85. Beyond Strategy: How AI and purpose partner for market success

Dom Hawes:
00:03

You're listening to unicorny, and I'm your host, Dom Hawes. Welcome, unicorners, to part two of our dive into purpose. We're talking with Dominic Rodgers, head of marketing of Frog Capital. Frog is an investment company that focuses on purpose led businesses. They believe that businesses built around a positive purpose are more sustainable and more resilient. In short, they believe that purpose led businesses are a better investing bet. That's right, unicorners. This is not soft and woolly purpose stuff. We're being overtly commercial again. This is about succeeding. This is about winning the future. So we're examining the symbiotic relationship between purpose and business growth. Now, in part one, we talked about all of this as a thesis, a belief that purpose and growth go hand in hand. In part two, we're getting real. How do you make a belief like that come true?

Dom Hawes:
01:00

What does Frog actually do to help.

Dom Hawes:
01:03

The business's it backs achieve scale?

Dom Hawes:
01:05

And what practical tools and resources does it use to do just that? Let's find out.

Dom Hawes:
01:11

Talk to me, Dominic, about some of the toolkits Frog Capital has developed to help your portfolio scale.

Dominic Rodgers:
01:18

We have developed over two dozen toolkits that really support software businesses scaling up across finance, go to market strategy technology, and so on. Some of the key toolkits we've developed are scaling product market fit, building sales machines, strategy workshop days, how to create a board pack, delivering tech, due diligence, for example. And most recently, the toolkit that we've been working on is actually a new UI for accessing our toolkits. We've created an LLM, so a generative AI that has ingested all of our toolkits so that when someone is on our website and they search, they've got a question on their mind about how they scale their business. It's something keeping them up at night. They can ask that question and our toolkits will effectively answer the question.

Dom Hawes:
02:14

That's so cool.

Dominic Rodgers:
02:15

It's absolutely awesome.

Dom Hawes:
02:16

I mean, is that open to anyone on the website? Surely that's an internal tool for your portfolios only.

Dominic Rodgers:
02:20

No, that's for anyone that goes back to Frog's purpose, which is to help support businesses to scale. Obviously, we invest in businesses ourselves, but it's a really great way of sort of scaling that purpose and adding value outside of our portfolio as well.

Dom Hawes:
02:39

And I would think a pretty big magnet to the right types of companies. I mean, that's a continuation of the symbiosis that we talked about at the end of the first part of this episode where the more you scale your purpose, the more you scale. And the more you scale your purpose, because the two are centering linked. It's interesting that you're doing that with a public facing LLM. I mean, I think that's simply extraordinary.

Dominic Rodgers:
02:58

On the one hand, it's complex technology, and we have an operating partner. He's a software engineer, he's a CTO. He's able to work with a team to kind of deliver that. It's also very much a marketing initiative because it's the content that is answering the questions. If it was a new idea without any content, we'd be reliant on other people's ip to answer those questions, which, in my opinion, loses, you know, you lose value there because people use the tool, maybe, but they don't think Frog really know what they're talking about. They think that was a really useful tool. And there's no connection between the advice that they're getting and Frog. So it really is Frog's product, Frog's team that is answering these questions.

Dom Hawes:
03:52

We talk a lot about innovation on this show. Talk about discontinuous innovation. Geoffrey Moore came on. We have an upcoming episode with Bensau from INSEAD, who is the don of continuous innovation in companies. And what I'm hearing here is an area people don't often talk about innovation, and that is attitude. I mean, it's so innovative. The way that you're kind of open source or public with everything you do, and obviously, the use of AI and the way you doing it is innovative. But I think your attitude to what you do with that proprietary knowledge is extraordinary. And it's very easy for me to see how that will serve you well. And I hope that listeners will use that as inspiration to think how they could give to get, rather than ring fence everything and, you know, and paywall everything and gate all their content.

Dom Hawes:
04:41

It's a very, to my mind, very innovative approach.

Dominic Rodgers:
04:44

It's something that I call the godfather strategy. I remember when I was editing a magazine, I interviewed a swedish man who, he was coming to the end of his career. He was a multimillionaire, and he used his business as a force for good in his community and created sculpture parks, made sure that the infrastructure of the town where the business was situated was really top notch. I thought about it, and then I thought, you know, he's like the good godfather, okay? Not the godfather that the film was made about, but he's like an actual human godfather. Someone who cares, someone who is really trying to do good. And I think that this works in marketing in general, is that if you are putting out marketing content or product content or whatever, that really adds value.

Dominic Rodgers:
05:41

Then that's going to provide a halo effect to your brand.

Dom Hawes:
05:45

Super. If you can achieve it's not easy to achieve, but if you can achieve it, I think it can be so powerful.

Dom Hawes:
05:50

We've talked about the toolkits a little.

Dom Hawes:
05:52

Bit, and obviously your attitude to what you do with those toolkits. Some of those are co created with operating partners.

Dominic Rodgers:
05:58

They're all co created with the operating partners. So the operating partners, the senior partners, the investment team, myself, we talk continuously about the challenges that scale ups are facing. We've already got a bank of a couple of dozen toolkits. We've got over 15 podcasts, dozens of articles and videos, etcetera. But we're constantly learning, we're always seeing new challenges, etcetera, that are arising crucially because the team have got a lot of experience. We're able to identify new topics that we can cover that they're not really new topics, the challenges that the businesses are facing at a particular time because of market conditions, etcetera. Last year we identified that mergers and acquisitions is a really important topic for people because it's a really great growth strategy when you've got a challenging market. We've also done that across a number of different topics.

Dominic Rodgers:
06:57

And the operating partners, I'll speak to them and they will come up with an outline. They'll write the first draught, will then review that and they'll maybe write a little bit more, or they'll focus in a particular area. I'll edit that and I work with a great designer who will design that into our toolkit template. And then the operating partners, senior partners will review that to cheque that there's nothing missing or there's nothing that we focused on too much, etcetera. So it is absolutely a co creation extends to our podcast as well. We talk to our operating partners about the things that they think are the burning issues for scale ups at any given time.

Dominic Rodgers:
07:40

We'll talk about those topics, what the key points are, what the takeaways are, how is it practically useful, and then I'll record that with a great team that I have, and we'll edit that and then we'll review it and we'll put that out there.

Dom Hawes:
07:57

What I find really interesting here, we talked offline, you and I, a little bit about engaging other people within the business. And it seems to me, if you sort the word operating partner for executives in another business and you sort the word portfolio or investee for customers. Cmos, listening to this could be using exactly the same model to engage fellow executives to co create content and make sure that whatever they're producing is bang on the money for the customers or the markets they're trying to reach.

Dominic Rodgers:
08:26

Yeah, I think if you take it back to first principles as a CMO, your job is to market the business that you are in. And the business is made up of huge talents and great people and teams. And if you're trying to think of ideas without the product team, without the tech team, we invest in software. So if you're not using all of those tools, all of those skills and experiences, you're missing out on a huge opportunity and you're doing a huge amount of work that's outside of the benefit that you've got there on tap.

Dominic Rodgers:
09:05

And so building relationships with the product team, the tech team, the sales team, it's so important because then you almost develop a flywheel where you get great value from the product team, the marketing team, develop that, communicate that to the sales team, take that to market and then they hear from the market how that's received and they can then feed that back into product and into marketing. So you get this virtuous cycle.

Dom Hawes:
09:36

Yeah, I'm sure there are lots of our listeners who are engaging their fellow executives, but I've met many, many businesses where they build large, in house teams, largely creating content, and they do it as an island, and then they do it as an island to provide other teams with content, which is then often not received too well. But I just love the concept of putting execs or operating partners, in your case, right at the heart of that content is their expertise that you're showcasing. And I'm sure this is going to be a no shit Sherlock to a few people listening, but to many, I.

Dom Hawes:
10:08

Don'T think it's going to be Frog.

Dominic Rodgers:
10:10

We're all about helping, about offering support, adding value. You're absolutely right. There are going to be lots of people being like, well, this is, you know, this is 101. But for a lot of people, marketing might be further away from the core of the business. The founding or senior leadership team might not understand marketing as well, and therefore not give marketing as many resources as they need. That makes it incredibly difficult for great talents to actually have the impact that they want to. And so hopefully this is just a really good inspiration for, whether it's the finance teams or it's the product teams or it's the senior leadership teams to think marketing can be an investment rather than a cost. It's a strategic resource rather than a veneer.

Dom Hawes:
11:01

And the conduit to getting the engagement to those people is the toolkit.

Dominic Rodgers:
11:05

It's just so practical.

Dom Hawes:
11:11

If you're a regular, you will know how much I love my tech. I'm a sucker for a platform. So Frog's use of AI and making it open to all to help businesses access the right tools to tackle their problems, well, that's. I'm kind of speechless. I think it's amazing. But it's the driving purpose behind it that I find really inspiring. Frog's purpose is to help businesses grow. So of course it makes its tools free to use. Yep, every video, every podcast, every paper, every toolkit it publishes is a marketing hook for new businesses. But it shows that Frog's purpose is true, that they're here to promote growth, not sell growth. And that is a key distinction. And it's one, I think, that often gets confused.

Dom Hawes:
11:56

Companies might think their purpose is to make money for their shareholders and owners, but it's highly unlikely that actually is what they do. It's more a symptom of an in to out mindset. The power of purpose is to keep the focus on what a company actually does and more specifically, on what it actually does for its customers. And that's the thing that makes the money and that is thinking out to in. So the money bit is just the reward for doing the purpose bit. Well, the other thing this approach shows is how integral marketing is to the firm. As Dominic says, it's not just a veneer, it's actually part of. Of what they do. And as I've said on previous podcasts, when you can't tell when your marketing ends and your business begins, I think you're in a pretty good place.

Dom Hawes:
12:41

And what I want to know now is where Dominic begins. How does he order his marketing efforts? Is he a brand man or does he go straight for performance? Let's find out.

Dom Hawes:
12:53

Talk to me about your attitude and your approach, and how you prioritise the different ways that you try and impact the companies you invest in.

Dominic Rodgers:
13:03

Most people will be familiar with Binet and fields cheque out the long and short of it. It's a really valuable read. I feel it's quite similar to Daniel Kahneman's thinking fast and slow. The covers are even quite similar. I look at performance across both marketing and sales, rather than just performance marketing for startups and scale ups. Performance is obviously incredibly important because revenue is important for mooding the needle, demonstrating product market fit, building momentum, and obviously paying people, which is a nice thing too. As you go further along the scale up journey, you can't just muscle your way to the revenue. You have to build your brand, your awareness. And that becomes a really sort of virtuous cycle where your reputation and the awareness people have of you is adding value to your performance, marketing and your sales function as well.

Dominic Rodgers:
14:04

It's almost like a nice problem to have. The better you're doing, the more you have to focus on your purpose. But that's where you look at things from the fact that the purpose is really embedded in the product anyway. It's not about, well, regardless of what the business does, how can we use purpose to market it? Because that's massively back to front. You have a purposeful business, a purposeful product. You market it in the same way as you'd market any other business. So performance is really important.

Dom Hawes:
14:39

Quite often, again on this podcast, I discuss use of the word brand in the boardroom. So there's one account that says you need to find a synonym for brand. Let's call it reputation, because that way people know what you're talking about. And then there's another camp that says, no, no. What you need to do is educate your fellow executives to understand what brand means, because it's an important concept and it has intangible value on the balance sheet. But here we're talking about purpose, which I'd say it's not synonymous, but maybe.

Dom Hawes:
15:06

Could be a proxy, because if we.

Dom Hawes:
15:08

Could get the whole executive team to understand that brand is how you communicate your purpose, then maybe this helps a marketer communicate the importance of the investment in and the activity on Binet and fields.

Dominic Rodgers:
15:22

Long yeah, I definitely agree with that. I think that purpose and brand overlap massively. That's not to say that they are absolutely synonymous, because as we've discussed, there are lots and lots of brands that they're not purpose driven, and that's fine. It's not exclusively about purpose. I just feel that purpose adds so much value to any business or in any industry. I think of it from the perspective, a kind of a cross reference between the long and short of it with binet and fields, and the fact that at any given time, only three to 5% of your tam, your total addressable market, is actually buying. So if you're focused on performance all the time exclusively, it's very difficult to increase efficiencies and add on salespeople to kind of generate the growth that really you want to make.

Dominic Rodgers:
16:17

Because ultimately, if you're purpose driven, you want to create as big an impact as possible by using a more purpose driven approach in marketing, really communicating your purpose, building your reputation, talking to the market that isn't buying at the moment, you're suddenly building consideration with the market that isn't buying. And so when they are buying, they naturally are either aware of you and interested in you and coming to you. It provides, again, another virtuous cycle.

Dom Hawes:
16:53

We're into the realms of Ehrenberg bass here, which we all love. I think one of the overlooked things about the 95 five, I'm a little bit sceptical about bits of it and often miscommunicate this, but the five only works. The performance bit only works if you do the other 95.

Dom Hawes:
17:06

Right.

Dom Hawes:
17:07

And I have conversations with non marketers who say, well, marketing could be really efficient by only doing the five. Like, if you only do the five, you're screwed, because the decision of most companies is already made when they come in market. They've done their research, they've got their favourite vendors, the procurement, pretty much know who they're going to go with. So you have to do the longer bit. And we're also into the concept of mental availability, obviously, and what better way of increasing your recall and being more memorable and taking someone's mental availability than.

Dom Hawes:
17:38

Having a purpose they can relate to?

Dominic Rodgers:
17:40

Well, it goes so much deeper than this is a useful application for this useful thing. One of my favourite brands at the moment is a brand called who gives a crap?

Dom Hawes:
17:51

Okay?

Dominic Rodgers:
17:52

They've taken a commodity business, loot paper, and they have absolutely wound purpose all the way through it, all of their decisions on a product level, using bamboo, they've created these really colourful, fun packaging. Not only are you engaged in the distinct purpose of the fact that they're using a sustainable alternative for toilet paper, but you're engaged in that purpose because of the fun packaging. It's turning it on its head from something that you hide in a cupboard to something that you put on a shelf because you like the colour, but also you like the cachet of using a, using the sustainable option. So I really believe it is a massively positive ingredient in brand building.

Dom Hawes:
18:46

I think particularly in B two B. A lot of the debate I'm hearing at the moment is around the use of emotion. Like it's, you know, we're finally starting to talk about brand properly and B two B, you know, implicit and explicit goals and motivations and all that kind of stuff.

Dom Hawes:
19:00

What do you think the angle is.

Dom Hawes:
19:01

Here for B two B?

Dominic Rodgers:
19:03

So in B two B software or services, there is by and large an inherent purpose. A lot of businesses just don't bother with it. They're not interested in that purpose. They feel like it's implicit and they get on with what they're doing. They're not communicating what their purpose is because that's not their strategy, that's not their interest. But they're missing out on why their product and service actually makes a difference. Why is it useful? These things are so synonymous with what people are doing anyway. When you're marketing a B two B product, you're thinking about the benefits and the features. And really from a purpose perspective, you're just taking that deeper. You're looking at, why did we get into business in the first place? Whether it's events or whether it's payment software, the list goes on and on.

Dominic Rodgers:
19:56

But you're just reconfiguring your messaging so that you are demonstrating that you don't just happen to be selling x software, you're in business to solve a problem. And that, I think, captures people's imaginations because the buyers want to feel like, you know, I feel good about the work that I do that makes a difference. And making a difference obviously goes back to mental availability, emotion, etcetera. As we've all seen, meaning is becoming more and more important. I mentioned earlier that purpose is a great way of attracting talent to your business. And I think that is going to continue and eventually it's going to become pervasive and more talented people will move away from businesses and industries that lack purpose.

Dominic Rodgers:
20:49

As that happens, people's radar for green washing, purpose washing, diversity washing, etcetera, it will just increase and purpose will become more and more synonymous with traditional value, with branding, with business in general. The inherent focus will be on solving society's problems, whether those are environmental or social impact or how we do things.

Dom Hawes:
21:24

Dominic is one of those people who, he's quite softly spoken, but what he says carries deep meaning. I hope you enjoyed listening to him as much as I did recording him. And if you're hearing this message, well, I'd like to suggest that you are exactly who we make our shows for. So thank you for listening. Now why not subscribe to unicorny? Then we'll pop up in your feed without you even having to raise a hoof. Anyway, back to Dominic and Frog Capital. Our talk got to the very heart, the very nature of business, to why a business exists, to why we choose a career, to why we choose to work for one company or another, or to why we go off and start our own businesses. It all comes down to purpose. Purpose answers all of these questions.

Dom Hawes:
22:12

And for us as marketers, it's such an essential place to begin, because if we can get the purpose right, then we can connect that to profitability of the whole company. As we said earlier, purpose is intrinsically linked to business growth. The more you enact your purpose, the more you grow. The more you grow, the more you enact your purpose. So is purpose a proxy for brand? The way we communicate purpose is through our brand. So when we're marketing to the 95% who aren't in market, when we're building brand, building awareness, building consideration, the investment is worth it, because it pays off when we get to the 5% who are in market, provided that is, that what we're showing them has meaning. Now, at the end of part one of this part, I appeal to any marketers out there working on defining their purpose.

Dom Hawes:
23:04

And my request to them, and to you, in fact, was, stick to the truth. Don't make your purpose too rosy or too lofty. And don't worry if the purpose isn't saving dolphins. Not, of course, that I've got anything against dolphins. Some of my best friends are dolphins. The reason your purpose has to be truthful is because for the purpose to be effective, it has to be about what drives your business, why it makes a difference, why it's useful, what it's here to solve. It's not what you'd like it to be. And remember, it can't just be about making money. Unless, of course, you are Delarue. Your purpose has to define what your business is on this earth to do for your customers. And that then must shine through in the marketing you build around it.

Dom Hawes:
23:52

The reality of that connection is what makes it powerful as a growth driver. It's the meaning that inspires customers and employees alike. And for anyone, especially the sceptics out there, that is how you demonstrate the true value of marketing. You have been listening to unicorny. I'm your host, Dom Hawes. Nichola Fairley is the series producer, Laura Taylor McAllister is the production assistant, Pete Allen is the editor, and Peter Powell is our script writer.