The Startup Marketing Launch Process is Broken

**See updates at bottom posted on Jan 20, 2009**

Originally published March 2, 2008

The majority of VC funded startups fail and a large part of the blame should fall on marketing.  Specifically, executing a flawed marketing process during the startup’s critical customer traction stage.

Through running marketing at two startups for the full cycle from launch to IPO filing, I’ve discovered that success at various stages requires very different marketing skills.  It also became clear that early stage marketing execution was the most critical to long-term success.  Yet it is nearly impossible to get good at this critical marketing stage.

Why?  Because effective marketers don’t get enough repetition in the early stage to master it.  Any skills they do develop become rusty.  Stock option vesting periods lock them in well beyond the traction stage (typically four years).

I actually stayed five years in each of my last two startups.  In that final year I had very little time for hands on marketing; I was too busy with such things as managing a team of marketers, recruiting more marketers, meeting with the sales team and other executives, preparing for board meetings, traveling to conferences and trade shows, etc, etc…

I know that my skills are best suited to the earliest stage of marketing, but I wasn’t about to walk away from extremely valuable options.  Even after the options vest it’s still hard to walk away.  Beyond paying hundreds of thousands of dollars to exercise options, you also have to pay income tax on the appreciated value of those options.  If the company isn’t public, you can’t even sell the options to get the money to pay the tax…  Anyway, the point is that despite knowing I’m best at marketing during the early traction stage, I was compelled every year to let those skills get rustier as my options appreciated and vested.

My solution to the problem may seem a bit radical at first, but considering the billions lost in failed VC investments it deserves careful consideration.  Here it is: Startups should plan from the beginning to have different marketing leaders at different stages of the company.  One marketing leader to gain traction and kick start growth, one to manage growth until an IPO and one for post IPO leadership.  Considering the average tenure of a VP Marketing is less than 2 years anyway, this really isn’t that radical.  It’s just planning the transitions rather than making a bunch of disruptive firing/demoting/hiring decisions.

You might be thinking that a consultant approach would work here, but I believe to be effective the marketing leader needs to be totally immersed in the role.   Another common approach is just to force the early stage marketer out when they become less effective (the disruptive approach mentioned above).  If they have played a key role in the company’s success, I don’t believe this is a very ethical approach – even though it’s probably the best thing for the company.

So rather than forcing out the effective early stage marketer, have an agreement from the start that it is a short-term role.   I recommend calling it an interim VP Marketing role and planning for full time 3 to 6 months followed by another 6 to 12 months of advising (working with the longer term VP marketing).  This ensures full knowledge transfer and gives the company access to two sharp marketing thinkers during the very important second stage of the company’s growth.  Options will still be an important motivator for the Interim VP Marketing, but they should have a much shorter vesting period.  The total options allocation to marketers will be higher, but this approach should result in faster market traction, meaning less burn and less need for future dilutive rounds of funding.

It’s probably already clear that I am now specializing in this traction stage.  Xobni is my first assignment.  Of course everybody warns that it will be tempting to want to stay on (especially since Xobni is really picking up steam), but I am very committed to developing this approach over the next few years.

Another advantage of this approach is that it will hone my ability to identify great startup opportunities.   Even the best marketing approach can’t save a crappy idea.  The challenges and opportunities of each former assignment will be fresh in my mind when I look for the next startup to join.   I’ll try to avoid startups with key challenges that I could not previously overcome and try to join startups that have the types of assets that proved important in an earlier assignment.

This knowledge is also very valuable to VCs and I already have several that have asked me to help them assess new investment opportunities.   I’m expecting this will be my pipeline for finding new startup opportunities. Given the alignment of my interest with VCs in picking the right opportunities, they are willing to pay me to conduct a marketing viability assessments to dig into target customer’s need for the solution, real addressable market size and segments and any existing current demand for the category.  If everything looks good after this assessment, the VC can make a less risky investment and I can make a less risky decision to try to take on the interim VP marketing role (if a marketing leader is not already in place).

Update Jan 20, 2009: I temporarily removed this post several months ago with the intention of making a few edits and quickly reposting it.  Unfortunately it slipped through the cracks despite being one of my more popular posts.  My thinking has a evolved quite a bit since I wrote this post 9 months ago.  During that time I have nearly doubled my experience taking startups to market (despite being in startups for 10 years).  As much as the idea of interim VP Marketing roles sounded good at the time, it really limits my ability to help several startups and requires more energy than I could possibly muster (this is a very intense period in startups).  Instead I have shifted my focus to work alongside a long-term marketer and guide them through executing the key phases of going to market.  This approach has worked very well at both Dropbox and Eventbrite.

We still have a long way to go before the launch problem is fixed at VC backed startups, but there has been a lot of progress in the last year.

The New Chasm – Flawed First User Experience

The first chasm most startup marketers face is not the well-known chasm originally described way back in 1991 (jumping from early adopter to mainstream users).  Instead, it’s the chasm from “click” to “gratification” experienced by website visitors.  In my direct experience with six startups and indirect experience with several others, it has become clear that the majority of new people that visit a website receive zero gratification.  In other words, they do not experience any benefit from the product or service being offered.  Without gratification, it is very unlikely they will generate transactions or positive word of mouth/virality. In fact, I generally assign a negative value to these people because any brand awareness created is saddled by the memory of wasted time and effort.

Most companies concentrate resources on the two sides of this chasm.  The product team focuses on creating a fantastic product experience for those who make it to the other side of the chasm, while the marketers are busy trying to stuff as many people into the top of the acquisition funnel as possible – often at a large expense.  The negative experience and wasted money happen in this no-man’s-land between the click and a gratifying experience with the product. It is into this chasm that the majority of online marketing dollars are lost.

My first startup marketing experience in online games at was helpful for developing skills in all three of these areas.  Games are all about engagement and we were able to surface this engagement early in the user acquisition flow.  In 1997 we introduced a syndicated widget/app that is generally considered to be the first of its kind.  This app appeared on tens of thousands of websites and “extended” our game play experience to these sites.  Users would visit a web page on the affiliate’s site which would automatically start an embedded animated trivia game.  Players with a qualifying score were given an opportunity to enter a weekly cash prize drawing.  If they didn’t qualify, they were asked to try again.  Only after they completed this gratifying experience did we ask them to fill out a registration form.  Upon completion of the form, they were told that they were now eligible to win cash prizes in other games on the Uproar site.  They would then see a list of games and the next prize in each game.  Once they entered the game and began chatting with other users, we had them.  They became part of the community and one of the “stickiest” sites on the web.  This approach was the key to becoming the biggest game site in the world prior to Uproar’s acquisition by Vivendi Universal in 2001.

Of course not all products/services can engage users like a game site does.  Still, there are important lessons that can be applied about surfacing your primary benefit early in the acquisition process and drawing users into the core experience.  LinkedIn and other websites have done a fantastic job with the “% completed” box that appears next to your profile.  Rather than having the barrier of asking for all the information up front, they ask for it gradually.

Free trials are another way companies have offered a gratifying experience before asking users to commit.  But with a software product, there are still several costly steps required before the trial begins.  These include the challenge/risk of downloading software and the time it takes to learn how to use the product.  If a company can sprinkle in a gratifying experience through this process, people will remain engaged. 

At LogMeIn we took it a step further and rewarded prospects for their effort with a completely free version of the software.  Prospective customers knew they would be rewarded for their effort downloading/learning the software even if they didn’t upgrade to the premium version.  This helped get LogMeIn eventually installed on over 50 million devices.

Another example is Tripit, whose process I described here

Can you think of examples of how companies have bridged the chasm between click and gratification?  If you’ve benefitted from this post, I’d appreciate it if you could give back to me and other readers by posting suggestions (in comments) of other sites that have effectively bridged this chasm.

Surviving The Financial Meltdown – Three Tips for Early Stage Startups

For months we’ve heard that startups should prepare for a recession that is looming in the future.  But it always appeared to be around some distant corner.  Well, it seems we’ve arrived.  Giga Om is reporting that Sequoia (considered by many to be the top VC) held an emergency meeting yesterday warning their portfolio companies to buckle down.    B rounds are already a wasteland – at least that’s the sentiment of the VC with whom I had coffee yesterday.  He claimed that money is still rolling into A round startups and that companies needing a C round often have solid financial metrics.  It’s the companies that are approaching a B round that are suffering.

So how can early stage startups weather the storm?

  1. Raise as much money as possible on the A round.
  2. Measure everything from day one.  Last week’s Startonomics conference has sessions on using a metrics driven approach to execute all the key parts of a startups.  Watch these videos .  Resources should only be invested into development and marketing initiatives that deliver measurable results.
  3. As soon as you have raised your series A, figure out the financial performance you’ll need to be considered “a safe bet”.  The best time to raise money is when you are near cash flow positive and have identified several scalable positive ROI marketing programs.  If you need the money to fund these programs and reach your full growth potential – you’ll raise the money.  During frothy times you can raise money on hype; don’t count on hype valuations during a recession.

A recession is when the real entrepreneurs emerge.  Those who think it would be “neat to start a company” generally prefer the safety of a stable job during a recession.  LogMeIn was born in the last recession.  While we had a really hard time raising our $10m A round, twelve months later our $10m B round was much easier based on our proven metrics.   We then went on to build a company that now has its software on 50 million devices and is still on deck for an IPO.  Google also emerged during the last recession.  While the stock has suffered recently, it remains one of the most successful tech companies ever.

First Startonomics a Big Hit

The first Startonomics conference was held in San Francisco last week and was packed with useful information for startups. The goal of the conference was to highlight simple actionable metrics for each of the core areas of launching a startup

Videos of every presentation are online at .  I’ll personally be watching the presentations a few more times.

I had the opportunity to kick off the marketing section with an overview of a full Web 2.0 startup marketing plan.  There were several marketing presentations that followed covering specific tactical customer acquisition drivers in more detail (including SEO, Viral Marketing, Social Marketing, etc).  Here’s a link to my presentation:

The next Startonomics conference will be held in LA early 2009.

Picking the Right Startups

Each new startup I help take to market offers many potential rewards but there are risks too. 

The most obvious reward is the financial upside of equity in a successful company.  But there are less tangible benefits like the thrill of being part of a team realizing the potential of their vision.   Probably the most important long-term reward is that each startup success enhances my reputation and opens doors to additional startups with strong potential – while improving the skills I need to maximize these opportunities.  This allows me to continue doing the most enjoyable “job” of my life.

But the risks are very real.  A startup in a bad space with a bad product won’t be much fun to market – and I’ll probably fail.  And when the company flops, it will damage my reputation.  Enough damage to my reputation and I’ll have to figure out a new pursuit.  Of course most people recognize that it’s impossible to have a perfect startup record, but the opportunity cost of committing to the wrong startup means I won’t have the bandwidth to take on a potentially hot company.

Given these rewards and risks, I increasingly find myself evaluating opportunities with a VC-like diligence.  I’ve created an opportunity assessment worksheet that identifies key risks in the business. The standard format makes it easier to compare opportunities.  One of the biggest risks of any business is the inability to raise capital, so early on I set the requirement that I’ll only work with companies that have recently raised a series A or large seed round.  A very good VC can also help improve the odds, as they’ve achieved a better track record with their historical picks (and many would argue their “added value”).

Beyond general business risks, I obviously need to be confident that it is a marketable business and one on which I can make a meaningful impact.  The ideal category is what I refer to as a “disruptor” startup.  These are businesses that enter an existing category with a breakthrough feature or very disruptive pricing model.  My iterative, metrics driven marketing approach is perfect for helping these types of businesses discover their ideal market, differentiate appropriately and identify viable customer acquisition drivers.  Generally these businesses can get substantial traction just by harvesting the existing demand for the category.

Another startup category I often consider is what I call “innovator” startups.  These are much more challenging to take to market, but under certain conditions they are very marketable.  If they solve a specific important problem for a large addressable market and the potential customer lifetime value is high enough, it is generally possible to fund the full demand generation process.   Still, it takes a lot of time to discover the right target users.  Not only do they need to suffer from the problem, your product needs to effectively solve the problem.   Your next big problem is finding a profitable way to reach these target users and messaging they’ll respond to.  These are difficult go to market assignments, but they definitely improve my skills. 

For now I find myself alternating between these types of startups and avoiding those that don’t fall into these categories.


I’ve been toying with names for my advising services that would capture the value I’m offering to startups…  In a nutshell this value is “helping startups more quickly achieve traction and efficient growth momentum.” clearly positions me as a startup marketer, but it’s very generic and says little about what I’m trying to do for startups.

On my drive from Palo Alto to San Francisco today I was pondering how I discovered the need to help startups gain traction/momentum – and the name 12in6 struck me.   Before I explain what the name means, I’ll describe how I came up with it.  My “self – how did I get here?” reflection began by remembering the period when I was planning my next move following LogMeIn.  I was reflecting on 10+ years of startup life and wondering “what was the most important marketing activity we did that led to these two NASDAQ IPO filings?”  I realized that the first 6-12 months were the most critical marketing contributions to the long-term success of each company.  I also realized that what took 12 or more months at took only about six months at LogMeIn.  A solid go to market process was the primary difference.  And finally I realized that this go to market process had a ton of room for improvement.

I had my next move figured out.  I would specialize in helping companies plan and execute their go to market strategy.  My process would improve with each startup experience.  I quickly switched my blog from to and continue to evolve/improve the go to market process with each new startup marketing project.

So today (as I was going through this “self – how did I get here?” exercise) I figured out the name.  It’s 12in6 – reflecting that I’m helping startups achieve 12 months of marketing progress in 6 months.  This is a powerful promise since this period generally has a very high capital burn rate – and getting through it more quickly preserves precious capital.  The name is a great conversation starter (based on the WTF factor).  It is also numbers, which highlights my data driven marketing approach.  Even the logo is a no brainer with a 12 inside the 6.

I’ll continue to post to since it gets a lot of search traffic, but I’ll eventually transition to the new domain  Fortunately the move will allow me to switch to a better blogging platform too.

The Ideal Startup Marketing Leader

In the last couple weeks I’ve met with CEOs at nearly a dozen well-funded startups desperately in need of a marketing leader.  Many of these companies have expressed a strong desire to work with me on their go to market execution, but one of my key requirements is that they have a marketing leader in place.  This ensures strong knowledge transfer and reduces the need for a long-term engagement with me.

The challenge many of these startups have faced with their hiring is that they were seeking a seasoned marketing leader.   Having led marketing in both early stage ventures and in more established companies, I tell most that they don’t need a seasoned marketing vet.   Experienced marketing execs haven’t rolled up their sleeves and executed for a long time.  The majority of their skills are completely irrelevant in the early go to market stage of a truely innovative startup.  So why pay their required high salary and give up multiple points of equity?

The good news is that for about half the salary and a fraction of the equity they can hire a qualified candidate to be trained and mentored to successfully execute this early marketing stage.  In fact it’s probably easier to train someone with no marketing experience than someone with years of the wrong type of marketing experience.

Of course the right candidate must be dynamic and possess the essential soft skills.  They must be analytical enough to execute a data driven marketing approach and have the discipline to follow a proven go to market process.   Most importantly they must be very curious about discovering how your solution maps to the needs and the buying process of prospective customers.

When the role is positioned correctly, the right candidate will leap at the opportunity.  Nothing is more exciting than being on the ground floor of a hot new startup.  For the next several months they will have the critical responsibility for the planning and execution of the company’s go to market strategy. And (by working with a go to market specialist) they will have guidance and training from someone who has taken multiple companies to market.  It’s important to be honest with them that they may not become the long-term marketing leader, but they are in pole position to get the role.  The ideal candidate will understand that they have everything to gain from this opportunity and nothing to lose.

But how do you find these candidates?  While it would be tempting for me to set up a recruiting business to help startups with this crucial hire, my hands are full with startup marketing advising.  So I’m exploring other ways to address this need/opportunity.  These include working with existing recruiters, partnering with someone who could specialize in filling this type of role, setting up a training boot camp for aspiring startup marketers or some combination of each.  Stay tuned.

Update:   The above recommendations are for startups that have an opening in the marketing leader position. I know many marketing vets, particularly those with strong online marketing skills, that have done exceptionally well with startups.

Check Out Startonomics

You may have noticed that the go to market process I use is heavy on identifying and using the right metrics to build your startup marketing engine.  So it’s not surprising that a conference called Startonomics caught my attention.  The organizers describe it as the following:

“Startonomics is a one-day workshop designed by entrepreneurs for entrepreneurs on how to create simple, actionable metrics for internet startups, and use them to make better product and marketing decisions for long-term growth and success.”

I was even more excited when I was asked to speak at the conference.  A whole conference of other nerds focused on actionable startup metrics.  How could I miss this one?

The conference is October 2nd in San Francisco and is affordable at $295 for entrepreneurs.  Here’s a link if you are interested in attending or learning more.


“Potential” is the most important concept in startup marketing.  Startups are all about creating and then realizing potential.  It is our “true north.”

So what is “potential?”  One definition is “capable of being but not yet in existence.”  From a startup marketing perspective, I define potential as the combination of the size of the market and the intensity of the need for your product as it exists today.

A startup’s potential begins with the vision of the founders.  Generally there is some tweaking of the vision based on research around the actual needs of potential customers and the competitive landscape of alternative solutions.  The right business model can also extend potential by enabling you to cost effectively expand market need through demand generation marketing activities.  Startups seeking VC funding must make sure that their potential is sufficiently large to be interesting to the VC.

Generally marketing leaders don’t join a VC backed company until the initial potential has been established.  It is our job to fully realize this potential.  An effective startup marketer is sickened by the idea of falling short of their startup’s potential.  The only growth that is good enough is growth that rides the line of what is possible.  Anything short of that creates an opportunity for a competitor.  Each additional competitor reduces your potential.

Too often startup marketers push the rest of the company to extend potential through feature enhancements while they are falling well short of the existing potential on the marketing side.  Avoid this vicious cycle of chasing markets without fully reaching the potential of your existing market.