OnStartups Article: Big Bang Vs Darwin Marketing for Startups

Here is an excellent blog post from OnStartups that compares a Darwinian evolutionary marketing approach to a Big Bang approach.  It’s from way back in July, but I found both the article and comments to be insightful:


I agree with the article that a Darwinian evolutionary approach is right way to get a startup out of the gate.  However, the article fails to mention the importance of eventually stepping on the gas by investing in high growth drivers.   Billion dollar companies aren’t created by only focusing on the downside.   

If you’ve done your job right during the iterative evolutionary stage, you’ll have a very efficient acquisition funnel, strong value proposition and a product/service that delivers on the promise of your value proposition.  This makes it much easier to fund profitable outbound marketing campaigns.  With the right tracking system in place, you will be able to identify strong ROI campaigns and cut the losers.  Nothing with a positive ROI is expensive if your pockets are deep enough.  If you have scalable positive ROI marketing opportunities that can’t be funded, it’s probably time for another round of financing.  In this situation, it will be much easier than earlier rounds of funding.

My marketing budget at successful startups grew to millions of dollars per month, the majority of which generated a tracked positive return (the exception being for a small testing budget that was necessary for pushing the envelope into new growth drivers).   Contrary to one of the comments, PR was a great investment when we transitioned into high growth mode.  Trend analysis and surveys indicated that the $20,000+/month spent on PR generated by far our best ROI.  

In my latest startup I will conserve funds as much as possible while we iterate through the evolutionary launch process.  But eventually we will need to shift into a much more aggressive spending mode to reach our full potential.

Great Startup Marketing Post By Entrepreneur-Turned-VC

Check out this excellent post on marketing a startup by Josh Kopelman, Founder and Managing Partner at First Round Capital (one of the VCs behind Xobni).


His key point is that a single event (such as TechCrunch) sprinkled with viral growth should NOT define a startup’s marketing strategy.  He then goes on to explain what should.  His recommendations are right on the mark.

My New Role as Interim VP Marketing at Xobni

My first week as interim VP marketing at Xobni was incredible.  In earlier startups we had to work a lot harder to get the customer acquisition engine cranking.

Naturally, I did a lot of due diligence on Xobni before deciding to join.  I discovered that Xobni has all the elements of a startup with enormous potential for marketing success. Specifically, it resolves real pain in a mission critical part of the daily work flow for a huge addressable market. And early users are thrilled with the solution.  They love how Xobni helps them manage the flood of email hitting their Outlook inbox.  After installing Xobni, it’s much easier to find contacts, attachments, conversations and more.

The PR opportunity for Xobni is also enormous.  The press is enamored with the visionary way Xobni addresses the email overload problem.  Xobni’s solution leverages the rich relationship data that already exists in the inbox.  In a sense Xobni turns email into your biggest and most important social network.  While this is a bit esoteric for mainstream users, it’s great for generating press.  In recent months Xobni has landed coverage in the Newsweek, Wall Street Journal, Business Week, Entrepreneur Magazine, Inc Magazine, Business 2.0, Webware, and BNET. Additionally, there are already over 5,000 blogs and websites that link to Xobni.   All this with no PR agency.

So I consider myself extremely fortunate to be the first marketing head at Xobni.  While a lot has already been achieved, there are still many dials to turn to accelerate Xobni’s momentum.  For confidentiality reasons I won’t go into the details of how I plan to market Xobni, but I will be trying to make frequent blog updates on my general startup marketing thoughts.  These thoughts are becoming crystallized as I spend more time executing the early stage marketing for Xobni.

By the way if you are curious why it’s an “Interim” role, this post explains the reasoning.

Where Did Your Comments Go?

Sorry to all that posted comments.  My credit card expired and my blog disappeared.  I’ve added a new credit card and renewed hosting for 2 years.

Fortunately I have backups of all the entries.  It’s going to be a fun night reposting the entries…

Launch Your Startup with a Trickle

Every startup wants to get a fast start out of the gates.  But starting too fast can be a mistake.  You only get one blank slate on which to build a reputation, so you better do it right the first time.  Pacing yourself at the start will allow you to offer excellent customer support as you improve the user experience.  It also lets you conserve cash until you can get a much bigger bang for your buck.

Start by driving just enough traffic to optimize every point on your conversion funnel.  Don’t worry about your initial ROI, since your overall marketing spend will still be relatively low.  Through an effective funnel optimization program, I’ve seen visit-to-purchase conversion rates improve by 2000% in just a few months.  In this case, funds spent on the exact same media after this optimization generated 2000% more revenue for every dollar invested.

Before you can begin your funnel optimization program you’ll need to determine your funnel’s baseline conversion rates through effective tracking and reporting.  If you don’t have a good tracking system, check out Google Analytics (it’s free).

Funnel optimization involves frequent tests, surveys and customer interviews.  Everything is worth testing, but surveys and interviews will point you toward tests that will yield the best results.  Be sure to isolate tests to one variable at a time.

Don’t test individual marketing programs until you have achieved significant funnel optimization.  Then many cost-effective marketing programs will be possible.  And you will also improve your chances of having satisfied customers to help you get the word out.

Career Advice: Know Your Strengths and Weaknesses

Through years of building marketing teams, I’ve been surprised at how few people really understand their unique talents and weaknesses.  Understanding and leveraging unique talents can propel your career forward faster than anything.  But watch out.  You may get promoted into a role that relies on your weaknesses.  Taking the time to understanding both is well worth the effort.

Watching my daughter play soccer this weekend reminded me of my early days of self discovery.  Like her, my lack of coordination was compensated by high levels of determination.  I didn’t want to be a star athlete, just above average.  It wasn’t until high school that I found a sport/position that didn’t require high levels of coordination to be successful.  As a defensive lineman on the football team I could claw and scratch my way to success.  Of course it helped to have some talent to find angles to stop a runner and discipline to stay in position.  But my success in football was primarily based on finding a position that didn’t rely on my key athletic weakness – limited hand-eye coordination.

I followed a similar path in academics.  With a B average in high school I barely scraped into UC Davis with a physiology major.  I thought I was on my way to achieving a lifelong dream of becoming a doctor, but I quickly hit a hurdle in chemistry class.   Despite non-stop studying I could not wrap my brain around chemistry.  I couldn’t visualize it or rationalize it.  My brain just didn’t work that way.  And I could see organic chemistry looming in the future.  The horror at the thought of failing pushed me to the brink of a nervous breakdown.  When I spoke to my guidance councilor she suggested I consider changing my major.  This would mean giving up becoming a doctor, but I agreed.  It remains the hardest decision of my life, but it was also one of the best.  A business path was much more aligned with the way my brain functions. I quickly discovered in economics courses that I could get twice the grade for half the effort of my peers.  My academic success could never have happened if I didn’t work to understand my strengths and weaknesses.

This academic success opened doors for career opportunities.  Marketing was very intuitive for me and I was able to quickly rack up some early marketing successes.  In 2000 I leapt at the opportunity to run European operations for Uproar, following its NASDAQ listing.  But I quickly discovered that as President of Uproar Europe, I had very little time left to focus on marketing.  While I was decent at general management, marketing was my unique strength and true passion.  After Uproar was acquired, I vowed to continue to hone my marketing skills and to avoid general management.

Unfortunately many people think their only career objective should be to work their way up the organization.  Warning – avoid promotions that don’t leverage your strengths.

Where is the Online Advertising Innovation?

Online advertising models are far from optimal.  Improvements would benefit everyone – from online media properties, to advertisers and even website visitors.  Improvements can only be achieved with the commitment of leading web properties and advertisers to work together to continuously test innovative new online advertising models.

Unfortunately the same standards groups that drove the initial success of online advertising may now be holding it back.  IAB standards transformed a highly fragmented online media landscape into something that large advertisers could purchase efficiently.  Rather than dealing with hundreds of ad specs, advertisers could limit their creatives to a handful of standard banner sizes. While this was critical for catalyzing initial online advertising growth, things were optimized on a less than perfect model.

For proof of potential advertising model improvements, just consider the leading search engines of 1999. Three of four are basically dead, while Google moved from obscurity to a $160 billion market cap.  This growth was largely on the back of an innovative advertising model.  Google didn’t follow the recommendations of the IAB, but the other search engines did.  Google’s new model delivered fantastic results to advertisers and provided a better experience for users.  At my current venture, we largely built our business through Google Adwords.

I believe there is similar potential for dramatic improvement in advertising on destination websites.  Again, pushing the envelop will require close cooperation between media properties and advertisers.

I first became fascinated with the potential of online advertising in 1995, when a friend showed me his business plan for an online advertising supported game site, Uproar.com.  His concept was that people would register to play free online games for a chance to win cash prizes.  Accurate registration information would let advertisers perfectly target their messages.  I had been selling print advertising so was eager to move beyond the static, untargeted world of print advertising.  In fact I took an interest bearing loan just to make an angel investment in the company.

When I later joined Uproar full time, we faced the daunting challenge of balancing advertisers’ needs for results with visitors’ desires for an entertaining experience. We launched with integrated animated advertisements targeted by demographics.  However, since our audience was so small, we couldn’t even give the ads away.  We were faced with the challenge of building a large audience and making it simple to buy advertising.  Eventually we settled on the standard IAB banners, but integrated them into the game flow to drive better results for advertisers.

There has been very little evolution in the 10 years since these standards were put in place. The primary difference today is that advertisers have become a lot more sophisticated at tracking results and media properties have added rich media.  Surely it is time for savvy publishers and advertisers to join forces to discover a much more effective way to leverage the potential of internet advertising.

What Makes an Effective Startup Marketer?

Should startups seek a seasoned large company marketing executive to give them credibility with VCs and drive their company to greatness?  Not necessarily.

Startup marketing leaders must be hands-on and dynamic.  A marketing executive from a large company is likely accustomed to relying on functional experts from across a big marketing department.  Their role is much more of a conductor than someone who actually executes marketing.

Additionally, the financial targets at a startup are initially much smaller than those at a large company.  Startups must manage many micro campaigns while they struggle for traction, but large companies must evaluate every marketing campaign for its potential impact against enormous marketing targets.  Small but profitable campaigns generally aren’t worth the time they take to manage.

Finally, startup marketers must approach their job with much more urgency than their counterparts at big companies. There is no momentum to carry them from quarter to quarter. While they are trying to discover marketing programs with a positive ROI, their company is burning precious cash on salaries and other fixed costs.

Finding a dynamic marketing leader for a startup is more difficult than it may seem.  Startup marketers must have strengths in both the creative and analytical sides of their brain.  They should possess the creative skills to know what to throw against the wall and the analytical skills to figure out what actually sticks.  And they can’t just be thinkers.  They must also be scrappy disciplined executers.

It is also important for startup marketers to be both conservative and aggressive.  Initially they trickle in customers to optimize their business model and hone their value proposition.  Once the business model has been refined and proven economically viable the marketer must switch into an aggressive mode to capture market share and quickly scale the business to cash-flow positive performance.  Despite the need for aggressive growth, effective startup marketers must retain the discipline to follow a systematic testing process of measurable programs.

With the right startup marketer, a new venture dramatically improves its chances of success.  Marketers coming from enterprises succeed despite their large company experience, not because of it.