like, how does that one's play out there? The conviction is huge. If there's any doubt, I don't know how many sales calls you've

been on, but, you know, people can see and feel and read. They can tell right through. in a face-to-face type situation or a presentation, and yeah, they got to believe. I totally believe that in any kind of human interaction, you're either selling or you're being sold. Hey, it's great to be healthily skeptical, but if you're going to go out to war for me in the field and I'm going to count on you to deliver, then you aren't, and you're skeptical, that's going to resonate in front of a customer. But I also think to your question, too, our fathers, they always say, don't believe you

bullshit. You can be skeptical and you can be smart. I think that's good because you can be self-critical and have a good, healthy self-evaluation. That's not the same thing we're talking about here, though. You can do that and at the same time believe in your product. Nothing has gotten without flaws, whether it's your product or your candidate or whatever it might be. But you've got to believe in it. You got to sell it. You know, a good example. I may have a product that I'm going to market with that, you know, I don't have the users, right? Or maybe there's competition that does better down with the feature function, you know, forward of developer or for, you know, the individual employee. But that competition doesn't have the scalability or the architecture to be used

across a, you know, Fortune 500, Global 2000 company. I have two-thirds of the equation. The competition has one-third. Well, I mean, you know, I'm going to focus my time going top-down in that situation. And, yeah, I'm going to be skeptical. I'm going to do that internally. and I'm going to beat the heck out of engineering to make sure we build out that type of functionality. I have no issue having courage and conviction and going to market and sitting across the table from a manager or VP or even the user of my potential product and making sure we win that deal. Another important parallel, too, is the feedback on the ground that, for example, the sales team is giving the engineering on business side to improve the product. Oh, Lars talks about this all the time. That's happening in politics all the time.

I mean, you're polling and you're doing focus groups, but there has to be feedback coming up to the strategy team and the candidate to give them a real ground testing of like, what's really going on out there? And that's why the more eyes and ears you have out there, and that's what you have in your field team and your and your volunteers. In the technology world, put yourself in the buyer's shoes. And in Todd's world, put yourself in the voter shoes. What are they asking themselves?

I don't, I think on the sales and marketing side, there's not enough of that that goes on. What is their criteria? So they go through, they ask themselves three of questions. Why should I care or why should I do anything? If you can get it past that, you know, you get some interest, piqued interest. And then, you know, they're going to ask themselves, all right, why you versus someone else. The third one is why now. The why you over a competitor is one of the competitors is do nothing different than what I'm doing versus

is, you know, I could also, you know, buy from a big incumbent. I could buy from another startup or I could just do nothing. I haven't motivated them enough because of a feature functionality or scale. It's typically more technical, technically related. The why now is typically something that, right, this is the best place I can invest my not only capital and money, but also time and management and people and process to, you know, making something happen inside my company. And I think those three questions probably, you know, putting yourself in the voter shoes, you know, I think candidates asking themselves, I'm not sure.

Yeah. So how would you, how would you answer that from the political view? Well, what I would say simply is that if I'm Hillary Clinton or I'm Donald Trump, I would, and I'm their strategy team on either side, I would take the three questions that Mark just asked and make sure I'm asking myself those questions and what are the answers that we want them to be. And I think that you can pretty much define this presidential race on those three questions and who answers them correctly or the right way in voters' minds is going to be the one that wins. So that's the way I describe it. Okay. So just to wrap up, the movement is a message. The, if you're explaining, you're losing. And it sounds like the story is the strategy. And there's a lot of

parallels clearly between politics and business. Thank you, Todd and Mark Cranny. Thank you.