Joe Payne of Eloqua: $11M startup to a $1B acquisition by Oracle


Former Eloqua CEO: A Real DC Homer

Those who follow acquisitions know its not always the founder that takes a startup across that final finish line to a really, really big sale. Often it’s a vetted CEO, brought in to supercharge sales, streamline operations, improve margins and make everybody a lot of money in a buyout. This month Startup Grind hosted such a man, Joe Payne, former CEO of Eloqua, a DC-er who led Eloqua in the acquisition by Oracle, an $871 million deal.

What makes a great tech CEO? Washington, DC can claim this one: Payne was born in DC in Sibley hospital. “I’m a real homer,” Payne emphasized. “Caps, Terps, Redskins – I know there are like four of us left.” His family is all boys, and he described it, “A lot of sports, a lot of competition.” To entrepreneurship, “I was cutting grass all through college. On campus, I was the ‘t-shirt representative’ for TS Designs, so if you were a fraternity or sorority and you were throwing a party and needed tshirts, you found me on campus, and that’s really how I paid my way through school, that and the very generous support from Duke.”


Marketing Your Startup: Wear Your Customer’s Shoes

Payne was no novice to the tech industry when Eloqua brought him in in 2007 when it was a little startup with just $11 million in revenues a year. Starting his career with Coca-Cola in marketing, Payne’s marketing expertise catapulted him to president of Intelidata, then CMO for MicroStrategy. His CV reads like a modern millennial, jumping through executive positions at tech companies year after year, until he landed with Eloqua.

As he puts it, “I grew up in marketing. [4:10] When I came out of business school, I went into consulting.” Payne gives a shoutout to Startup Grind DC’s Nigel Morris interview. “Nigel Morris was at this consulting firm that he and I were at the same time. He worked on credit cards for Bank of Richmond, and I worked on credit cards for TD Bank. It was about marketing, and I fell in love with marketing – customer segmentation, trying to figure out where you’re most profitable customers are. I came at marketing as a quant early on, let’s look at the numbers, lets look at where to make our money.”

“Folks, that marketing,” he explains. “Marketing isn’t standing at a trade show both, it isn’t sending out emails blasting your customers. It’s figuring out what the right product and promotional mix is for you company, and what the right positioning is to maximize value for your company.”


Growth Capital: West Coast vs East Coast Offense

I dug into the archives to quote Payne, “You had said, ‘Raise as little as possible for a startup’, and you actually did that, you raised close to 35 million on about a 100 million in reoccurring revenues, and you didn’t raise for another 5 years to IPO. What is the maximum amount we should raise?”

“There’s not right answer to that question”, said Payne. “Right now money is cheap, when I said that, money was expensive…the way we ran our company is not the way everybody does it, and its not what I call the ‘West Coast offense’. WC offense is you spend and spend until there’s not 1% of growth left. That means you’ve got to raise money and raise money and keep spending for growth. And the WC offense has worked extraordinarily well for lots of companies out there. It’s worked extremely well for lots of investors. It doesn’t always work well for the entrepreneurs.”

“The founder of Pardot sold his company to Exact Target. The founder of Pardot made like 10X more money than the founder’s of Marketo will ever make, because he followed a different strategy. He said, ‘I’m not going to raise a bunch of money, I’m going to build a nice company, and I’m going to sell it for a $100 million, and when he sold it for $100 million he took home like $90 million.” Payne paused as the audience took that in. “When I say run the ‘East Coast offence’, what I would say is do what’s right for you, if you have growth, (he shouts out to TrackMaven), you can burn money, but if your growth rate is not that high, be careful, because that money comes out of your, and your employees, and your friends and family who have invested in you.”

“In 2007 we sat down and we said, we’re not going to raise any more money. That day we cut 20% of our staff. And almost everyone who left exercised their options that day, which paid off really well for them. After that, we took everything we made and invested that back into growth – but we didn’t spend more than we made. And when we sold the company to Oracle for $870 million we had over a third of our people make over a million dollars. We had over 300 make over a hundred thousand. And all the original investors – the moms and the dads, they all made money. That almost never happens in tech.”