Rose Tech Ventures Talk

Rose Tech Ventures

I own a company called The Barbarian Group. We are a “digital marketing services

company.”

Hi there. I’m Rick Webb.

And what’s it got to do with building startups?

What does this mean, “digital marketing services?”

“All skills necessary in service to provide comprehensive digital marketing to anyone that

needs it.”

We’re not talking just “online PR” or “SEO” - things startups tend to have a bit more

experience with - but also full-blown traditional marketing and advertising.

Our company was founded with a unique, singular mission:

Sometimes we operate like an ad agency, to brands, yes.

Doesn’t that make you an ad agency?

We also help other entities with their digital marketing needs. Brands, yes. But also

television networks, technology companies, rock stars, magazines, story tellers...

But we don’t just work with “brands.”

... and startups.

We’ve worked with maybe 40-50 startups in some formal capacity - everything ranging from

board of advisors capacity to full site builds, launch marketing, viral marketing, custom ad

unit creation... the works.

BTW I looked and we’ve only worked with one of your startups - and it was 6 years ago. We

were just getting started.

Startups are a big part of our clientele.

And I thought it would be fun to talk to people who deal in startups about some of the

challenges, quirks, insights and anecdotes we’ve picked up.

So all this work on all these startups has learned us a thing or two.

We’ve worked with entrepreneur-funded startups, venture-backed startups, bootstrapped startups, sweat equity startups - you name it.

Each offers a few unique insights - indulge me while I try to weave a narrative.

I’m going to run this presentation through the prism of sources of funding.

Funding Sources

I think for simplicity we can break down our startup friends into two groups

The Bootstrapped: Going it alone (for now). Would be open to funding but want to get the thing off

the ground, either because investors want to see progress first, or because they think they can pull it

off on their own.

The Funded: The company has some funding, and needs to get the thing off the ground and turned

into a success.

I’ve found these two approaches offer two different constructive sets of learnings.

The Bootstrapped

The Bootstrapped

Recently stumbled upon this quote by Jon Steinberg of Google’s Small Medium Business

Partnership Team:

People on the business side of internet software, constantly bemoan their inability to code. I’ve been guilty

at times of the frequent refrain, “My kingdom for the ability to code.” However, I’ve found over the past year

that the emergence of APIs coupled with eLance (or oDesk or one of the other contractor platforms) have

made this expression of exasperation largely hot air.

For $500 and four weeks of late night emails to eLance developers, you can basically spec and build simple,

rough apps that knit or build upon open APIs to create things that are interesting and potentially valuable. To

be clear, you can’t build complicated apps or the next Salesforce.com on this kind of shoestring, but you can

achieve the kind of learning, vetting, and experimentation that is left undone if you don’t.

They’re out there. Many of us in the room, if we had nothing else to do, could pull it off. It’s

not fun, and funding makes it easier, but it’s doable. We know this.

The real problem is in the marketing.

We’ve all heard of the entrepreneur savvy enough to bootstrap their startup into existence.

Bootstrap vs. Seek Funding

The entrepreneur savvy enough to bootstrap their launch marketing is a far rarer breed.

If you’re not networked into the entrepreneurial blog world, this can be a huge challenge.

You’re actually essentially marketing to two different audiences:

Possible funding avenues

Possible customers

This often gets confusing, since they need two different messages.

The social media challenges are intense - being connected or having someone connected on your side can

help immensely both with getting the attention of VCs and getting the first few users using your product.

A past successful entrepreneur can garner interest in a new project...

But the rest of the bootstrappers have to do it themselves

The ethos of the internet tells us that a great product will be found and grow, and eventually

thrive, and all we have to do is hammer away at making the best product we can. Oh and

maybe a little PR.

How many bootstrapped startups do you know that are great but never gained traction?

In the old days, we’d make a cool minisite at a new cool

URL, and everyone would find it.

We used to deal with the same things in online “advertising.”

Our middle years are filled with examples

of this - great sites that no one saw

because there wasn’t any awareness

marketing - the same is true for products.

Nowadays, though, the market is saturated - we know all too well the risks of building something and not thinking of the marketing side of it.

In all our years and all our startup projects we find it curious that while we’ve been offered equity to build the product for free or at a discount dozens of times, we’ve never been offered equity to effectively launch or market a startup.

Let’s put that aside for a second and talk about funded startups

The Funded

Typically, funded startups work with us at two distinct points:

Launch

Somewhere around their 60th employee, usually their second in the “marketing department,” probably

the first employee with an MBA focusing in marketing

The Funded

Interest

in

Marketing

Time

Launch

TechCrunch headline about

growth having peaked and

investors getting nervous, or

the 70th or so employee

The Launch is an interesting time. There’s still a lot of the funding laying around, and there

is palpable concern about getting the word out about the site. People are often interested in

hearing ideas at that point about marketing “the launch” of the site.

The Launch

The Launch

I always find this interesting because as “internet people,” we’ve all been indoctrinated

that a site and a product is, these days, being constantly iterated upon. And yet the desire

persists for people to get the word out about the site “at launch.”

I also find it interesting because usually we end up doing this in tandem with a site build or

branding project - no one really wants to spend money on the launch marketing.

But boy are we all thinking about it.

We all want our new baby to succeed, so typically we @ TBG do a little extra to get the word out. It

usually ends up being gratis, however.

The Launch

Then there’s the whole “hire vs staff” debate - do I hire a CTO to oversee some vendors? Do

I hire a company to build the initial build of my project? Do I build a whole company?

This could be a whole presentation into itself, and I debated having that presentation, but

instead I’m leaving you with three big learnings on that one:

Lesson 1: If you DO hire a company to build your site while you staff up, be acutely aware that every new hire you make will have an impact on the build process - we’ve seen all too often the number of stakeholders grow precariously on the client side while the build is already in motion. Avoid revisiting too many past decisions, and prep the new hires on the decisions that have already been made.

If you don’t do this, the platform decisions will then impact the CTO search, and the reverse

may even be true - we’ve built product sites on certain platforms simply because that will

make the CTO search easier.

Lesson 2: Decide up front if the product your vendors are delivering is expected to last a long time, and if it is, try to have your CTO in place first, or at least make sure someone technical has vetted the platform decisions they have made.

Almost every good vendor will offer discounts for equity. Decide up front if the amount and

terms of that discount are the most important thing, or whether hiring the best qualified

vendor is the most important thing - both are valid approaches, but know up front which

you’re going for.

Lesson 3: Decide up front if you’re hiring a vendor based on their qualifications or their price.

Put them on your advisory board. Ask them to help interview staff. Keep them apprised of

hiring decisions. Be frank with them when you’re hoping to not need them any more. A good

vendor knows they’re not going to be there forever, and wants to make the transition as

smooth as possible.

Lesson 4: Keep the vendor around and ask their opinions, even if you don’t like hearing them.

The Launch

Picking the thread back up... a few final thoughts on launch marketing.

PR, Marketing, Consumer Relations - they’re all merging. We all know this. Be aware of who you are

trying to market to with your “marketing” - to get users? To draw the attention of investors? The press?

Align the goals and clarify the roles between the inevitable “startup PR” company and your marketing -

much online marketing is social these days, and so is much PR. They’ll overlap if you’re not careful.

Consider doing the marketing after launch when the product’s worked out some of the kinks.

It’s funny how almost no startup calls us

between launch and that fateful TechCrunch

story. We always find that interesting.

And then there’s the gap.

Interest

in

Marketing

Time

Launch





OMG WTF?

The Gap

If marketing is useful to small startups and large startups, why is it so ignored by medium

startups?

I think there are two common causes:

The belief that marketing is “expensive.”

The belief that marketing is unneeded in this day and age - that “earned media” make traditional

marketing unnecessary.

The Gap

Marketing is “expensive.”

There is, of course, some potential truth to this. And the dot com 1.0 bust taught us we shouldn’t be

blowing investors’ money on Super Bowl ads.

Web 2.0 changed not just web development and entrepreneurialism, but marketing as well

Viral marketing has exploded

Social media and earned media have become harnessable

Successful web companies that have marketed on small budgets (Zipcar, Zappos) have done so by:

Tightly integrating their marketing with their business processes

Harnessing positive customer word of mouth

Web marketing is often more of a consulting affair with selective production gigs as necessary - it’s not about

“hiring an agency” or “doing a big campaign.”

To me, this is the proof. Almost every successful

startup, when it hits a certain point, learns of

the limitations of their current efforts and

inevitably turns to marketing.

Then there is the “Mature Startup”

Interest

in

Marketing

Time

Launch





Redemption!

All of these startups have had “pitches” or hired a marketing firm recently

Were the marketing needs not there previously? Of course they were - they needed those

additional customers just as badly a month earlier, right?

Was the money not there? In some cases, such as Digg, the answer is no, but often the

answer is yes.

To me, this is curious

I believe these firms “hit a wall.” Rapid, unsupported growth started to slow, and the

economics of paying a marketer began to be perceived as more compelling. Did these

economics actually change? In many of the situations I’m personally familiar with, the

answer was no.

So. What changed?

I do believe, however, that marketing is getting a bad rap with startups and VCs. Given the

history of monkeys and Super Bowls, this is understandable.

I’m not so naive as to think that all startups will suddenly start marketing.

The gulf between the advertising world and the technology world is fairly astonishing to me.

Even in firms that are building products whose revenue is derived from advertising.

Finally, I find it doubly curious that so many websites base their revenue models on advertising, while acting as if they believe advertising doesn’t exist or work.

The advertising world is in full blown revolution at this point as it works to unlock the worlds of

social media, earned media, viral marketing and word of mouth. And they have made enormous

strides.

And as web publishers and properties struggle to sell more custom and premium advertising

solutions, they’re beginnig to understand agencies more.

But things are improving on both sides.

...but I am hoping and I believe that soon, advertising and marketing will once again become

a viable tool for startups.

Small, digital-focused shops are cropping up all the time. A whole generation of advertisers

have reached maturity on the internet. And a new slough of respected startups are turning

to advertising in smart new ways.

Perhaps we’re not quite there yet...

And in the meantime, thank you for your time!

So maybe we’ll all talk in a year or two!