January 7, 2010

When PR for Your Startup?

This post is by Joe Eckert, the most effective PR executive I know (we worked together at LogMeIn).  Joe has played a critical role helping startups generate press coverage as both an inside VP and on the agency side.  He is now at Baker Communications Group. 

Given my limited PR knowledge, I asked Joe to write this guest post to help you begin your startup’s PR program.  – Sean

When PR?

Because we specialize in communications for high tech start-ups, we’re often asked “when should I start a PR program?” 

It’s a simple question. The simple answer (often given) is: “No time like the present.”

The real answer is bit more complex. We always ask prospective clients about their strategic company goals, as well as near- and long-term product plans so that we can help the management team determine whether a PR program can be helpful – and sustainable.

Once all parties agree that the time is, in fact, “now”, we go about the work of creating and executing the strategies and tactics that will help support the corporate vision. One of the first things we look at is helping a client generate a fairly steady stream of “content”.

Content is King

A good PR firm will help guide you and “tease out” the information that will help communicate your value and credibility to customers and partners. Part of your commitment to the PR process is to make sure the company is ready to handle the increased attention that comes with an effective and successful PR program. PR places additional demands on executives and managers who are designated as spokespeople or who otherwise have a stake in the PR process.

Content can begin – and often should begin – with company/product strategy communicated in the form of industry analyst discussions. This foundation work often precedes a more “public” PR campaign, It can also be combined with social media activity and/or “wire press releases” – two examples of content distribution tools. Knowing who is watching you and who you should be watching can often dictate the type, style and frequency of the content. But the key is that a lot of PR deliverables are no longer just media stories. They ARE company-created content that adds value and context to the more traditional media channels.

The Good (Bad?) Old Days

Not so long ago, PR lived in a relatively simple world of communication to the traditional press, who then processed, fact-checked and distilled that information before sending it out to the world. Today’s PR landscape is quite a bit more complex.

Before embarking 10 years ago into the land of the start-up, I and most of our team here spent time at large companies (IBM, Compaq, HP) where the simple rule was don’t communicate unless you get coverage in the press. Today, we’re seeing a disaggregation of traditional media “centers”, however, and now direct forms of communication are supplementing (not supplanting) the role of media. Take blogs, for example. They have become a significant supplement to traditional media and, in fact, many reporters also do double duty as bloggers. And, of course, companies and organizations have their own blogs, which add to the content volume. The influence of Twitter is well documented (ironically, in the traditional media).  Even CUSTOMERS are publicly influencing the buying decisions of other customers. So, today, the press release, the company blog, the analyst deck all take on significance in addition to, and beyond the role of media in delivering content.

While scary (for some), companies must be willing to communicate with their customers and potential customers in an almost 1:1 fashion, or at least to appear that way. You might be thinking “that’s marketing.” And, in a way, it is, but it’s marketing using the tools, language and credibility of public relations/media. And, of course, it’s also using the traditional PR tools FOR press articles and analyst reports.

PR is not a magic bullet. Just as with building a sales and marketing organization – indeed an entire company – an effective PR program builds up over time with activities strategically dictated by what stage the company is at and where it wants to go.

So, when PR?

Ask a simple question…

We welcome your comments about your own experience with startup PR and/or any questions for Joe.  – Sean

December 17, 2009

Audio Interview on Venture Hacks

I recently sat down with Nivi from Venture Hacks and discussed what it takes to build a successful startup.  The full conversation is available here.  There have also been some great thought provoking questions that I’ve answered in the comments section following the Venture Hacks post.  Please jump in and join the conversation over at Venture Hacks.

November 30, 2009

Milestones to Startup Success

Update added to end of post

When your startup accepts outside money (such as venture capital), you are obligated to focus on maximizing long-term shareholder value.  For most startups this is directly based on your ability to grow (customers, revenue and eventually profit).  Most entrepreneurs understand the importance of growth; the common mistake is trying to force growth prematurely.  This is frustrating, expensive and unsustainable – killing many startups with otherwise strong potential.

Most successful entrepreneurs have a good balance of execution intuition and luck.  This was definitely the case at the two startups where I ran marketing from launch through NASDAQ IPO filings.  While we didn’t follow a specific methodology, our CEO was intuitive enough to know the right time to “hit the gas pedal.”  We didn’t accelerate until verifying that the team had created a great product that met real customer needs and we could generate sufficient user revenue to support sustainable customer acquisition programs.  It’s taken years for me to realize that our growth was less a function of clever marketing tactics than beginning with something that customers truly needed.  Some growth would have been automatic; the marketing team simply accelerated this growth.

Several startups later I have a much better understanding of the key milestones needed for a startup to reach its full growth potential.  These are based more on observing universal truths than inventing some type of methodology.  Reaching the full growth potential of your startup requires focus, specifically focusing on what matters when it matters.  In my post on the startup growth pyramid I talk about the high level milestones you must achieve in order to unlock sustainable growth.  This post looks at it on a more granular level with links to several of my previous blog posts and other resources that provide additional details.

Day 1: Validate Need for Minimum Viable Product (MVP)

Before any coding begins it is important to validate that the problem/need you are trying to solve actually exists, is worth solving, and the proposed minimum feature set solves it.  This can best be achieved by meeting with the prospects most likely to need your solution.  Steve Blank has published a great post on this.

Eric Ries offers more details on the minimum viable product concept in this post/video.

Where’s the Love?

Vinod Khosla, one of the most successful Silicon Valley VCs in history, once suggested to me that startups should think of their early users as a flock of sheep.  He explained “the flock always finds the best grass.”

For you this means you should start looking for a signal about who loves your product and why as soon as you release your MVP.  Most products have at least a few people that truly consider it a must have.  These people hold the keys to the kingdom.  Learn everything you can about them including their specific use cases and demographic characteristics.  Try to get more of these types of people.

A good place to start collecting this information is the survey I’ve made freely available on Survey.io. You can read more about this product/market fit survey in this blog post.

If you’re lucky you’ll be able to use this early signal to find the product/market fit.

Expose the Core Gratifying Experience

The majority of our project focus at 12in6 recently has been helping startups find their core user perceived value and exposing it in messaging optimized for response.  Your objective should be to remove complexity from the initial user experience and messaging in order to highlight this core user perceived value.  Often this means burying or even completely eliminating features that don’t relate to this gratifying experience.

Metrics

Metrics don’t matter until you achieve product/market fit – then they are critical to your success.  Dave McClure has a great video on startup metrics that matter (relevant part is at about minute 2:20).

Most of the tools out there provide way too many irrelevant metrics and miss the essential few.  Both Dave McClure and I are advising KISSmetrics on a solution to this problem.

Start Charging

Another key step before growing your business is to implement a business model.  The ideal timing for implementing your business model is discussed in this blog post .

I’ve often heard the argument that startups are focused on user growth and prefer to delay revenue in the short term.  I believe the fastest way to grow is with a business model and explain why in this blog post.

Extreme Customer Support

Now that you have a business model in place, your first marketing expense should be to expand the customer support team.  Anyone that cares enough about your solution to contact customer support is a great source of insight about your target market.  Also, customer support will uncover issues that will help you grow faster without spending.  And fixing these issues will make it much easier to grow when you do start spending.

If your customer support team is overwhelmed now, I don’t recommend trying to grow until you address the issues driving most support calls. Once you’ve addressed these issues you’ll have fewer barriers to adoption and will be able to grow without overwhelming customer support.

This will enable customer support to go above and beyond expectations, which is an important way to drive customer loyalty and enhance word of mouth.  This approach pays more dividends today than ever before – as I explain in this post on Social Media.

Update: See comments for additional thoughts on extreme customer support.

Brand Experience Over Brand Awareness

Back in the “Dotcom Bubble” days billions were wasted on brand awareness campaigns for startups.  Today most entrepreneurs understand that brand awareness campaigns are a waste of money for startups.

Instead, it’s much cheaper and more effective for startups to focus on creating a fantastic brand experience.  While startups often realize the importance of brand experience, they focus on it too early, fine tuning things that customers don’t care about.  Instead, wait until you understand why certain customers love your product; then obsess over every element of this customer experience.

Apple is probably the best tech company out there on coordinating a perfect brand experience for its target users. I cover more on brand experience in this blog post.

Driving Growth

Once you’ve achieved all of the previous milestones, then you can focus on driving growth.  CEOs must take an active role in driving customer growth whether or not they have an interest in marketing. Nearly all of the risk and upside in a startup is in your ability to gain customer traction and then drive scalable customer growth. The CEO should not abdicate this responsibility to the marketer.

It’s important to stay aggressive and take all slack out of the market (make it completely uninteresting to pursue the market for any other competitor).  Your early advantage is the ability to iterate on the customer feedback loop and leverage strong customer loyalty to drive word of mouth.

While ROI lets you know if a user acquisition channel is sustainable, the key focus should be on exposing lots of the right people to your fantastic product experience.  It’s much easier to get passionate and creative about this than purely thinking about things from an ROI perspective. Of course positive ROI is essential for any customer acquisition program to remain in the mix.

When it’s time to hire a marketing leader to partner with the CEO, this post explains my recommendations for an ideal startup marketing leader.  The most effective startup marketers are relentless about experimenting with channels until finding things that work.

Start by building out free channels such as listing in directories and basic SEO.   When you begin building paid channels, extra effort should be put into channels that show strong potential for scale.

Unfortunately you can’t count on effective online tactics working forever.  I’ve seen many hot online marketing tactics lose their effectiveness over time.  This is because online tracking makes it easier for marketers to quickly figure out what actually works.  As a result we start piling into the most effective tactics.   Eventually online tactics get saturated, as explained in this post.

Business building

Fast growing businesses are difficult to manage.  This is the point where you should bring in some experienced operations people if they aren’t already on the team.

It Won’t be Easy

Finally, the top three risks to growing via these milestones are:

  1. You lose patience and decide that one or more of the milestones really aren’t that important.
  2. VCs and/or board of directors lose patience because you did not achieve conceptual agreement on this approach from beginning.
  3. You delude yourself into believing that for “our type of business” customers really don’t need to consider our product a “must have”.  For us, “nice to have” is good enough.

Building a successful business is hard.  Hopefully this milestone driven approach to growing your startup will make it a bit easier.

Update: It’s hard to write a blog post on “milestones to startup success” that covers every type of startup.  Some startup types may need to reverse the order of some of these milestones.  For example, with marketplaces (EBay, social networks, dating sites, etc.) user gratification increases with more users so there is a bit of chicken and egg here…  Ad supported sites also benefit from early scale. Many of the articles linked to from this blog post also cover exceptions such as when a startup should start charging (it’s different for enterprise targeted startups).

October 21, 2009

More on CEO’s Role in Driving Growth

I just wanted to highlight a reply to a comment on my post Founders Make the Best Startup Marketing Leaders :

“In hindsight, probably one of the most important points of the blog post is that CEOs must take an active role in driving customer growth whether or not they have an interest in marketing. Nearly all of the risk and upside in a startup is in your ability to gain customer traction and then drive scalable customer growth. The CEO should not abdicate this responsibility to the marketer.”

October 7, 2009

Founders Make the Best Startup Marketing Leaders

CEOs often ask for my advice on the ideal candidate profile to lead their ongoing customer growth efforts once we’ve completed the key steps to unlocking growth. You would think that after running marketing at two startups through IPO filings that I could easily answer that question. But I’ve struggled to define the ideal profile of a successful startup marketing leader. After many course corrections, I finally believe I have it figured out. But to really understand the ideal profile, it is important to comprehend why the role is so challenging.

Based on anecdotal evidence, I’d guess that 90% of startup marketing leaders don’t work out. This corresponds to the overwhelming majority of startups falling short of expectations of founders and early investors. When a startup falls short of expectations, the startup marketing leader is the first to go. Even those fortunate enough to gain early user traction still face the uphill battle of finding cost effective ways to acquire users at scale. And if they do succeed, then startups are often tempted to hire a “next level marketer” to replace them.

A successful startup marketing leader must be undaunted by these risks and believe they uniquely have what it takes to succeed. That sounds a lot like the profile of most startup founders. So it’s not surprising that the best startup marketers are entrepreneurs at the core. Entrepreneurs are willing to take the risk and are generally tenacious enough to uncover the channels necessary to drive long-term growth.

I came to this conclusion after finding the common thread between myself and the two most effective people I’ve met at uncovering growth channels. One is still CEO of his company but has done more to drive customer adoption with a fraction of his time than most startup marketers do with undivided attention. The other highly effective startup marketer is a founder that transitioned to leading marketing. They share a persistent desire to connect their innovative solutions with the people that really need them. After implementing critical tracking systems and an efficient customer acquisition process, they are now relentless about experimenting with channels until they find things that work.

Contrast this to a typical marketer, who is generally more focused on marketing activities than marketing results. Most of these activities do nothing to move the needle on the business, but make the marketer feel good because they are working hard.

It may be tempting for a startup CEO to read this and think that aggressive targets can steer the marketer in the right direction. I don’t think that will work. Effective marketing leaders will challenge themselves by pushing the boundaries of the startup’s growth potential. The CEO should be a partner in this process rather than setting arbitrary unrealistic goals. If you don’t have confidence in your marketing leader, the founding CEO should micromanage the process by being an active participant in channel brainstorming sessions and challenging the marketer to ensure tests have been implmented to perfection. Once you have created a product that people really want, most of the remaining company risk and upside lies in your ability to aggressively drive customer adoption. This is not something a CEO should abdicate to the marketer until they’ve demonstrated a relentless drive to uncover profitable customer acquisition channels.

The CEO can also facilitate channel discovery by ensuring that the marketing leader gets the tracking systems they need to execute marketing efficiently. Of course the marketer should be able to make a case for why these resources are important.

What about successful startups that had an initial marketing leader with a more traditional background? First, there is nothing wrong with a traditional marketing background if at the core the marketer is entrepreneurial. Second, the marketer does not always deserve credit for strong user growth. Sometimes great products really do market themselves. My experience with Dropbox certainly supports this assertion. Also, I recently spoke to the former VP Marketing at a company that sold for billions and he agreed that his most important growth contribution was not getting in the way of the viral growth engine.

Of course the risk in hiring an entrepreneur to lead your marketing is that they’ll eventually leave to start their own company. Agree that this is an acceptable outcome if they are willing to give you at least a couple years.

Finally, only the marketing leader needs to be entrepreneurial. In my experience, it is not an essential characteristic for the rest of the marketing team.

September 23, 2009

Seedcamp in London

Seedcamp is an innovative program that brings experienced entreprenuers together with a batch of several promising new startups from all over Europe for a week of mentoring.  The best of these startup receive 50,000 pounds, but the mentoring is worth far more than that…  Seedcamp provides a fantastic model for any region trying to replicate the startup ecology that has helped Silicon Valley thrive.

In addition to mentoring several of the startups directly, I also had an opportunity to present to the full group yesterday.  Here are the slides I presented:

Startup Customer Development (Seedcamp, London)

View more presentations from Sean Ellis.
September 14, 2009

Quick Thoughts from TC50: SeatGeek

My favorite startup from the third session at TC50 was SeatGeek.  Overall SeatGeek appears to have a strong value proposition – “buy event tickets at the right time and save substantially over the peak price.”  It’s very similar to farecast, but for event tickets (sports, concerts, etc.).  The product, market and business all seem to work/fit since SeatGeek is already profitable.  The big question for a startup that reaches profitability and overcomes these big challenges is: Can it scale?

Based on their stated metrics, net proceeds from the average transaction to them is around $50 (10% of $500).  Once they’ve acquired a user, lifetime value could be substantial (if we assume 10 transactions over their lifetime, lifetime value would be pushing $500).  Within that allowable acquisition cost, there should be many scalable marketing opportunities. 

I may have missed it, but I didn’t hear them address the specific way they would market the business.  My assumption is that they would market primarily through search (both SEO and SEM).  Given the breadth of events, there should be several keywords to test in order to find profitable, scalable customer acquisition channels.  They also have strong alternative monetization ideas to further improve their allowable acquisition cost and/or profit per customer.

One potential competitor is FanSnap, which is a price comparison engine on tickets across sites.  I believe the primary improvement SeatGeek brings is a price predictor, since according to SeatGeek prices often drop.

September 14, 2009

Quick Thoughts from TC50: ToyBots

It’s a bit strange that I’ve picked another “kids targeted” startup from the second batch of  startups as my favorite – kids are a notoriously difficult market to acquire online.  But in the case of ToyBots, I believe they are targeting a fantastic opportunity. It is likely that connected toys will be the next generation in toys and I love their example of having grandma read a story to the grandkids through the toy. 

I believe Webkinz laid out a good marketing roadmap for this type of startup.  My kids couldn’t walk into a Justice (previously called Limited Too) without asking for another Webkinz.  I didn’t mind buying a stuffed animal, but am a little more hesitant to offer the kids my credit card for online purchases.  From a business perspective, I was intrigued when my kids ripped off the virtual currency and threw the toy into the corner – never to be played with again.

ToyBots can create a tighter link between toys and a web experience than Webkinz, but leverage the same types of marketing channels. My recommendation would be to link the licensing to the marketing opportunities.  The toy makers already have great distribution, but very few subscription opportunities.  ToyBots can improve the ongoing engagement with kids for each toy manufacturer – increasing monetization opportunities and possibly creating a direct customer acquisition opportunity for manufactures to cross promote new toys.

It’s difficult to know how much progress they’ve achieved, but announced partnerships suggest that this isn’t a half baked idea.

September 14, 2009

Quick thoughts from TC 50: ToonsTunes

I’m at TC50 and plan to write quick thoughts about demos that catch my attention.  This is very “on the fly” so it will be pretty rough. I’ll try to clean it up later.   Videos of the demos will be posted online, so I’ll add links when they are available.

ToonsTunes is my first…

  • Who needs it/why?(They claim to be targeting Tweens, but the demo looked like it would appeal to a younger demographic.  I think children 7-12 would probably enjoy this product, but would want to validate with research.)
  • Product progress? (Great graphics, looks well developed.)
  • Are they willing to pay for it/how/how much? (business model)
    • Freemium (enhanced), Sponsorship, Merchandise
    • I’d recommend premium subscriptions to save music
  • Are there realistic ways to acquire users within economic constraints? (marketing)
    • Viral (via parents social networks) – this is a great idea.
    • I’d also recommend marketing via popular sites for kids.
  • Is the likely cost of acquiring users plus marginal cost of service less than value per user? (business economics) – This would require a lot more exploration.  But I like their idea of giving parents the ability to display their kid’s work via FB, etc.  Not sure about licensing costs to music labels if they “borrow” from popular songs.