After seeing behemoth financial firms struggling to stay afloat, a startup seems like a relatively safe bet. But don’t be fooled – new businesses are still the most fragile part of the economy. The situation for startups is only more precarious given the mistakes of these once renowned financial institutions.
We must quickly shift our focus from market domination to survival. This economic crisis is going to result in a ton of startup road kill. The eventual survivors will be in a great position to dominate their markets – if they continue to attract users and build great products while cutting their burn.
Instead of racing to achieve critical mass at any cost, startups must now patiently work to eliminate marketing mistakes and waste. In frothy times, conservative marketing execution can sometimes result in being overtaken by a more aggressive competitor. Today you can forget about that competitor – they are racing toward their demise. The more time you spend implementing metrics systems and optimizing conversion rates, the less you’ll waste when you eventually start spending money. And many Web 2.0 companies have shown that it’s possible to achieve critical mass with little or no marketing spend.
Unlike the first dotcom boom when traditional mass marketing was the norm for attracting users, web 2.0 entrepreneurs have been much more adept at leveraging the network to tightly track online marketing and even build user-get-user viral marketing programs. Websites like Facebook and LinkedIn have grown almost entirely through address book scraping – because they built social invites into the overall product experience. Other services like YouTube make user generated content so easy to share that many visitors are compelled to become free distributors of their content. And we’ve only begun to scratch the surface of marketing tactics that leverage the network effects of the internet.
Of course Web 2.0 marketing tactics can’t guarantee success. Startups still need to create a product/service that people need and take the time to understand who needs it and why they need it. They also need to be able to monetize it. But with a massive user base, even micro monetization starts to become an interesting business. Those startups that get these pieces right and combine them with efficient web 2.0 marketing execution will reach the level of excellence needed to rise out of the ashes of this recession.