Tag Archives: startup marketing

Idea Assassins

“Do few things but do them well. What doesn’t work, kill quickly.”

This is not a quote from Sun Tzu. It’s from Simon Rothman, who is probably just as smart. Simon was one of the very early guys at eBay and was responsible for starting eBay Motors, which ended up becoming a $14 billion-a-year global business and generating about one-third of all of eBay’s merchandise sales. He later became a board member at Tesla and is now executive-in-residence at Greylock Venture Partners.

I had a chance to meet with Simon last week. The advice he gave me about marketing strategy was just too good not to pass along, so I thought I’d share it. Here are Simon’s four rules on marketing:

1. Place only a handful of bets.

Startups rarely fail for a lack of ideas; they fail for a lack of focus. As a founder, your job isn’t to come up with a million marketing ideas but instead to prioritize the top three. So many startups fail because they try to boil the ocean. Instead of trying to tackle a million different marketing ideas, keep in mind that 80 percent of your revenue will likely come from your top 20 percent of customers. Try to figure out the common characteristics behind these top-producing customers, and then focus on the channels that are bringing them in.

2. Put enough time, money, and resources into each strategy to give it chance to succeed.

If you place too many bets, you spread yourself too thin and set yourself up for failure. Some of your bets will fail, not because they were bad ideas but because they were undercapitalized and never even had a real opportunity to succeed. The key is to put more money into fewer bets.

Take display ads, for example. You might be losing money for three months on your display ads, but then on the fourth month, you make a small tweak in the ad copy and your ads turn into a huge moneymaker. But if you only had enough budget to run the ads for one month, you never would have figured this out and just would have thrown money down the drain. Marketing is all about iterating and making as many tweaks as possible in the time frame that you have allotted. The more money you budget for a particular channel, the longer you can stay in the game and the better your odds are of figuring out a formula that works.

3. Test your hypotheses in any way you can — including your instincts.

There’s an old saying in marketing, “What you can’t measure, you can’t improve.” This saying is absolutely true — except when it’s not. Try to test as much as you can, but realize that you can’t measure everything. One of the things that worked well to drive growth early at eBay was PR, one of the most notoriously difficult tactics to measure. Simon said that even though they couldn’t really measure it, they just knew it was working. In other words, sometimes, as a founder, you have stop being a nerd, put down your copy of The Lean Startup, and just trust your instincts.

4. Add fuel to the fire, or kill it quickly and move on to the next idea.

Once you’ve tested a strategy, you have two options. If the strategy is knocking it out of the park, pour more time, money, and energy into it in order to make it scale. If the strategy is not working, kill it immediately. As Simon said, ”If you have to ask yourself repeatedly whether a strategy is working, then the strategy is NOT working.” The harder question arises when a strategy is working pretty well but is not really knocking it out of the park. The tendency in most startups is to keep it going, because they have already put significant time and money into it and want to see it all the way through. This is the wrong choice!

Instead, recognize that the resources you put in are sunk costs, and kill the idea. When you only have enough money and bandwidth to execute on two or three ideas really well, the opportunity cost of putting resources into anything but the best performing strategies is too high.

Marketing is a crap shoot; no one really knows which ideas will work until they let them loose in the wild. The more ideas you test, the greater your chances are of finding the one that works. But don’t test them all at the same time. That won’t work. If you do that, they’ll all fail because you’ll be stretched too thin to execute any of them well. The key is to prioritize.

Lastly, be an idea assassin. Don’t get emotionally attached to your ideas. Be ruthless about killing off the medium performing ideas and just keep the absolute best. Because if you don’t make it a practice to kill off your ideas, your ideas will end up killing off your startup.

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For Startups – Weird is GOOD

Courtesy of Vimrod1

One of my favorite authors in the world, Seth Godin, recently came out with a new book called We Are All Weird and argues that the age of one-size-fits-all, mass marketing is done.

I couldn’t agree more with Seth.  Maybe it’s because I’m a complete weirdo myself, but I’ve been saying it for years: WEIRD is GOOD.

Weird is especially good if you are a startup and here’s why.  We’ll start with the premise that in order for your business to succeed, you need to have, as Seth would say “a remarkable” product or service.  It has to be something people want to talk about and tell their friends to try.  This is even more true with startups because as a startup you don’t have any money to spend on advertising, so if people aren’t raving about your product and getting others to try it, you’re dead in the water.

So the big question is how are you going to get people to talk about your company?  Certainly not by trying to appeal to everyone. There’s an old saying, “you can’t be all things to all people.” Because when you try to do this, you water down your product and you end up appealing to nobody.  If you go down this route (and we did at first at GiveForward) you’re heading down a path to a boring, bland, vanilla death.

On the other hand, let’s say you create a totally freaking weird-ass product that appeals to just a tiny part of the population. Perhaps, only one out of every 50 people “get” your product.  The rest of the population thinks it’s stupid or even worse, hates it. That’s perfectly okay because the 2% who “get” it, absolutely love it.  They identify with it. It tickles their soul, and it’s exactly what they are looking for.  And you know what they do?  They tell their weirdo friends who are just like them to try the product because they know their weird souls will love it too.

Here’s an example.  Let’s say you run an ice cream business and you are deciding to sell either vanilla or tequila flavored ice cream. You have a $10 marketing budget for each product line. For every $10 you spend on advertising, you can attract ten people to check out your product.

With the vanilla ice cream advertising campaign, four of the ten people that checked out your product actually purchased!  The other six people said, “meh! It’s okay, but nothing special.”   You still got four purchases and that’s pretty huge, right?  Well, not really and here’s the problem. Four people liked your  product enough to try it, but none of them loved it enough to tell their friends about it.  So with your $10, you bought yourself four purchases and that’s where the story ends. Your cost per acquisition is $2.50 for each item sold. ($10 divided by four items sold).

Now in this second scenario, you are now selling your weird-ass tequila flavored ice cream.  Let’s say that with that same $10, you can get one out of the ten people who check it out to actually purchase. The rest of the people don’t purchase. Six of the people who checked it out, don’t “get” it.  And the final three people actually hated it.  So initially your cost per acquisition is $10 ($10 divided by one item sold).  But in this case, the story doesn’t end here because that one weirdo who purchased it, loved it so much that she told her two of her weird friends who are just like her and they purchased it too.  And then those weirdos each told two of their weird friends who purchase it too.  And guess what?  One of their weird friends just happens to be an influential weirdo blogger that blogs about weird-ass ice cream flavors.  She has 1000 loyal weirdo subscribers and after she blogs about how awesome tequila ice cream is, 15% of them go out and purchase it that afternoon.  Now, let’s do the math again.  For that same $10, you now have 155 purchases. Your cost per acquisition is 6.5 cents per item sold.  Winner Winner chicken dinner!

If you are a startup without a bazillion dollar marketing budget,  weird will always win over vanilla.   The goal isn’t to create a product that tons of people like.  This will put you out of business quickly.  The goal is to create a weird product that a few people absolutely LOVE and are willing to share with their weird tribe.

It may be hard to believe that there are enough weirdos out there to buy your niche product, but trust me there are.  Have you ever sat around your Thanksgiving table and thought, “OMG, my family is freaking weird!”    Of course, you have.  We ALL have because everyone’s family is weird.  Embrace the weirdness!  The weird ones who “get” you and your product — those are your customers.

 

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