The Startup Marketing Launch Process is Broken

**See updates at bottom posted on Jan 20, 2009**

Originally published March 2, 2008

The majority of VC funded startups fail and a large part of the blame should fall on marketing.  Specifically, executing a flawed marketing process during the startup’s critical customer traction stage.

Through running marketing at two startups for the full cycle from launch to IPO filing, I’ve discovered that success at various stages requires very different marketing skills.  It also became clear that early stage marketing execution was the most critical to long-term success.  Yet it is nearly impossible to get good at this critical marketing stage.

Why?  Because effective marketers don’t get enough repetition in the early stage to master it.  Any skills they do develop become rusty.  Stock option vesting periods lock them in well beyond the traction stage (typically four years).

I actually stayed five years in each of my last two startups.  In that final year I had very little time for hands on marketing; I was too busy with such things as managing a team of marketers, recruiting more marketers, meeting with the sales team and other executives, preparing for board meetings, traveling to conferences and trade shows, etc, etc…

I know that my skills are best suited to the earliest stage of marketing, but I wasn’t about to walk away from extremely valuable options.  Even after the options vest it’s still hard to walk away.  Beyond paying hundreds of thousands of dollars to exercise options, you also have to pay income tax on the appreciated value of those options.  If the company isn’t public, you can’t even sell the options to get the money to pay the tax…  Anyway, the point is that despite knowing I’m best at marketing during the early traction stage, I was compelled every year to let those skills get rustier as my options appreciated and vested.

My solution to the problem may seem a bit radical at first, but considering the billions lost in failed VC investments it deserves careful consideration.  Here it is: Startups should plan from the beginning to have different marketing leaders at different stages of the company.  One marketing leader to gain traction and kick start growth, one to manage growth until an IPO and one for post IPO leadership.  Considering the average tenure of a VP Marketing is less than 2 years anyway, this really isn’t that radical.  It’s just planning the transitions rather than making a bunch of disruptive firing/demoting/hiring decisions.

You might be thinking that a consultant approach would work here, but I believe to be effective the marketing leader needs to be totally immersed in the role.   Another common approach is just to force the early stage marketer out when they become less effective (the disruptive approach mentioned above).  If they have played a key role in the company’s success, I don’t believe this is a very ethical approach – even though it’s probably the best thing for the company.

So rather than forcing out the effective early stage marketer, have an agreement from the start that it is a short-term role.   I recommend calling it an interim VP Marketing role and planning for full time 3 to 6 months followed by another 6 to 12 months of advising (working with the longer term VP marketing).  This ensures full knowledge transfer and gives the company access to two sharp marketing thinkers during the very important second stage of the company’s growth.  Options will still be an important motivator for the Interim VP Marketing, but they should have a much shorter vesting period.  The total options allocation to marketers will be higher, but this approach should result in faster market traction, meaning less burn and less need for future dilutive rounds of funding.

It’s probably already clear that I am now specializing in this traction stage.  Xobni is my first assignment.  Of course everybody warns that it will be tempting to want to stay on (especially since Xobni is really picking up steam), but I am very committed to developing this approach over the next few years.

Another advantage of this approach is that it will hone my ability to identify great startup opportunities.   Even the best marketing approach can’t save a crappy idea.  The challenges and opportunities of each former assignment will be fresh in my mind when I look for the next startup to join.   I’ll try to avoid startups with key challenges that I could not previously overcome and try to join startups that have the types of assets that proved important in an earlier assignment.

This knowledge is also very valuable to VCs and I already have several that have asked me to help them assess new investment opportunities.   I’m expecting this will be my pipeline for finding new startup opportunities. Given the alignment of my interest with VCs in picking the right opportunities, they are willing to pay me to conduct a marketing viability assessments to dig into target customer’s need for the solution, real addressable market size and segments and any existing current demand for the category.  If everything looks good after this assessment, the VC can make a less risky investment and I can make a less risky decision to try to take on the interim VP marketing role (if a marketing leader is not already in place).

Update Jan 20, 2009: I temporarily removed this post several months ago with the intention of making a few edits and quickly reposting it.  Unfortunately it slipped through the cracks despite being one of my more popular posts.  My thinking has a evolved quite a bit since I wrote this post 9 months ago.  During that time I have nearly doubled my experience taking startups to market (despite being in startups for 10 years).  As much as the idea of interim VP Marketing roles sounded good at the time, it really limits my ability to help several startups and requires more energy than I could possibly muster (this is a very intense period in startups).  Instead I have shifted my focus to work alongside a long-term marketer and guide them through executing the key phases of going to market.  This approach has worked very well at both Dropbox and Eventbrite.

We still have a long way to go before the launch problem is fixed at VC backed startups, but there has been a lot of progress in the last year.

6 thoughts on “The Startup Marketing Launch Process is Broken

  1. Not only do I agree with your assessment, but having my own startup, this is very similar to the marketing approach I am taking (more out of necessity and default than brilliant, extensive experience that you bring). We are launching in mid-April and, while I have my CTO, I have yet to find a marketer for our venture. We have met someone who cannot commit beyond six months right now but he is smart, focused and thinks outside of the box. We’d be crazy to let him go. So it occurred to me that we should have a marketer for this stage (gaining traction) and someone else for the second stage (gestation – as I call it).It really makes sense. Thank you for the wonderful article and here’s to your new and excellent adventures at Xobni (which we will hopefully read a bit about here).

  2. Hey Chuck. Thanks for the comment. Sounds like you should grab this guy. If he’s interested in specializing in the traction marketing stage, please have him contact me at seanwellis at I’d love to exchange notes with him. And right back at ya – here’s to your success with your venture!

  3. Sean, this is a great post. I really like how you’ve put an “end” date on your own position (begin with the end in mind, right?) and that you are putting the company’s best interest over your own. I like people who don’t fall into complacency and strive to continuously build equity in themselves. I admire your drive and transparency. I’m a fan of YC’s, Xobni is a great opportunity. Best wishes in your adventure!

  4. Great post Sean. I’ve also tried the interim thing as a consultant for an early stage as well as the f/t and agree with most of your observations about te value of the former for both sides.

  5. What a great approach to handle the marketers role in VC funded startups. I especially like the “1– 2 week marketing viability” idea – this will help the VC a lot because they can then get a more realistic image of the market size and possibilities than the startup themselves provide when asking for VC 😉

  6. Sean, I think this is a really interesting approach to the startup marketing process. I see some other inherent benefits to this approach, but also some potential challenges that may need to be overcome.An early stage marketer is likely to also bring some generalized startup experience that outside of the marketing arena is going to be valuable to the company. Someone who comes from a traditional marketing background, may never have dealt with the nuts and bolts of the startup process: company formation, accounting issues, sales training, etc. An early stage marketing specialist likely has seen a lot of this and has the experience to help the executive team solve other problems so more of the focus can stay on the marketing process. Startups need scrappy people to get the job done no matter what shape it takes, and I think someone who thrives in the early stage marketing role is likely to bring that scrapiness to the table and serve both their position and the company at-large well.One challenge I could see is on the team management side. On day one, when you join the company you are telling the executive team, “I am in this for a set period of time,” and your explaining why. They will respect that because it is in their best interest, and I think it shows a maturity in that you specifically understand this role and its unique attributes. On day 120, however, you begin to hire your team. They are looking to you for leadership–are they going to have the same zeal for their position, knowing that you don’t have the long-view in mind for yourself? I could be totally off-base, but I would think the interim title could make the people-management process harder.When I worked with you, I went beyond what I thought I owed the company many times. I often did this because we fed off each other’s drive and ambition. If I didn’t think you were going to be around in 6 months, I may not have had that same desire. I don’t think that is an impossible one to overcome, but I think being cognizant of it might help you better prepare for ways to keep your team motivated. The right people, may just get it!Good stuff, thanks.