Don't Launch!

Here's a common question I get from startups, especially in the early stages: when should we launch? My answer is almost always the same: Don't.

First off, what does it mean to launch? Generally, we conflate two unrelated concepts into the term, which is important to clarify right up front.

1. Announce a new product, start its PR campaign, and engage in buzz marketing activities. (Marketing launch)
2. Make a new product available to customers in the general public. (Product launch)

In today's world, there is no reason you have to do these two things at the same time. In fact, in most situations it's a bad idea for startups to synchronize these events.

Launching is a tactic, not a strategy. In the right situation, it's a very useful tactic, too. In particular, a marketing launch can help you do three things:

1. Drive customers into your sales pipeline. This is the usual reason given for a marketing launch, but for most early stage startups, it's a failure. That's because a marketing launch is a one-time event, and rarely translates into renewable audiences. Worse, if you are not geared up to make the best use of those customers when the launch sends them your way, it's a pretty big waste. And, as we'll talk about in a moment, you don't get a second chance.

Because this reason is so often used as an excuse, I recommend giving it extra scrutiny. Are you really choosing to engage in marketing in places where your potential customers pay attention? Do your customers really read TechCrunch, for example? If not, do not launch there. Even if you must launch to your customers, avoid the urge to also launch in extra places, just because your PR firm / team can do it at the same time.

1. Establish credibility with potential partners. In some businesses, especially in certain industries like traditional enterprise software, you simply cannot bring a new product to market on your own. You need to combine your product with others, and this requires partners like OEM's or system integrators. A marketing launch can help you get in the door with those partners, if you're having trouble getting their attention. Again, it's critical to focus your marketing launch on those publications, venues, and channels that your potential partners are paying attention to. If you don't know who the partners are, what they pay attention to, or what kind of message they are open to receiving - it's too early to launch. Do some customer development instead.
2. Help you raise money. If you are having trouble raising money, sometimes a little PR can help. But don't be too sure. When VC's and other investors see PR activity, they are going to expect to see significant traction as a result. If you launch and see only mediocre results, it may actually make it harder to raise money. Sometimes, it can be easier to raise money pre-launch, if the launch is not imminent and there is some fear on the part of investors that they might lose the deal when the launch drives awareness of your company to all their peers.

Those are the potential goals of a marketing launch, but those are not its only effects. It also has causes other tectonic shifts that many startups don't consider:

1. A marketing launch establishes your positioning. If you don't know what the right positioning is for your company, do not launch. Figuring this out takes time, and few entrepreneurs have the patience to wait it out, because the business plan does such a good job of explaining what customers are going to think. The problem is that customers don't read your business plan.

When you launch with the wrong positioning, you have to spend extra effort and money later cleaning it up.

1. You have to know your business model. Most startups launch before they've figured out what business they're in. Pay attention to your?fundamental driver of growth. If the product needs to be tweaked just a little bit in order to convert users into customers, you want to figure that out before the launch. If the viral coefficient is 0.9, keep iterating until it's 1.1 before you launch. And if your product doesn't retain customers, what's the point of driving a bunch of them to use it? Spend your time with?renewable sources of customers and iterate.
2. You never get a second chance to launch. Unlike a lot of other startup activities, PR is not one where you can try it, iterate, learn, and try again. It's a one-way event, so you'd better get it right.

Why do startups synchronize marketing launch and product launch? I think it has mostly to do with psychology:

1. Investors push for it. Many investors have a desire to see their companies lauded publicly. This actually makes a lot of sense, if you see the world from their point of view. Third-party validation is one of the few forms of feedback they have available to them. Most investors in startups have a 3, 5 or even 10 year horizon for liquidity. That means they don't really know if they made a good investment for a very long time. Seeing the press talk about what a great investor they are is a great form of feedback. As a bonus, it gives them something to show their partners and LP's.

This trend is so strong, this is actually a question I recommend to screen potential investors: "How do you know it's time to launch the company?" See if their answer is about tactics or strategy.

2. Founders push for it. Who doesn't want to see their name in print? Investors aren't the only ones with ego invested in the company. In some ways, founders are even worse. How do?they?know they are making progress? They spend so much of their time trying to convince everyone around them that their idea is great and the company is doing well: employees, investors, partners, friends, family, significant others - it's a long list. But when they go to sleep at night, who's there to convince?them?that they are making progress? My experience is that many founders actually have a deep anxiety that maybe they are not succeeding. Sure, they are keeping everyone busy, but are they really working on the right things? A marketing launch is a temporary salve for these kinds of worries. Unfortunately, it's not a long-term solution, so it can become a bit of an addiction and, therefore, a huge distraction.

3. There is also fear of the accidental launch. Companies that are thinking strategically sometimes reason like this: "if we do a product launch, members of the public will see our early product. They'll form their own opinions, maybe see our wrong positioning, and maybe talk to members of the press. By the time we're ready for a marketing launch, it will be too late. Better to launch now and get ahead of the story, or stay in closed beta until we're ready."

In most situations, this fear is misplaced.

So don't combine your product launch with a marketing launch. Instead, do your product launch first. Don't chicken out and do a closed beta; get real customers in through real renewable channels. Start with a?five-dollar-a-day SEM campaign. Iterate as fast and for as long as you can. Don't scale. Don't marketing launch.

How do you know you're ready for marketing launch?

• When you have a strategy for the launch, which means knowing why you're doing it. Make sure it's solving a problem you actually have, and not one that you think you might have some day.
• Know what the success metrics are for the launch. If you know what the strategy is, you'll know how to tell it was a success. Write it down ahead of time, and hold yourself accountable for hitting those objectives.
• Know what your?fundamental driver of growth is. Make sure the math for your model makes sense. That way, you'll be able to predict the future. When customers come in from your marketing launch, you'll know exactly what they are going to do and how that benefits your business.
• Know where, when, and how to launch. If you know what your strategy is, and you know your target well (customers, partners, investors) you will also know where they are paying attention, and what messages they are able to absorb. Hold yourself and your PR agency/ team accountable for developing a high level of understanding of these questions ahead of time.

One last suggestion: Think about the psychological motivations that are driving you to want to launch earlier than makes sense for your company. See if there's anything you can do to address those underlying needs that?does?make sense. For example, if your employees are feeling frustrated that they don't get much third-party validation for their work, use a board of advisers to fill that role. Bring in people that they (and you) respect to evaluate your progress and make suggestions. In my experience, this has provided an effective boost to morale and also helpful guidance.

When you're ready, enjoy the launch. Until then, resist the urge.

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