Monthly Archives: July 2008

July 12, 2008

Advisor at Xobni – What Now?

Monday will be my last fulltime day in the interim VP marketing role at Xobni – then I switch to part-time advising.  Xobni’s progress is definitely on the highest end of my expectations when I went into the role.  I’ll miss my day-to-day interaction with the team, but will be on site a couple of afternoons per week to trade jabs.

Many people are asking me “what now?”  Through fall I’ll be working with a few other startups using a more leveraged approach.  I’ll help them set the overall marketing priorities and then provide ongoing assistance refining their go-to-market strategy and executing more challenging marketing projects.   Each startup recently received their series A VC funding and has a smart and scrappy (but less proven) fulltime marketer.

This is a different approach than I took with Xobni, where I was exclusively focused for six months on laying the groundwork for the public launch (May 5th) and building on the post launch momentum.  By focusing on only one startup during this period I’ve been able to re-tune my startup marketing skills.  I now feel more prepared to effectively help multiple startups.

In classic flip/flop fashion of a politician, I’ve change my perspective on whether a part-time consulting approach will work.   Back in March I wrote (http://startup-marketing.com/2008/03/01/the-startup-marketing-launch-process-is-broken.aspx) that a total immersion approach is better than a consulting approach.  While this is probably still the case for the eureka moments of creating innovative customer acquisition programs, it’s less important for laying a foundation to maximize the impact of these programs and developing the overall go-to-market strategy.  If a startup has the right marketing director in place, they should come up with the innovative marketing programs needed to drive growth.  By limiting my time involvement, companies will be able to pay less overall compensation.  And it works out better financially for me as well, especially since I’ll be able to diversify my equity.

I’ve already committed verbally to terms with three companies, but put off figuring out the contracts until I completed my fulltime role with Xobni.  I also postponed meeting with other companies because it would cut into my time at Xobni.  As a result, I have several meetings teed up over the next few weeks with other startups.  I plan to cap my advising/consulting roles to four companies through the fall (in addition to Xobni).  Once I understand my capacity I may add more.

I’m definitely in need of a vacation and excited to be heading to Thailand at the end of next week.

July 8, 2008

Three Key Lessons From The Slide/rockyou Facebook App Fallout

Well it was only a matter of time before Slide and rockyou pushed things too far.  Facebook’s crackdown on aggressive viral tactics has exposed a key vulnerability of these businesses.  Facebook has banned some apps and shut down two of the three most important viral channels for others (invites and newsfeeds).  And according to this TechCrunch article the growth of these apps has been dramatically squeezed as a result.

Despite their mistakes, both rockyou and Slide should be recognized for their pioneering role in advancing viral marketing.  Through metrics and iteration both companies have achieved unprecedented user growth rates. This rockyou presentation from April ’08 (http://assets.en.oreilly.com/1/event/3/Design%20Learnings%20from%20Viral%20Applications%20Presentation.ppt) describes their growth as resulting from the “Rise of open platforms + laser-like focus on metrics and viral channels.”

But after today it’s clear that this growth sits on a shaky foundation.  I believe there are three key lessons all online marketers can learn from Slide and rockyou’s challenging situation:

1) Don’t get too aggressive.  When the key driver of your business is engineered virality, it’s tempting to keep pushing the envelope.  Eventually you will cross the line and become annoying – particularly if it can be perceived that you are tricking users into inviting their friends.  Some people will always be annoyed by viral tactics, but monitor this “annoyance” closely to ensure it is a very small minority.

2) Building your business on one or two social networks puts you at the mercy of these platform owners.  Slide and Rock You have worked hard to diversify their platforms, so they will probably weather this storm.  Rockyou even makes a good case on slide 8 of the presentation (mentioned/linked above) that they can help drive the overall growth of the platform.

3) Try to aggregate loyal users on your own website.  It may seem so 90’s, but I think this is one of the key issues with the rockyou and Slide business models. By not offering a compelling trail back to their own websites, they have very little control over their relationships with users.  At Uproar.com (in the late 90s) we used a viral widget with a smooth customer acquisition trail from our 40,000+ syndicate websites and even paid partner sites a bounty.  While this was more expensive in the short run, we “owned” the users and could work to extend their loyalty and lifetime value – ultimately building the biggest gamesite on the web.  This approach seems more sustainable and defensible than the current Rockyou and Slide approaches (though the growth rate was certainly slower).

Hopefully we can all learn as much from rockyou and Slide’s setbacks as we have from their viral successes.

July 1, 2008

VP Marketing Compensation at Tech Startup

While working on recruiting the next marketing head at Xobni (either VP or director level), I stumbled across a great blog post on the typical compensation packages for VPs of Marketing at Tech Startups: http://www.mikevolpe.com/bid/3858/.  I haven’t downloaded the actual report which may provide more data (you can see it here https://www.compstudy.com/).

 Percentile   Cash Compensation  Stock Option %   
80%   $225,000  1.65%
60%  $200,000  1.25%
40%   $175,000  1.00%
20%  $160,000    0.75% 

Unfortunately Mike’s post doesn’t give many details on compensation by startup stage (I assume these probably weren’t available in the report either).  In my opinion pre-series A has more risk and should give the marketing VP more equity (all other qualifications being equal).  Also 1% of a pre-series A company is worth much less than 1% of the same company after the series C round (because of dilution).