How to Kill your Startup…With Marketing

Throughout my career, I’ve had the opportunity to work on new products, businesses, and categories. Wearable holographic computers that people had only dreamed of, robotic pizza machines that were utter craziness to some, and a whole host of other technologies and services that had yet to exist. For me, I love working in a startup space where there’s no prescribed path and you must work collectively with smart people from many disciplines to make something a reality. Although that fuels me, it terrifies others.?

I advise and consult with a lot of companies in various stages of startup-edness. Some are laser focused on what they need help with, others are looking for a lifeline to keep them from drowning. Let’s be honest, most startups will fail. Stats show 20% of new ventures fail in the first year and up to 90% of startups eventually fail. There’s lots of good advice out there from very smart people on how not to kill your business (HBR has some great case studies and the folks at Shark Tank are always pointed in their advice). But beyond getting funded and dealing with intuition and egos, I see fundamental issues that revolve around problematic marketing that I think hurt businesses more than you may be aware.

You don’t know what marketing is.

I hear from a lot of startups that they “don’t need marketing yet” because they haven’t launched. Or they aren’t ready to advertise. Or they don’t have PR budgets. To me, that thinking is like trying to paint the house before you’ve built it. Marketing is not the cherry on top of the engineering sundae – it’s a process that is as critical as your sprint planning and code reviews.

It’s very common that a startup founder will have a great idea and likely a whizbang demo or prototype that will get someone’s attention. The first question I ask is, “who is this for and why do they need it?” Nine times out of 10, people can’t answer that. They want “everybody” to be a customer or “influencers will create demand” or some equally bad nonsense. The root of marketing is defining the market – what is this thing, where does it fit, who will buy it, how will you talk about it to make it compelling? The 5 P's of Marketing aren’t just for fun – they really do matter. Engaging in marketing strategy at the outset is critical to align the product with the market and the eventual promotion.

I once had a client with a very technical, very specific, very niche solution for a chemical used in power plants. They were adamant that a Twitter campaign was critical to their success because they wanted marketing to get them ‘word-of-mouth’ and ‘buzz’. It wasn’t until we worked through the reality of their audience (about 100 plants worldwide with less than 500 total decision makers), the ways to reach them (none of them were on Twitter looking for buzz-worthy new chemicals), and the costs of acquisition (consider the ROI of running global web ads for months to the wrong people versus sending all 500 people a personal note or meeting them at the one annual industry conference) that they realized they were confusing “advertising” with “marketing.” Jumping to tactics that are far down the marketing funnel before it’s time will guarantee a waste of spend and effort.

You’re blinded by your wickedly smart idea.

Most startups talk about delivering the MVP (minimum viable product) without having any idea what is M, V, or P about it. If you’re creating a new category, it’s unlikely that your customer research (even if you do it) will tell you what the customer expects. I liken this to asking a group of focus group attendees what they are going to have for dinner two weeks from Tuesday. They will likely take a guess based on what their normal dining patterns are but, in reality, they have no clue. Will they decide to go out, will they be tired from work and not want to cook, will it be snowing and they want soup, will their kids demand pizza? We can make predictions from research and defining ‘minimal viability’ but we can’t be absolutely certain until a customer uses the product in a real setting. I believe the speed at which you act and react to customers is more critical then how you define a set of features from the boardroom.

Herein lies the need for startups to be nimble in their actions and their thinking. Not only reacting to market signals but being willing to adapt concepts that may go against assumptions. Founders and leaders who are mired in their own idea – while the market is telling them something different – will only flop around wasting money and time until another company comes in and solves the problem the right way. Product market fit (PMF) isn’t just a data point on a slide, it’s a disciplined way of thinking that requires marketing, engineering, operations, and sales to coalesce and flex based on what real-time signals they are hearing.

You over-staff by under-staffing.

There’s no secret that startups don’t have a lot of money. And that’s how it should be at the beginning. But when there’s a million things to do and only a small group to do them, there’s a natural tendency to want to hire help. Most companies are good about hiring the initial key roles early on and investing in employees who will help set direction and strategy. The problem comes at the next ring of hiring. The senior folks are so focused on finding investors or creating product, there’s typically a laundry list of critical initiatives not getting done. So, the reaction is to hire staff but to peanut butter budgets across groups to alleviate the bleeding. What happens is that most startups end up with a deep bench of early-in-career folks, interns, and task-specific consultants that have a short-term impact on ticking things off the to-do list but a longer-term drain on the company.

I see this lopsided staffing spending all the time. An early-stage client that I have advised was gaining traction with investors and their product was getting noticed in the right audience segments. They wanted to “do more marketing” to raise visibility and increase potential customers. Their solution was to hire a junior marketer (a recently graduated previous intern without any other experience) and a marketing consultant to handle web advertising and SEO. The full cost of both resources was approximately $100,000 per year which initially seemed very reasonable. But when all you have is a hammer, everything is a nail and these two were pumping out ‘campaigns’ without a plan. Without a marketing strategy or a seasoned manager to oversee the team, their tactics were disjointed, had very little ROI, and within 6 months the company was looking to hire an additional external consultant at 3X the initial cost to fix the messes that had been created.

By saving money on less experienced and hyper-specific consultants at the start, the company failed to get the strategic help and insights it needed at a critical time. It wasn’t about just placing web ads and doing some flyers, there were bigger questions on audience segmenting, positioning, messaging, and sales planning that needed to be done to enable the tacticians to be successful. Startups need to look at hiring part-time or fractional strategists early on to lay the foundation of marketing before specialists are called in. The initial cost may be slightly higher but the speed, expertise, and depth you will get with a seasoned fractional exec will far outweigh the rip-and-replace costs if you don’t. Spend the time building the foundation before you hang the drapes.

Startups are fun, crazy, wild, terrifying, and exhilarating. It’s why many of us take the risks with the hope of a huge reward. But from my seat, and the vantage of seeing this time and again, there’s no need to add risk with problematic marketing that works against you.