When is the Right Time for Startups to Hire the First Marketer?

I love the fast pace of working at a startup in a marketing role.  There is always so much to do – particularly around customer acquisition.    Turn new campaigns on, scale highly effective campaigns, cut the bad ones…   Other campaigns can be optimized by testing new messaging and user flows to improve conversion rates, etc, etc…  On the web it’s all very iterative and there is always something that can be done to improve efficiency and scale acquisition drivers.  It is the dream job for any ADD powered entrepreneur.

But that’s post launch.  Before that you have to lay a foundation to maximize your chances of hitting the ground running when your product emerges from private beta.  Important marketing activities include ensuring your product meets real needs of a large addressable market and defining necessary tracking systems to manage and grow campaigns.  I’ve outlined some of the critical pre-launch activities in this post.

So what happens in between these two stages?  If you’re anything like me, it’s primarily a time of agitated chomping at the bit.  It takes time for engineering to get a product ready for mass market adoption (fixing bugs is the main point of a private beta).  There is only so much research and planning that a marketer can do before the marginal benefit drops below the marginal cost of their time.  Managing a private beta, even a very successful one, takes relatively little time. And optimization is usually irrelevant during private beta, because most early adopters enjoy figuring out particularly tough product installations.

I’ve heard some argue that marketers offer little or no value pre-launch.  I would strongly disagree with this.  However, I am coming to the realization that it probably makes more sense for marketers to be project based consultants during this pre-launch stage.   As the product gets very close to public beta launch, the marketer can join in a full time intensive role.   Before that, they can spread the cost and benefit of their expertise across multiple startups.  Their ultimate selection of a startup to join full time will be based on an actual understanding of the market and experience working with the team.  This knowledge will help them make a better choice.

This is a change from my earlier recommendations on the ideal marketing process for startups.  I have approached my current role with the goal of figuring out an optimal marketing process – rather than applying firm preconceived ideas of the perfect way to bring a company to market.  I still believe marketers should specialize in either early stage startups or companies that have already achieved firm traction.  Mastering the first part is nearly impossible without lots of repetition and focus.

Blockbuster/Circuit City Not That Bad

CNet Buzz Outloud jumped on the negative bandwagon about the Blockbuster/Circuit City merger in yesterday’s podcast. Rather than a private conversation with my iPod, I figured I’d blog about why I think the merger actually makes sense – at least from a marketing perspective.

It boils down to this:

Blockbuster = store traffic

Circuit City = impulse purchases (when enough foot traffic)

A perfect analogy here is movie theaters and malls.  Movie theaters pay much lower rent per square foot than retailers in a mall because they add value to all the other tenants.  The retailers that receive the bulk of this value are those that sell impulse purchase items.

Personally I rarely go into an electronics store without making an impulse purchase.  Also, every time I go to Blockbuster, I get bored standing around as my kids take a long time picking out a movie.  If I could browse a section of electronics (think Sharper Image type stuff) while my kids are browsing movies, I’d likely make some impulse purchases.  Of course this requires putting smaller cheaper electronics near the movie rental section to draw you in… Occasionally I’d even wonder over to the bigger ticket items.

Check Out the Signup Process at TripIt.com

Jamie Siminoff recently suggested I check out the sign up process for TripIt.  I highly recommend you go check out the TripIt sign up process if you haven’t already.  It is absolutely brilliant and highlights how important it is to think about marketing as you are building your product.

Here was the comment I posted on Jamie’s blog comment:

One word – “Smooth!”

I’m blown away by the signup process. Very easy, low commitment. After you have received some value, they encourage you to register – to get more value.

Also some interesting viral marketing/social networking angles. Just when I thought I wouldn’t be tempted to join another social network, I think this one would actually be useful. I added you as a friend, so it will notify us when we are in the same city.

Thanks for pushing me to finally check out TripIt. I’ve been hearing about it for a while. Definitely some stuff to learn from these guys.

Why So Long Since My Last Blog Post?

It has been hard finding time to make blog posts recently.  As anyone who has been through a startup knows – there are never enough hours in the day.  To make things even more challenging for me, I moved up to San Francisco to join Xobni while my wife and kids stayed down in Southern California to finish up the school year.  So most weekends I’m down South and most weekdays I’m up in San Francisco.  That pretty much rules weekends out for blogging – I have a lot of missed time to make up for with the family.  But I’ll definitely be posting as often as I can – it’s fun and helps me to crystallize my thoughts…

The 2 Most Important Questions to Ask Before Launching a Startup

“Can this startup be marketed profitably?”
“Can the profitable marketing scale?”

Of course you can’t definitively answer these questions until you try marketing the product.  But, if you aren’t pretty confident that the answer to these questions is yes, you shouldn’t launch the business.   Too many people start trying to build a product and believe they’ll figure out the marketing piece later.  Some get lucky, but the majority fail.

If you start your business with these questions in mind, you are much more likely to build a successful business.

Hiring Unproven Talent for your Startup

Building the right team is critical to the success of any startup.  You can pay a significant premium for proven talent, or take a risk and get a deal on unproven talent.  My best hires have usually been relatively unproven when they joined the team.

But how do you gauge the potential of these people?  I may have figured out a critical interview question to ask when hiring unproven talent (and maybe proven talent too).  The question is: “How would you react if you felt like you were underpaid in your position?”

I came up with this question based on a conversation with my younger sister.  She was recently promoted and very disappointed that she didn’t get a pay raise with her promotion.   Most people would lose motivation and begin putting less effort into their work.  A few of us though would take the exact opposite approach.  Defying logic, we would actually work harder, figuring that our salary will eventually catch up to our valuable contribution.  We understand that being underpaid gives us enormous leverage and eventually a smart employer will give us a raise for fear of losing us.

From the inception of my career, I have always taken this approach when I felt underpaid.  And I’ve always preferred to be underpaid than overpaid (much better job security).  I have a feeling that this is a key characteristic of most people that have had success in their career.

It will be interesting to hear the reactions when I use this question in interviews.

Startup and Online Marketing Secrets Exposed

This presentation by Dave McClure is the best concentration of online marketing information I have ever seen.  It is a direct contradiction to my recent rant that startup marketers are too protective of their ideas. Dave is definitely open to sharing his very valuable online marketing insights.  Almost everything you need to know about online marketing is included in the presentation.

I wish I would have had a presentation like this when I began online marketing. Of course in the mid 90s no one had accumulated this knowledge yet.

It also expanded my existing knowledge – particularly the last few pages on viral marketing.

I plan to start following Dave’s blog very closely and I’m sure I’ll learn lots of new marketing tricks.

Open Source Marketing

Why can’t marketing be more like the rest of Silicon Valley who have long shared ideas, resources and processes across startups?  Engineers have been doing this for decades and the open source movement takes this to a worldwide level.  Startup founders are also forming alliances (often facilitated by common VCs or groups like Y Combinator).  The startup stories of Apple and other companies show that many great technology companies came out of “clubs” of people that were passionate about technology.

But us startup marketers have stayed on the sidelines protecting our mediocre ideas and processes.  If we pulled together, we could dramatically improve our contribution to the success of startups.  Many of us have become complacent about accepting a flawed marketing process for bringing companies to market – as long as we’re better than the other guys we’ll always have a “job opportunity”.  But successfully bringing a startup to market is much bigger than any one job.  Knowing you’ve built a sustainable thriving company is a huge accomplishment and can put you in a financial situation that means you never have to worry about a “job” again.

In an earlier post I explained why I believe the startup marketing process is broken.  In a nutshell, today’s “long term” comp packages prevent effective startup marketers from specializing in the traction stage – the most important stage in building a valuable company.  Specialization and repetition are the ways to get really good at this “traction” process.  Shared learning will help all involved improve their processes much more quickly.

The startup marketing blog is my attempt to share my experiences and get the ball rolling on collaboration with other startup marketing leaders.  I really like that I’m now getting some great comments from readers.  Most of the comments begin with “I wholeheartedly agree” or something like that – which is great.  But what would be even more valuable is “I disagree and here’s where my experience has been different…”  Here’s an example of a really helpful comment from Rajiv Kapoor (scroll to bottom).

I’m also starting to connect offline with other startup marketing leaders who share my passion to develop a better startup marketing approach.  I share detailed process documents and get great feedback from these new friends.  Please consider this an open invitation to any other marketing leaders from VC backed startups that want to contribute to and learn from this effort.  I’m always open for a phone call or if you are in SF, a coffee.  Drop me an email at seanwellis (at) gmail (dot) com.  Of if you prefer to get a snapshot on my latest thinking on the key early startup marketing milestones, see this post.

Thanks Jay for your recent comment praising me for my openness.  It helped to remind me why I started this blog.

Brand Like Starbucks (for Startup Marketing Success)

Like millions of other people, I’m working at a Starbucks today (on my PC, not behind the counter).  Despite some recent financial hiccups, Starbucks has built an amazing brand over the last 20 years and rocketed the category of high end coffee shops into mainstream existence.

Starbuck’s process of building their brand is a great example for any startup.  There was no heavy spending on brand advertising.  At Starbucks it’s all about the brand experience.  They obsessed over everything – from the quality of the cups to the quality of the toilet paper.  The music, colors, furniture…  It’s all an orchestrated brand experience.

The cost of this brand building was nothing compared to the losses someone can incur on massive brand building campaigns.  Starbucks is a great concrete example of why spending a lot to build brand awareness is a waste of startup resources.

The Difference Between Word-of-Mouth and Viral Marketing

I often hear knowledgeable people say “that’s not viral marketing, it’s word of mouth.”  Rarely do they go on to try to explain the difference or why the difference is important.  I’m not sure why it’s particularly important, but I’ve tried to decipher the difference below.

The confusion probably stems from their shared potential for driving exponential growth rates by leveraging existing users.

Based on the two sources I’ve found that tried to answer this question (pasted below) and my own experience, I’ve reached the following conclusion.  The primary difference is that strong word of mouth is primarily based on a compelling customer experience while viral marketing is more “engineered” to specifically propagate a product.

It’s easier to “engineer” viral marketing into some environments than others.  For example, a few years ago my accountant in Belgrade asked me to download Skype so we wouldn’t run up a big phone bill.  Skype didn’t need to do a whole lot to drive this virality, but making it easier to invite friends improves their viral growth rate.  Like Skype, every new communication platform shares this viral characteristic (the first fax machines, early IM products or Facebook).  There is a strong incentive to tell other people to join the network, because it improves the value of your own experience.

Word of mouth, on the other hand, is really based more on doing a favor for the other person (clueing them into something unexpectedly cool).  TIVO is a great example of this.  There is no inherent usage benefit for telling other people to buy TIVO.  But it is such a surprisingly great experience that people tell their friends about it anyway.  Even if TIVO were to offer a free month of service for everybody you tell, I still wouldn’t consider this a viral growth driver.  It’s just incentivized word of mouth.

While they may technically be different, I’ll take either exponential viral growth or exponential word-of-mouth growth if I can get it.  Or even better combine the two.  Skype falls into this combo camp.  You’d probably be compelled to tell friends about the ability to make free phone calls (especially overseas) even if the software weren’t required on both ends.  The fact that you also benefit when they install the software only accelerates this growth.

Before you obsess over viral marketing and word of mouth, make sure you have completed these critical baseline marketing steps.

Here are links from other bloggers that try to answer this question:

Andrew Chen’s comparison is a response to the question I posted on his blog.  He mentions multilevel marketing and chain letters as a couple of great non-online examples of viral marketing (and MLM is an example of a non-communication form of viral marketing also).

Seth Godin’s post points out the decaying nature of word of mouth.  A great experience fades quickly when it reaches a couple links into the word of mouth chain.  However, this wouldn’t be the case if word-of-mouth referrals always result in a new user who also refers the product/service.

For more details on the process of engineering viral growth, see this earlier post.