On behalf of Rockfish Brand Ventures, I was invited to give a presentation to the CEO’s and Founders of CincyTech’s portfolio companies on digital marketing.
Last week, quite the debate was started when Fred Wilson from Union Square Ventures wrote a post that shared his thoughts on marketing as it relates to start-ups. I decided to wait a week to respond because frankly I was kinda fired up about Fred’s disrespect to my profession.
You see, apparently Fred has a major issue with the entire marketing profession. As he wrote in his post:
And I’ll also say that I have seen “marketing professionals” do a lot of damage to our portfolio companies over the years. Most of the damage has come from outsourced marketing relationships with agencies who charge too much and help too little. But I will also say that marketing hires in our companies have had the lowest success rate of any hire and there are many so called experts who have turned out to be bad and expensive hires. I’m angry at the marketing profession for these transgressions over the years and it spilled out into my post.
Now Fred is one of the venture capitalists that I have a ton of respect for. Like many other fans, his blog posts are daily reading for me. But unfortunately, I think Fred was way off base on this one. I think he (and his portfolio) have been burned by a few bad hires and as a result, he is taking it out on the entire marketing profession.
That’s just plain wrong.
After all, I’ve seen more than one case of an investor taking advantage of a young start-up. But in those instances, I haven’t gone and said all investors or venture capitalists are evil. That would be ignorant. Let’s just accept that every profession has exemplary members and those that fall on the other side of the coin.
So let’s get to the heart of what the debate was about. Is marketing appropriate for start-ups at the early stages? Obviously I would argue that marketing is one of the single most important things for start-ups. That philosophy is at the heart of what we are doing with The Brandery after all.
First, lets agree that there is a difference between marketing and advertising. Advertising is just part of the marketing mix along with design, customer service, PR, and a whole host of other things. And second, lets admit that there is good marketing and just plain stupid marketing. Its easy to mock marketing by pointing out the Pets.com of the world who spent millions on Super Bowl spots and elaborate launch parties. But those are examples of stupid marketing by amateurs (probably a harsh word but if the shoe fits…)
Now with that out of the way, lets talk about what marketing means to a start-up. Before everything else, the best marketing that a start-up can do is building a great product. No question about that. And the second best thing a start-up can do is build a great product that has marketing built right into it from day. Think about GroupOn as the perfect example of this. Most people forget that you only get the deal if enough other people buy it as well. In the early days, this led people to actively tweet, share and everything else to get their friends to buy. Gilt also built marketing right into the product by creating a sense of exclusivity in the waiting list that they originally had to become a member.
But even when a start-up does both of these things, it probably won’t be enough. After all, its the rare company that has instant viral success where everyone markets the product for them.
I was talking this very thing with Michael Stich, our COO at Rockfish. Michael made the great point that:
It’s still possible for trees in the forest to fall and no one hears them. It’s a big internet after all. There are lots of under-marketed ideas and startups. Furthermore, certain spaces (Geo, social commerce…) are land grabs right now. The biggest winners will have early users. Anything to accelerate = goodness.”
Think about Zynga and the millions they spent advertising on Facebook in the early days of Social Gaming. They have the #1 market share right now because they won the land grab and knew had to take advantage of it (note: I’m saying to spend like crazy and if you get the market share you will win).
Mint is another great example of a Web 2.0 darling who believed in the power of marketing for start-ups. Just look at their original pitch deck where on page 8 they talk about User Acquisition (ie marketing) through a Launch / Growth / Maturity model that includes tactics such as Direct email, PR and Internet Advertising. I think Mint did pretty well by thinking about marketing and user acquisition from day one.
In his post, Wilson also argued against spending money on marketing and that you should instead focus on free customer acquisition tools such as Social Media or PR. Well, I’d argue the neither of those are a cost free exercise. Social media, talking with press, etc all require the time of the founder or their employees. That is an opportunity cost and an awfully high one when you are talking about taking the time of founders. Nothing in this world is free, including marketing.
Needless to say, I’m proud to call myself a marketer and I think my profession does a tremendous amount for companies big and small. And I think every start-up out there should be thinking about the role of marketing from the start.
This is just one subject that Fred and I will just have to agree to disagree on.
A few weeks ago, I wrote about a great post by Steve Blanks in which he talked of the upcoming “Entrepreneurial Revolution” in the US. As a follow-up, I wanted to share a short 6 minute talk that I gave in October at the inaugural TEDxCincy. In the talk, I share a few reasons why I believe Cincinnati has tremendous potential for cultivating start-ups. I also touch upon the key strengths that our city needs to build from in order to reach this potential.
It is hard to believe that only 12 weeks ago, The Brandery was just getting started with our inaugural class of companies. Fast forward to today and we will be graduating 6 amazing start-ups at our first Demo Day on Thursday, November 18th. We have a sold-out crowd of 150 venture capitalists, investors and entrepreneurs joining us at the LPK Innovation Center for what should be a fun-filled and exciting morning.
The day will start off with a keynote by Ben Lerer, founder of Thrillist.com and Lerer Ventures. We then move onto the pitches as our 6 Brandery graduates take the stage to share their stories. Presenting on stage will be:
- Giftiki: the online version of a greeting card with money enclosed, allowing users to conveniently give gifts digitally to friends and family.
- Idea Rally: an open innovation web app which helps students voice their ideas for brands in a fun, game-like atmosphere
- LifeBlinx: a Facebook Application that takes your selected status updates, classic comments and favorite photos from Facebook and organizes them into printed memory books.
- TurboBOTZ: a service that makes it effortless for video gamers to manage the games they own as well as to buy, sell, or trade their used video games all within a single online environment.
- VenturePax: a website and soon-to-be mobile application making it effortless for you to discover your local outdoors, fun to engage your friends and rewarding to track how active you are.
- VenueAgent: a website that offers discounted event space to users, helping venues sell unbooked dates at their facility via online transactions.
If you aren’t able to join us in Cincinnati, we will be live streaming the event over at uStream starting around 9 AM EST. We will also be taking the companies on a road show to be New York City (December 1st) and San Francisco (December 7th), so let me know if you’d want to meet any of them.
Thanks to the Twitter tip from Jon Steinberg, I came across this great presentation from Rashmi Sinha, CEO / Co-Founder of Slideshare. In it, she talks about the trials she went through in finding the right mix of business models for SlideShare, ranging from advertising to Freemium. Great read for any start-up.