Silicon Valley’s Marketo plants office in Denver to help develop marketing messages people want to hear

Last April, Steve Lucas walked into Marketo’s new temporary space in the Denver City Center and saw the head of human resources sitting at a desk next to the company’s only other Denver employee.

“They were at two desks and that was it, just staring at each other,” said Lucas, who became CEO of the San Mateo, Calif.-based marketing technology company in November 2016. “I just went ‘OK, … we can do this.’ We were hoping to get up to 150 employees by the end of the year.”

Fast forward only nine months, and Marketo is now on two floors, which its nearly 200 employees moved into over the past two months. The company is adding engineers in Denver. And by the end of next year, it plans to expand to another two floors and more than double its staff to 500 people, making it the same size as its Silicon Valley headquarters.

Lucas — a University of Colorado graduate and longtime Colorado resident who is entrenched in the local tech scene and sat on the board of SendGrid before joining Marketo — will work from Denver. Chief financial officer Mark Miller and chief marketing officer Sarah Kennedy are relocating here. But the company is not moving its headquarters.

Think of the new 50,000-square-foot Denver digs, with floor-to-ceiling views of the Rocky Mountains, as more of an HQ2 — a term coined by Amazon in its hunt for a city to build a second headquarters. Denver is part of Marketo’s “dual site” strategy to keep staff regionally diverse with different points of view. But ultimately, it picked Denver because of the access to talent.

“I’m fairly familiar with the tech scene in Denver. But I’m also familiar with the old tech. Denver to some degree was a telco hub. You had MCI, Qwest and all those other companies,” said Lucas, who has worked in Denver at tech companies for the past 30 years, most recently as a president at SAP, the multinational software company.

“You always have to make a bet, but I’d rather make a bet on a place I know. We looked at Phoenix, Dallas, Chicago and Austin. Those were unknown quantities for me. I don’t know where to go around and scour for talent,” he said. “At the University of Denver, we’re setting up a feeder (program) now to get graduates to come to Marketo. I want to do the same thing with CU-Denver and CU-Boulder and Metro (State University of Denver). All of these schools produce incredible talent, and it’s really undervalued in my mind.”

But Marketo has another very strong link to Denver: its new owner. Last year, Vista Equity Partners acquired Marketo for $1.8 billion. Vista isn’t based in Denver, but its founder, Robert F. Smith, is a native. And shortly after buying Marketo, Vista acquired Ping Identity, a cybersecurity firm in Denver. Then Vista snapped up Granicus, another Denver security company. In May, another Vista purchase, insurance tech company Vertafore, announced it would leave Washington and move its headquarters to Denver.

“Vista has (I believe) six local investments now, and all are expanding rapidly locally and recruiting from DU in both technical and business fields,” J.B. Holston, dean of the Daniel Felix Ritchie School of Engineering and Computer Science at the University of Denver, said in an email. “We’re seeing a ‘Vista Cluster’ emerge.”

Holston, who has a vision to turn DU into “the Stanford of Denver,” has mentored startups for years. But he has also been concerned with building Denver’s ecosystem as a place for companies to thrive and become billion-dollar entities instead of startups or midsized companies that get acquired by outsiders and leave.

Attracting investors such as Vista Equity “can, in turn, encourage other later-stage (private equity) firms to invest more in the area, as it gives them confidence that there is a strong density of late-stage scale-ups,” Holston said. “Growing the tech talent pipeline locally is a key success factor for all these firms. All of the higher-ed institutions have an obligation to do as much as possible as fast as possible to help acceleration continue.”

Marketo, which started in 2006, has already made a name for itself selling technology to help marketers market better. Lucas says Marketo’s technology cuts down on spam and other unwanted sales pitches by helping marketers pitch exactly what people are looking for precisely when they are looking for it.

“We want to change the world so the one piece of communication you get from a company, email, text or social media, you’re not looking at it with disgust, but with value,” he said.

Maybe that’s why market researcher Gartner named Marketo a leader in its “Magic Quadrant,” alongside competitors Oracle and IBM.

“They are one of the largest and most widely used marketing technology companies,” said David Raab, who runs the Customer Data Platform Institute, a resource of marketing information. “They are working to expand their business: Today they sell mostly to companies that sell to other businesses, but they want to also sell  to companies whose customers are consumers (including retailers, banks, airlines, telecommunications companies and healthcare). That’s much harder because the databases are so much larger.”

In July, Lucas apologized after Marketo’s main internet domain — — expired. A “good Samaritan” noticed and renewed it for the company. A firewall issue at one of its data centers disrupted Marketo’s service in November, causing another Lucas apology.

“Marketo has rebuilt its system to handle the larger scale, but it’s not yet clear whether they have succeeded,” Raab said. “They’ve had a couple of embarrassing outages that suggest they are not quite ready for companies to depend on them.”

But the spirited Lucas is up for the challenge. Dressed in Marketo’s team color  — from his purple shirt to his purple-and-white striped socks — Lucas has this goal: getting the company to a half-billion in revenues next year. Before the company was acquired by Vista, it was publicly traded, posting a $69 million net loss but 40 percent growth in revenues to $210 million in 2015 from a year earlier. It’s betting on its employees, or “purple people,” plus developing technology to help marketers reach their audience without annoying them.

“We’re in the transition phase where we’re getting close to a half-billion range in revenues. When you go from a half billion to a billion, that’s a huge change in terms of how your company works. You have to have competence in every site, city and in every executive,” Lucas said. “I’ve been through that over and over (with past employers Crystal Decisions and Business Objects). SAP was already big. That’s where we’re headed, a big multinational company.”


Originally published in The Denver Post
Tamara Chuang
January 3, 2018