Malcom Gladwell’s Outliers  has come up in most of my meetings with entrepreneurs and VCs over the last few days.  The big question we ponder is “how does Gladwell’s 10,000 hour theory relate to startups – specifically executing the go to market process?” If you are not familiar with his 10,000 hour theory, Gladwell asserts that mastery of any field requires about 10,000 hours of focused practice (see my previous blog post for more details).  The key to becoming the “foremost expert” in a field is to be the first to reach 10,000 hours of practice.  This opens doors to even more experience, further enhancing the expert’s reputation.

In my meetings over the last few days we’ve concluded that no one has reached 10,000 hours of experience in startup “go to market” execution.  The reason is that each startup only requires about 1,000 hours (approximately six months) of focused go to market execution before they are beyond the go to market stage.  The marketing executive that effectively navigates this stage generally has stock options that vest over four years.   They are fully rewarded for their successful execution at the end of this four year period, so very few leave early voluntarily.  Occasionally they may get an early exit, but sometimes they’ll stay beyond the four years as well.  If we average 4 years per startup, it would take 40 years to reach “go to market” mastery.  Marketers don’t focus on early stage startups for 40 years – they either become startup founders/CEOs or go up stream to marketing roles at bigger, safer companies.  Of course most startups fail, so you could potentially take 10 startups to market in a much shorter period of time, but after a string of failures the opportunities would dry up.

Why is mastery of the go to market process important?  After my two startup marketing leadership roles from launch to NASDAQ IPO filing, I reached the conclusion that the key marketing contribution that led to our success was the first six to twelve months of execution.  This is when we figured out our target users and the most compelling value proposition.   It’s also when we implemented the measurement systems that allowed us to tweak the business model, products, user acquisition flow, etc.  After we completed this process the marketing job transitioned to driving and managing customer growth, which is similar to the marketing role at any established company.

Most startups muddle through the go to market process and as a result fall well short of their potential.  In fact I believe that along with funding challenges, poor go to market execution is the key cause of failure for startups.   Considering that VCs invested over $25 billion In 2006 and only one in ten of their companies is considered a major success (10X+ return on capital invested), the value of fixing this problem is enormous.

After working on the go to market execution with six startups, I believe I’ve reached about 5,000 hours of go to market execution practice.  I also feel like I’m a long way from mastery.  There are substantial improvements with each new go to market role – and I often go back and apply those improvements to previous startups I’ve helped take to market.

Occasionally I get very lucrative offers to consult with a later stage startup or even public companies.  While I’m confident I can add value to these companies, they will take my focus off the go to market execution and dilute the external perception that I’m focused on early stage startup marketing.  Now that I’ve read Outliers, I also realize that they will risk my lead in getting to 10,000 hours of go to market execution first.

Malcolm Gladwell’s latest book, Outliers, attempts to reverse engineer the world’s most successful people.  He dispels the popular notion that successful people are simply more gifted than the rest of us.  Instead he attributes their success to a combination of luck, hard work and time.  Ultimately, he concludes that mastery of most things happens at around 10,000 hours of focused practice. Being the first to reach 10,000 hours of practice is an enormous advantage and often comes down to luck.

For example, most professional hockey players were born between January and March.  This gives them a significant advantage since the most talented hockey players are selected for exclusive club teams when they are around 10 years old.  At this time, hockey players born early in the year are around 10% older than those born at the end of the year.  Therefore, they are bigger and more coordinated.  Once they’ve been selected for the special club teams they receive better coaching and face tougher competition.  Most importantly they practice significantly more hours every week – putting them on the fast track to mastery.

The same principle applies to software entrepreneurs born around 1955.  These were among the first people to have the opportunity to use time sharing terminals – which made it possible to quickly rack up 10,000 hours of programming time.  Because of several lucky coincidences, Bill Gates may have been the only 13-year old in the world with nearly unlimited access to a time sharing terminal in 1968.  This gave him a substantial head start in getting to 10,000 hours.  Similar stories explain other wealthy software entrepreneurs born around 1955 including Steve Jobs, Paul Allen, Steve Ballmer, Eric Schmidt, Bill Joy, Scott McNealy, Vinod Khosla, and Andy Bechtolsheim.

Gladwell doesn’t claim that successful people lack special talent; he simply concludes that being gifted alone is not enough for success.  Mastery requires time, effort and lucky circumstances.

In my early years after college I embarked on a similar quest to understand how the most successful people achieved greatness.  I read the biographies of Rupert Murdock, Richard Branson, Ted Turner, etc.  Rather than being inspired, I was discouraged to discover that many entrepreneurs (especially Ted Turner) were miserable.  I decided that it wasn’t worth trying to become successful.

But after reading Outliers, I realize that the ingredients for success were piling up around me.  First I was probably born in the perfect year for an online marketer.  Many of the best online marketers I know were born around 1970.  Our lives were at the perfect stage in the mid 90’s to risk joining pioneering startups (we didn’t have mortgages or kids to feed) but we had enough experience to be given real responsibilities. Second, I was lucky enough to have the opportunity to run marketing at Uproar.com in 1996, a startup with significant VC funding.  If the company had been started in the USA rather than Hungary, Uproar probably would have opted for a more experienced marketer.  And finally I became obsessed with online marketing – I burned the candle at both ends pushing the online marketing envelop.  I must have been among the first people to get 10,000 hours of experience with metrics driven online marketing.

This early head start helped us build Uproar into the world’s leading online game company using many pioneering online marketing programs.  And my initial success at Uproar has continued to open doors to interesting online marketing opportunities that further enhance my skills.

Unfortunately mastery of online marketing is elusive.  Online marketing is a moving target where the most effective tactics become irrelevant every couple of years.  But I do believe mastery of the startup go to market process is possible.  Look for more details on this in my next post.

I’ve long since finished reading both Marketing Warfare and The Long Tail and had plenty of time to reflect on both books.  I’ve even reached out to both Jack Trout and Al Reis (the authors of Marketing Warfare) for their perspective on The Long Tail.  They both had differing views.  Al Reis called The Long Tail an important book. He suggested that “while Marketing Warfare deals primarily with strategic issues, there are many new tactical ideas that emerge from time to time. And the long tail is one of those important tactical ideas.” On the other hand, Jack Trout had doubts about the numbers used to support The Long Tail, citing a recent article in the Wall Street journal.
Yesterday Errol Smith (who produces Jack Trout Radio) posted a comment on the Metrics Driven Marketing Blog about Jack Trout’s radio interview of Chris Anderson (the author of The Long Tail).  Talk about a fascinating interview!  In the interview Jack Trout seems to be a bit more accepting of The Long Tail than he was in my original correspondence with him.  Of course he may have just wanted to be cordial to his guest.   Still, by listening to the two authors discussing their views I have crystallized many of my conclusions.  To me, it’s not really a question of The Long Tail being right or wrong. It’s more a question of how important the emergence of a “long tail” sector is to the overall economic landscape.  While in some industries it has very little impact, in my industry – software – it is extremely important.
As Jack Trout points out in many of his books on strategy: proper marketing situation analysis is an important part of shaping marketing strategy.  Because of the Internet, consumers have more choices than ever.  This is starting to shape their expectations. For example, I can rarely buy a marketing book in Barnes and Noble anymore, since most of the books are too main stream.  However, at Amazon there are hundreds of marketing books that I would like to buy.  In software, buyers no longer want mega-products that can do everything.  If they have a problem, they Google for a solution and download a couple free trials of “perfect fit solutions.”  Research indicates that this is the case for buyers ranging from an individual consumer up to a large enterprise buyer.  For a marketer, this offers an opportunity for a very fast conversion from trial-to-purchase and also a clean digital trail for tracking ROI.  Contrast this against the major challenge facing all marketers – getting attention in a world of extreme advertising clutter.  A good software strategy in a long tail world suggests breaking mega products into many micro products and finding all opportunities to market these micro products to active seekers.  Each product is an onramp to acquire new customers and an up sell for existing customers.
I completely agree with Jack Trout’s insight in the interview that “the long tail” can be an important place for market research.  By using Google Adwords to reach all active seekers of a specific product, marketers can identify vertical segments where a product is getting the most traction.  With this research, a company can define a relevant value proposition for the product in that segment and concentrate advertising funds to build awareness and demand within that segment.  Obviously it is important for the segment to offer enough headroom for growth and for the company to have a competitive advantage within the segment.
Overall both books are extremely important for shaping marketing strategy.  If you haven’t read them yet, I highly suggest doing so.

I am currently in the middle of two fantastic marketing books (one an audio book for my commute and the other a printed book for home).   They often seem contradictory – but both have my mind racing 1000 mile per hour.

The first book is Marketing Warfare, by Jack Trout and Al Reis.  It is a classic marketing book from the 80s that is extremely relevant today.  I really consider it light reading, since it is as much about history as marketing.  I’ll write a full review when I’m done with it, but I can already highly recommend the book (especially for someone who likes history).  The most relevant “lesson” the book has taught me (or at least reminded me) is that you shouldn’t spread yourself too thin – it is essential to concentrate your marketing resources on the best opportunities.  Fighting a multi front war is dangerous.  It’s always tempting to want to place a chip on every good segment or product idea, but history teaches us that this is a mistake that often drives companies out of business.

The other book that I just started today is The Long Tail, by Chris Anderson (I’m about 1/3 of way done with the audio version).  Talk about a book that has just reached the tipping point!  I had never heard of it, then within a week heard the book referenced by several different people.  It provides some cutting edge marketing data that supports almost the opposite view of Marketing Warfare.  According to the book, many successful companies are generating a substantial amount of their profits from niche products.  This is particularly true for internet retailers that aren’t constrained by shelf space.  By having thousands of products available, online retailers can have a very “long tail” of profitable products.  From just listening to the first CD on my way into work this morning – the book triggered some really great ideas for altering the marketing strategy for one of our products.  I’ve bounced the new ideas off a few colleagues and they are as equally excited about them as I am.   

While I’m sure my conclusions will evolve as I get further into the books, both books definitely have merit.  The web (particularly Google Adwords) makes it easy to harvest demand from multiple segments.  But effective demand creation requires a tight concentration of funds into a specific target customer segment.  Good marketing strategy finds an optimal balance between both demand creation and demand harvesting.