Marketing and The Bubble

Rand Fishkin has a good post in response to my marketing posts over the past two days. In it he makes this assertion:

For the first few years that I was in the "web world," 1997-2001, there was a dangerous and obvious bias in startups toward sales and marketing – and branding in particular. But, in the past few years, that pendulum has swung to the equally dangerous paradigm that product is everything.

And then he shows this great graphic:

I totally agree with Rand that VCs and entrepreneurs learned the hard way in the last bubble that spending a ton of money on marketing didn't guarantee success. More likely it guaranteed failure. And I am certain that experience has caused me and my partners to view marketing oriented startups with a fair bit of caution.

It may also be true that the same VCs and entrepreneurs have gone too far in our collective disdain for marketing. That is essentially the argument Rand makes in his post and he makes it well, with some cameos by USV portfolio companies.

Another post written in response to my marketing post is this one by Alan Patrick. Alan paints a different picture. He doesn't see the pendulum swinging away from the behaviors of the last bubble. He sees it swinging back toward them:

One of the things that defines a bubble is that too much money chases too few assets (in this case decent startups) – but the market abhors a vacuum, so the next thing is a flurry of production of new (me-too startup) assets to fund – so more startup teams leaving MBA school, more First Tuesdays, more Incubators, the start of funding at silly values "off the slide deck" – and it means a vast increase in startups also scrabbling around in the darwinian mire that one has to kick off the slippery ladder to get one's own hands on the rungs – and that means more and more shouting.

More shouting certainly isn't the kind of marketing I want to fund, and it is exactly the kind of marketing we all funded in the last bubble.

I'm sitting here mulling over the irony of two very different reactions to the same post, both of which I'm in agreement with. We are in a challenging phase in the cycle for sure. And marketing is a weapon that startups will need to use to get noticed in a very crowded and competitive environment. I just hope they use it smartly and well.

#VC & Technology

Comments (Archived):

  1. J.R. Sedivy

    The graphic representing the first view is a powerful image which reinforces the need for balance.

  2. Evan

    Your original post didn’t exactly hit me for being from Field of Dreams.

    1. Treehouse Logic

      This is a great debate. Many technology companies prefer to focus on product and shun marketing. And for good reason. But, great companies know how to balance both. I’m sure someone has mentioned Apple – the greatest marketing company of our generation. Oh yeah and they do technology, too.I am a marketer but ignore conventional PR. I think social media and the Internet in general have changed the very nature of marketing. For the better.I wrote a reaction post as it pertains to my company’s space, ie the business of customization, ie co-creation, personalization, ie mass customization.Thanks, Fred!http://blog.treehouselogic….

  3. Matt A. Myers

    “Build it and they will come”So true, this belief – and you can see this everywhere.This is a fallacious statement when applied to the internet. There are no geographical boundaries constraining people. It just doesn’t translate.Some internet platforms do of course try to create boundaries to constrain people, but those boundaries are just once again fallacies, a misconception.P.S. If all it takes is an advertising budget to make you money to then you better scale as quickly as you can because then barrier to entry is having money (especially once a model is proven). Eg: Groupon, LivingSocial, etc.. and I’ll reserve my other thoughts on that business model, well, actually I have a post about it on my blog: Google and Groupon

    1. William Mougayar

      Read Randy’s Slideware preso. It’s “build it, and market it”.

  4. kidmercury

    i submitted a comment but i think it got lost….anyway, now that we have achieved the first step of openly discussing it is a bubble, the next step is to ponder the implications: is it a problem? what problems does it cause? how can we solve these problems? then we will free ourselves of the cycle of bubbles, so that we can all live in a stable economy with high employment, low cost of living, and opportunities for innovation around the world.

    1. fredwilson

      calcanis’ comment on was the signature moment for mewhen people claim it is different this time, it is time to hunker down

      1. paramendra

        Ha ha!

      2. RichardF

        As an outsider I’d like to know if there is much truth in what he says about angels beating early stage VC’s to deals at the moment?

        1. fredwilson

          we will only know in a few years when we can compare portfolios and look at returnsone man’s gold mine is another’s sewer

          1. andyidsinga

            wait – did you just say one man’s sewer is another man’s gold mine? That could be a good post right there – looking for gold in the sewers .. with examples from the last bubble

      3. kidmercury

        one of the problems this bubble is creating is an excess of malinvestments — too much wasted capital. good ivnestors are being priced out by noobs, valuations are distorted so the price discovery process becomes impossible….and of course the inflation tax, creating $70 bln for fb and $4 gas for the rest of us.and of course it actually isn’t differnet this time. interest rates were near zero percent and people flooded dot coms back in bubble I because who wants no yield bonds? what has changed now with bubble II, aside from greater income inequality and a different date on the calendar.

        1. Alex Murphy

          In the late 90s, interest rates were nowhere near what they are today. They went down to the lows in 2003 in response to the recession.http://www.federalreserve.g

          1. kidmercury

            yes, i misspoke. what i meant was that there was a series of rate cutsfrom 1995 to 1999 which fueled the dot com bubble. then as rate hikescame the bubble burst. then rates were lowered again which fueled thehousing bubble. the fact that the percentages are lower now onlyreveals we are more desperate as an economy, but the principle is thesame.

      4. Alex Murphy

        I don’t think that Jason was saying it is different this time compared to last time. I think he was saying that services like AngelList allow for greater competition and for the entry of people that are intrigued by Angel Investing as “sport” which makes it harder for Boutique VCs …I tend to agree. It is supply and demand. There are many people with cash sitting on the sideline seeing outsized returns from companies that don’t have a fully tested business model. If they can invest $20k, $50k, or $100k in a business that can show how they generate revenue, have done the leg work to make sure that there are customers ready to pay, and show how they are going to scale then those Angels are ready to make a bet. It is a better place to blow your money than Vegas is.Although the number of deals going through Angel List is high, compared to really any time period, it is generally good for everyone involved. Angels get to place their bets, new start ups get to swing the bat in the game rather than only at Practice, and VCs get a larger crop of potential companies to work with.If anything is different this time, it is that there is more money going into more small companies rather than more money going into fewer larger companies. That doesn’t seem so bad to me.

    2. Matt A. Myers

      I’ve been writing up my thoughts on exactly this right now, letting my mind do its thing … 🙂

  5. Sebastian Wain

    What’s missing is a specific analysis per sector. Imagine that now you create a better blog, CMS or CRM system, how long does it take to penetrate this market with many established players?Thinking in Facebook: It’s perfectly feasible to have a better product in this area, but moving 500M (or a tenth) of people from one place to another will be a herculean job.

    1. Dan Lewis

      I think that’s the exact mindset Fred takes issue with when it comes to marketing. Why does “better” matter?Many times, creating a “better” product than the established competitor is a bad product strategy because, well, “good enough” is good enough. It’d be much better to create a “different” product which fixes the same problem that the “better” one makes. FourSquare, Twitter, GroupMe, and others could have been part of a robust, Facebook-like platform, for example, but making them distinct products was a better choice.And then you don’t waste as much money on marketing.

    2. Matt A. Myers

      If market penetration is possible … the leaders can ‘easily’ copy.Re: Facebook – there’s no physical moving of people, so it’s relatively easy with the right things in place.

      1. Sebastian Wain

        Market penetration needs a lot of marketing & sales work.And, I don’t agree with the Facebook thinking. When I saw twitter the first time I knew that every top 30% developer could develop it alone in less than, one week?

        1. Matt A. Myers

          Facebook has done a lot of marketing and sales work too. Of course they had the benefit of word of mouth, exclusivity to universities at first, etc.. however now competitors have the benefits of these platforms like Twitter and Facebook to make the sharing even easier.And once again, with the right things in place, a Twitter could be relatively easy to duplicate as well. 🙂

  6. Dan Lewis

    There’s no doubt whatsoever that the 2001 bubble was exacerbated by out of control spend to gain market share. And the sad part is that overspends by places like eTrade and in this area probably crowded out better products which simply couldn’t emerge out of this sea of advertising.Unfortunately, there are a lot of pretty simple products out there right now which can only differentiate themselves via sales and marketing — the products are straight-forward, replicable, etc. (Hi, Groupon!) So the reason you’re seeing, correctly, the pendulum swing back toward ad buys etc. is because that’s where the leaders can out-do their copycat competitors. And it’s a zero-sum game.But!Not all startups fit that mold. Tumblr, for example, has less need to out-market Posterous than they do out-“product” them.But again!There are middle-ground companies, like Foursquare, which probably need that 50/50 focus.In short: There’s no magic formula that applies to all startups.

    1. Sebastian Wain

      “… there are a lot of pretty simple products out there right now which can only differentiate themselves via sales and marketing”Simple or complex products can differentiate in support, that can be called Marketing too. You may prefer a worst product but having someone to call in the other end if you have an issue.

    2. reece

      Agreed.Like I said above, you have to do what’s right for YOUR company.

  7. reece

    I tweeted these last night and I stand by them:#1 Brand wins. #2. Inbound marketing is gold. RT @csavage: Epic response from @randfish to @fredwilson.…[cont’d] the trick is to find the balance between @fredwilson’s and @randfish’s advice and do what works for you. “It’s YOUR company.”And for those who love this subject, Mike Duda’s got some good input over here: http://mikeduda.posterous.c…Particularly this quote:”However, fundamentally, Fred does point out a key issue of misalignment. The Agency model is predicated on fees-for-services. VCs and entrepreneurs want to be cash smart and are looking to drive bottom-line business results and increase the overall valuation. HELLO, MISALIGNMENT. This by itself is a discussion point, but to those who are hiring Agencies, pick one who you honestly feel can add the most value and who genuine wants your business to do well…not just win the business. And in hiring a marketing executive, it is so crucal that the CMO’s goals are completely congruous to the business objectives of the company. Aything less can create unhealthy tension and poor results.”

  8. Tom Labus

    My concern is that since we are pretty far to the Product Focused side of the cycle, new companies/products wouldn’t fight hard enough to gain attention.

  9. Shubhrajit Chatterjee

    I agree with both these comments as well. There should be a product first, and a fair amount of marketing around it

  10. Brad

    Fred – I think we need to define marketing….. If we are talking Superbowl ads for, then I agree with Rand. However there are so many aspects to marketing -Zappo’s – Company cultureSouthwest Air – Price, convenience and experienceApple – Cool, chic and a great product experienceEtc.There are so many different ways to market yourself, but I do not believe you can just sit around and wait for customers to come. You have to be proactive and continue to move in the direction of building value. A balance of good marketing practice and product focus needs to be achieved to see real success.

  11. awaldstein

    Pre bubble or post, the need for companies to connect with their market stays.Methods change as tools change and with the customer not the company in the center of the bullseye the game has changed.Marketing is that handshake. It needs to be less loud and more honest now. But still its about matching the method to the product to the market.

    1. Dave Pinsen

      Well said.

    2. Aaron Klein


    3. Donna Brewington White

      Nice summary, Arnold.Your words “the game has changed” are at the crux.

    4. Matt A. Myers

      One main thing to understand is the cost of reaching consumers is much lower than historically via social platforms like Twitter, Facebook, etc..Harnessing these techniques and building them properly into products is how this primarily happens, and brings down the cost of acquisition.So then the important part becomes product development, developing products that can harness these in an intuitive, non-intrusive, useful way.There’s also a lot more competition, noise, and “marketing is that handshake” is a perfect remedy.

      1. christianbusch

        Although it’s much lower than historically (because the internet and performance-based marketing hasn’t been around for more than 15 years), it’s quite high compared to say 2 years ago. At the bottom, 2 years ago, you were able to purchase Facebook Flyers at $0.02 CPM if you bought a lot of them – now you’ll have a heard time getting in below $1.00 or at least $0.50 – that’s a 25-50-fold increase – not exactly cheap!

  12. Dave Pinsen

    “One of the things that defines a bubble is that too much money chases too few assets (in this case decent startups) – but the market abhors a vacuum, so the next thing is a flurry of production of new (me-too startup) assets to fund…Relevant to that quote by Alan Patrick, I don’t recall if I’ve linked to it here before, but this post by Eric Falkenstein is worth reading: “A Batesian Mimicry Explanation of Business Cycles”. Excerpt:In an expansion investors are constantly looking for better places to invest their capital, while entrepreneurs are always overconfident, hoping to get capital to fund their restless ambition. Sometimes, the investors (dupes) think a certain set of key characteristics are sufficient statistics of a quality investment because historically they were. Mimic entrepreneurs seize upon these key characteristics that will allow them to garner funds from the duped investors. The mimic entrepreneurs then have a classic option value, which however low in expected value to the investor, has positive value to the entrepreneur. The mimicry itself may involve conscious fraud, or it may be more benign, such as naïve hope that they will learn what works once they get their funding, or sincere delusion that the characteristics are the essence of the seemingly promising activity. The mimicking entrepreneurs are a consequence of investing based on insufficient information that is thought sufficient, but they make things worse because they misallocate resources that eventually, painfully, must be reallocated.Once the number of mimics is sufficiently high, their valueless enterprises become too conspicuous and they no longer pass off as legitimate investments. Failures caused by insufficient cash create a tipping point, notifying investors that some of their material assumptions were vastly incorrect. Areas that for decades were very productive, are found to contain exceptional levels of fraud, or operate with no conceivable expectation of a profit. Everyone outside the industry with excessive mimics marvels at how such people—investors, entrepreneurs, and their middlemen–could be so short-sighted, but the key is that the mimics and duped investors chose those business models that seemed most solid based on objective, identifiable characteristics that were, historically, correlated with success.

    1. fredwilson

      wow, gotta get our portfolio to valueful enterprises

      1. Mark Essel

        Dave kindly cautioned me of competing companies a while back when I was first working on Victus Media and desperate for angel seed capital. A number of funded companies have mastered this “pattern matching” deception, but I have little interest in perpetuating a fraud to get a chance in the ring, it’s not the way I’m wired.Out on the ocean tidal waves are simply a slow dip in sea level, but when they crash ashore, they deliver an irresistible impact. I’ll earn trust and money slowly to change the sea level.

        1. Donna Brewington White

          Hang in there and stick to your guns, Mark.



        1. Donna Brewington White


        2. markslater

          me agree

    2. Mark Essel

      Good stuff Dave and I remember reading your mention of it before. I replied to Fred below.

      1. Dave Pinsen

        Thanks Mark, will check that out.

    3. ShanaC

      Ok, what would be the best possible definition of things we are overinvesting on the web. If we have a list, we can probably outinnovate from that list. (knowing what to avoid)



        1. David Semeria

          Grimlock grammar improve with every comment.Grimlock smart dinosaur.

          1. Donna Brewington White

            Supposedly has a micro-brain. I don’t buy it.

    4. Donna Brewington White

      I pretty much read anything you suggest. Never disappointed. This is pretty darn fascinating — at least the parts I understand. 😉 Thanks, Dave.

      1. Dave Pinsen

        Thanks, Donna. Nice of you to say.Don’t feel bad if some of Falkenstein’s writing seems difficult. He is a former academic (finance Ph.D.) who doesn’t go out of his way to write accessibly for a lay audience.

      2. RichardF

        +1 Donna the links Dave provides are always interesting reads

    5. Alex

      Excellent points Dave.To add my 2cs, the field of anthropology points out that our species is hardwired for mimicry.People mimic..investors and entrepreneurs do it too. All of us mimic to some extent successful behaviors that we deem desirable and available to us, based on consensual knowledge and perceptions about what leads to success. Many investors mimic what other investors do (known as ‘tailgating’). Entrepreneurs try to mimic what other entrepreneurs did in order to become successful. Students mimic theories from school books. We are taught to mimic certain patterns.A bubble happens when everybody mimics everybody in buying an asset class and when this behavior is made possible by a combination of loose money controls and baseless optimism and it is reinforced by very visible peer successes happening ‘in the bubble’. Since we are hardwired for mimicry, it is conceivable that a vast majority of us is always prone to getting involved in or creating bubbles in our desire to replicate our peers’ successes.So, in regards to the above quoted article on mimicry-based explanations, maybe the important point is that it is in our nature to mimic and that we are hardwired to do it. The motivations for mimicking or the ways are maybe secondary to the fact that it is in our nature and we will keep doing it, with the occasional ‘bubbly’ consequences. The field of behavioral finance deals with these topics extensively:…Re: Fred’s point of the two very different, almost opposing reactions on the same topic that he simultaneously finds himself in agreement with, he is correct and in particular impressively so. F. Scott Fitzgerald put it like this: “the test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time..”. (The crack-up, 1936). It is skills like these that provide extraordinary insight and reading Fred’s posts is always a pleasure…Best,Alex.Managing Director“Connecting entrepreneurs with investors”

      1. JamesHRH

        It is also the subject of an interesting book – The Opposable Mind, by Roger Martin, the Dean of the Rotman School of Business @ UofToronto.

  13. Denis

    I totally agree with Rand that VCs and entrepreneurs learned the hard way in the last bubble that spending a ton of money on marketing didn’t guarantee success.Fred, you still mix marketing with advertising. Marketing is not just customer acquisition or telling everyone how good the product is; it is also getting to know your market’s needs & wants.Sure, huge ad spendings won’t bring success to a crappy product, but huge spendings on market research to know the customer better should result in a better product if the findings are used properly.

    1. Matt A. Myers

      I think what most of us are doing now with Fred’s posts is automatically switching ‘marketing’ to the word ‘advertising’ in our heads – assuming we understand the differences.There’s no cognitive dissonance then. :)Might confuse newbies (not meant in defamatory way) but the confusion will help them learn the difference.

    2. Aaron Klein

      I think you’re oversimplifying it here. Because advertising is not the only problematic marketing expense.PR is a great example.Fine to use a PR firm at some point – and I plan to do so – but a startup entrepreneur who is living, breathing and sleeping the product can be 10x to 100x more effective than a PR firm for a LONG time.And advertising and PR are just two examples.

      1. Denis

        I don’t believe in outsourcing PR. An effective spokesperson needs to understand the company & the product. A contractor that spends only a few hours a week with the client cannot develop such a deep understanding.Mark Suster did a great post on the subject 2 weeks ago: http://www.bothsidesoftheta

        1. Aaron Klein

          I’m on vacation with minimal internet so I can’t click through to Mark’s post…but I don’t recall it being that black and white.My take:If you are hiring a PR firm because you don’t know how to talk about your product, you’re in deep, deep trouble.If you have a cohesive winning message and a trusted partner with a history of success with PR can help you drive that message on a daily basis in creative ways, that’s a great expenditure.Certainly, even the latter isn’t necessary until you’re well into the scaling process.

          1. Denis

            Mark argued that PR firms help in later stages because they can help get inches in the major publications. Which means the reason for hiring a PR firm is their Rolodex. However, when a startup develops well the management should have a relation with the key journalists covering the field. That’s why I don’t like outsourced PR.

          2. Aaron Klein

            Well, I’m definitely on the same page with Mark then…and frankly, I hope the scenario you describe is possible with my new startup. I certainly wouldn’t mind!

  14. Ciaran

    As Seth Godin said after your 1st post, I think you’re confusing advertising with marketing. And even having said this, I think that you’re wrong (though obviously I’ve never funded any billion dollar start-ups). There is an awaful lot of noise out there, and sometimes being great just isn’t enough.Marketing can help with everything from awareness to conversion, and assuming that being mentioned on TechCrunch and being mates with someone who used to work at Facebook/Twitter/Foursquare/whatever will be enough to turn a start-up into a success story is one of the biggest things driving us towards a new tech bubble.

    1. Matt A. Myers

      “There is an awaful lot of noise out there, and sometimes being great just isn’t enough.”I think this is why entrepreneurs and VCs regularly say “luck” is involved.I would hope every great entrepreneur makes it, but there are trillions of variables that you can’t control, only can manage.

      1. Ciaran

        If I was a VC I think I’d want businesses that weren’t planning to rely on luck

        1. Matt A. Myers

          Some say you make your own luck. 😉

          1. JLM

            Luck is that magic essence in the air when you are sitting at your desk at 6:00 AM. You’re damn right you make your own luck.

        2. Aaron Klein

          Yep, and that was the point of my comment yesterday.I’ve budgeted for customer acquisition in my new startup. I’m not going to be lazy and immediately go there. If I can reprogram most or all of that money over to building product, that will be a huge win.But I certainly wasn’t going to raise our seed funding by telling investors I had no profitable way to acquire users beyond luck.

  15. JamesHRH

    Peter Drucker, I am paraphrasing, basically said that every oganization needs to recruit and retain customers (although that is not always what they call them). Anyone who faced a customer was in marketing. He also said that anyone who was not directly related to that function, who was below the C-level, could be outsourced.Another thought on this Fred – how many customer oriented enterpreneurs would carry a similar distaste for ‘professional investors’ who damaged their company.The most important thing, it seems, is to have something of value for customers and to not let any one functional group (sales, finance, ops, executive) highjack the company for their own purposes.

    1. Matt A. Myers

      Very good end point.This certainly would have to be the job of the founder(s) to pay attention to, and make sure the board is on the same page (or try anyway).

      1. JamesHRH

        Matt – the BoD is the group most likely to highjack a founder’s company, in my experience. It is why someone like Fred is so valuable.

    2. fredwilson

      no kidding. the only thing worse that a bad “marketing professional” is a bad VCi’ve invested with many of them and been burned more than most entrepreneurs on that one

    3. Brian Alvey

      The Drucker quote that always sticks with me (paraphrased here from memory) is that “companies have only two functions: innovation and marketing. All the rest are costs.””Innovate and market” means “create something amazing and then go tell people about it.”Fred Wilson is smart, but his original post that said “marketing is for companies with terrible products or companies that need to squeeze profits out of new customers” is flawed. I’m sure he has seen plenty of startups who believe that marketing spending will make up for failing to innovate, but marketing simply means telling a story to an audience.I market to customers. I market to investors. I market to talent. I market to partners. I don’t just throw a budget line at marketing after failing to create something attention worthy. There is a difference.

      1. Robert Holtz

        Very well said indeed.

    4. Stephen Purpura

      From a management perspective, I always thought the Drucker quote was wrong and Boeing found out the hard way. A company gives you some control over the behavior of the people that you can’t always get with outsourcing, even in software development. But the hijacking notion does get at the key leadership problem.

  16. William Mougayar

    Rand’s post is a gem of a reading. He captures the reality of startup marketing very well and his analysis by examples is right on the mark. Not enough has been written about start-up marketing to completely debunk it.Getting the marketing pop, and establishing a clear position inside the mind of the customer is probably one of the most difficult things. You get so many tries to get it right, then it’s either over or you’re in for the long term.Marketing takes repetition to reach perfection.

    1. awaldstein

      Iteration is the only marketing strategy that works.The beauty is that ‘iteration’ is both how we build and market products. Never have the two been more tightly connected as right now.

      1. William Mougayar

        Totally agree. And by being really close to the customer, you gain that special insight which feeds back into your marketing loop.When we wonder how come Apple keeps nailing it with their new products, it’s as if they were reading my mind about what I thought of their previous product.

        1. Jorge Guzman

          On a related note, Apple has the lowest marketing / sales ratio of big-public tech companies.



    2. JLM

      I think one of the secrets in life and in business is “iterative” improvement. Not the great journey, the little road trip.Improve a bit, just a bit. Get to that next plateau — not the top of the mountain.Catch your breath.Go do something else for a little while — also improving that process in an iterative manner and then come back and do it all again.Make constant improvements while not allowing anything to sap your energy so desperately that you become frustrated.I cannot tell you the number of things I ultimately got right on either the third attempt or the fifth iteration.If experience tells you anything, change comes in very small doses and you will work 13 years to become an over night success.

      1. RichardF

        you are so right JLM but it’s something I struggle with and really only came to realise post my 30’s.Anyone that can grasp that at an early age has a real head start in life imo

        1. JLM

          The military is a funny place. They standardize everything and then when the shit hits the fan, they tell the leaders to IMPROVISE.They teach the SOP and then they teach improvisation. It is pretty weird.I was in a Combat Engineer Bn in an Infantry Div in Korea in the 1970s and our job — in the event of a NK attack — was to swing east cross the Imjin River and then swing back west cutting off the NKs on the road to Seoul but north of the DMZ. Between Pyongyang and Seoul on the main invasion route.We had a big test from the US to test the Division’s ability to execute the plan and the Engineers were sent up to the river to start building rafts and a bridge to receive the entire Division’s tanks in about 5 hours. Tough few hours under ideal conditions.I was new to the unit but had been in the Army for a few years. My first actual assignment with the Engineers having been seconded to the Infantry before that.As part of the exercise, they “killed off” the entire Bn staff and picked the newest officers to undertake the bridging. Pretty damn realistic.As the FNG, I was given the floating bridge to build while another newby got the rafts. First few tanks go over on rafts to expand the bridgehead on the other side. Buying time for the floating bridge to get built.I huddled up all the Senior NCOs and gave them the preliminary order and deadline and asked if anybody had any input — hoping some Sergeant would say they had taught bridging at the Engineer school.One senior SGT — 30 year lifer type mad at the world and officers in particular — says — what the hell do you know about bridging LT? He knew I had never served w/ the Engineers before and that I had never actually built a floating bridge before. Just fucking with me at a very awkward time.I looked at this SOB for about 10 seconds and then relieved him on the spot. Told him to go see the Sgt Major because he needed a job.I didn’t really know too much about building a floating a bridge but I knew how to command soldiers and I knew I was in charge and I knew it was going to be next to impossible to get the job done without the cooperation of those NCOs.Everything worked out just fine. We set the record for bridging the Imjin that day, the Division’s tanks hit the bridge site at full speed with the bridge waiting for them and I grew up more than a bit.We all grow and learn at different rates. That is what iterative improvement is all about. Never again did I ever fear calling bullshit on anyone and it has served me well in life.

          1. Suzanne Lainson

            My father was a career Navy officer. I liked your military story. As for learning how to call bullshit, as a woman and not an engineer or a career techie, it took me a lot longer to get up the nerve to call bullshit on some the ideas being offered as “the next big thing.” When I would suggest that it wouldn’t find a market, I’d be told I just “didn’t get it.” But having lived through the dotcom crash and having written about it for several Colorado business publications, now I feel much more comfortable in my skepticism. And having been very involved in several waves of online networking experiments (going back to BBSs), I feel pretty confident when I point out that the new thing looks a lot like the old thing. Famous last words: “But this time it’s different.”

          2. JLM

            Every generation stumbles on sex and thinks they invented it. Some believe it. Beware the believers.When everybody says “this time it’s different” — beware.”Dear God, please just give us one more ugly on an ape boom and we promise not to piss it away before cashing in!”In some ways it is an endearing characteristic of us AmericansOnly an American could celebrate as democracy when a military despot is overthrown by a crowd, tanks are in the streets, the military is put in power and a bunch of generals hold sway — promising elections in 6 months.Only an American could think that feels like democracy.Is this a great country or what? Of course, I was prepared to die for it once upon a time.

      2. fredwilson

        i call it growing in steps and i’m a huge fan of this approach

      3. Tom Labus

        Sounds like MSFT.

        1. JLM

          One of the things I do admire about MSFT is that they seem to learn from their failures. And sometimes they come back stronger than ever.I always remember Dell’s disastrous initiation into the laptop business in which they failed so miserably they recalled all the laptops they could, literally dug a hole and bulldozed them.Michael Dell got up and said — when we finally get back into the laptop biz, we will be the best. An actual true story.Failure only kills you if you go to the funeral.

      4. andyidsinga


      5. JamesHRH

        JLM – I live near the Rockies, obviously. Mountains were an obvious thing to talk about. I like this startup / mountain analogy:- You have to pick your mountain and understand why you want to climb it. It also helps to know something about the mountain, high level mountaineering requirements (support teams, etc.) – you get the idea.- Now you need to look around where you are. You can fall into a large canyon or deep river if you have your eyes on the mountaintop all the time. This can be fatal ;-)I think it comes down to being able to be a top down person and a bottom up person at the same time. And, while we are at it, you need to be a front to back (Customer based) and back to front (ops / supply based) person at the same time too.The back to front and bottom up types have an advantage early on, as they intuit next steps. But without the other skills, repeated success (climbing several mountains) is unlikely.Not that Bill, Larry or Zuck really care – they intuited a pretty good set of one trick ponies 😉

  17. paramendra

    Two words: define marketing. Word of mouth, the Google/Facebook/Twitter/FourSquare kind, is also marketing. No?

    1. Aaron Klein

      If you’ve got to boil it down to a simple sentence, my take is: “actions that drive demand for your product.”$2.5MM Super Bowl ads are marketing.Tweeting and blogging are marketing.Somewhere between those two is the right mix for every startup. Only a few can use the latter exclusively and still grow.

      1. paramendra

        You are right. It’s a whole spectrum.

    2. Guest

      Life’s a Pitch. Any artefact which can be perceived has a tendency to sell itself. Twiter and Facebook turned into marketing channels like ANYTHING else, even though they were made for a different purpose. The same with Google and now UNFORTUNATELY with YouTube.In life (nature), marketing starts with beautiful eyes and a nice voice. If you look into the selfish gene theory: Appearance and it’s communication is the extension of content (genes). I suggest the same should happen in business.

  18. leigh

    I think that start ups have a unique opportunity to build their entire company around their brand. Those that do it well, create a sustainable competitive differentiation way beyond their product – culture, customer experience, process, policies etc. etc.If you buy Umair Haque’s sea change shift theory of brands moving from function (which many start ups focus on), to aspiration to now deeper DNA of creating tangible positive outcomes for people in the broadest sense (which i do), then understanding how your company and Brand can deliver that may be key for building and sustaining success in both the short and long term.

    1. fredwilson

      Umair is on to something with that train of thought

  19. Guest

    I think cash cows market a lot without having innovative products to avoid becoming poor dogs. That’s why we hate marketing as it repeats itself. But stars can only market themselves by being original and innovative. Their marketing strategy is part of their innovative product.Marketing (without Innovation) sucks. I still agree with Fred because I’ve done that. Innovation without Marketing is oasis (Agree with Rand Fishkin because VC’s can boost the fame of innovative products). The most important part of a striking product is however User Insight (This part has not been discussed yet).Great User Insight is hereditable and can save you lots and lots of marketing expenses. I have build an entire company around these three relationships:Ceedin = User Insight > Innovation > MarketingAnd when ever I think about involving VC’s in my COOL COMPANY’S I think about “How can I grow fast by iterating faster and become as popular as twitter?”Funny enough, most innovative entrepreneurs have a sense for all three parts, BUT they focus more on either marketing or innovation. I made a good experience focusing on all three. Great User Insight is what make people click on your banner or listen to your ad and finally buy your product :-)User Insight > Innovation > Marketing are not separable. Their successive execution determines the success of a product.

  20. Jonah

    Marketing stopped being effective for companies when their marketers started wanting book deals, to build out their ‘personal brands,’ etc. The best marketers in this space are those who are focused on their employers but there are far more using their employees to promote themselves. I can’t think of a single thing Ford has done but I can recall hearing the name of their idiot social media ‘guru’ Scott Monty.Given that so many marketers are focused on what’s in it for them, it’s not a surprise to see marketing failing. You can’t serve two entities.I wouldn’t pay a dime to any marketer in this space presently.

  21. sigmaalgebra

    In these discussions of ‘marketing’, several times I found comments that looked good and posted that I thought so. I still think that the comments were good.But the comments that looked good were mostly not from marketing people. And at this point I have to conclude that the comments from the marketing people were not good.So, we have: The threads had many good comments on marketing, however, the good comments were not from marketing, and the comments from marketing were not good.With irony, the marketing people failed in marketing their marketing.Since marketing is their specialty, they’d likely do less well marketing my work far from marketing.So, marketing people: I don’t know what you’re selling (‘marketing’), but I don’t need it.I’ll stay with Fred’s and the other good comments for free.Entrepreneurs can discover that VCs are good at saying “No” and then can learn a lesson: In business, when people try to sell to you, will often have to say “No”, and a good example is outside marketing experts.

    1. JLM

      Brilliant observation! Well played!

  22. awaldstein

    “Iteration’ in product development and marketing is the name of the game. Never have the two been closer together than now.Pre bubble we were very much in the Big Bang era. Big bang launches, big bang push activities, big bang event based marketing. Big holes for big bucks.Any time you discretely build the product then source the expert to discover the community you are harking backwards. Maybe you’ll win, maybe not but the odds are stacked against you.Community. Brand. Customer loyalty are built over time. Any time that you need to throw money at it or count on the one deal to make it happen or expect to compress time to market, its a red flag.The more you push whatever you call marketing out into the future the more expensive it becomes and the more questionable the outcome. The more you start to think about your community and the market from the beginning, the more integrated and organic the process begins.There are lots of tools and trick and smart techniques. They serve the idea and shouldn’t masquerade as the idea itself.

    1. Mark Essel

      What you speak to is design that wholly embodies marketing. From inception the product is crafted with an irresistible message of it’s own, that evolves and matures over time into a titanic brand.The disciplines are no longer best served as discrete entities. Founders, designers, engineers, and marketing professionals can each have a positive impact on the different cycles of product development.

      1. awaldstein


  23. Thomas Ilk

    Edit is coming

  24. Tgriffin

    Providing “free” loss leader services that hit above the gross margin line (in COGS) does not not mean that a company is not marketing. It means they are doing their marketing in-house. What fell below the gross margin line when you do traditional marketing is now part of COGS. The consumer web companies you talk about all have the ablity to acquire customers very cheaply. They do it by attracting customers with a loss leader. That’s marketing.In enterprise, >50% of top line revenue is sales and marketing. 100% of CRM income is investment income.

  25. William Mougayar

    This sequence of posts on marketing will be known as the ‘marketing long week-end series’ in the annals of !As with the above pendulum graphic, it started on one side (Friday) then swung to another (Saturday), and now we’re back in the middle, with less controversy.Or maybe I’m sensing some marketing fatigue…

    1. fredwilson

      i’m done with marketingi hope Arnold is satisifed 🙂

      1. awaldstein

        You can see my avatar smiling Fred 😉

      2. William Mougayar

        The meme it started outside of AVC was remarkable.

      3. Mark Essel

        I suspect we’ll be learning about marketing from you over the next few years a few times a month as you discuss portfolio companies and your markets.As a side note, do you think your blog has a measurable effect on gathering limited partner contributions (through greater and higher quality startup deal flow)? Isn’t that marketing?

  26. Robert Pease

    Some great points by Rand and everyone else who is weighing in on this. You definitely hit upon something with your first post. I’d love to see some additional thoughts from you on analytics and technology applied to marketing or do what you do well and crowdsource the optimal startup marketing plan.Some additional thoughts on these posts: http://replytoall.typepad.c

  27. Ryan B.

    I think in 5 years the pendulum will swing back towards the middle.

  28. Rand Fishkin

    Fred – first off, I’m flattered and humbled by the response. If you find yourself in Seattle, please do drop by.Second – any chance you’ll be writing about how you’ve built a marketing engine with your personal brand, AVC and in your companies? I can’t be the only one who’d love to hear about that process.

    1. fredwilson

      i think that is the story of this blog, and i’ve written it post by post, day by day, investment by investment

      1. lance

        Seems to me that Rand and you use the same methods of building a marketing engine.

  29. Thomas Ilk

    I agree with your point that most startups shouldn’t have a huge marketing budget and especially in the beginning they shouldn’t spend it on advertising.The focus of every company has to be their product, because without a product you have nothing to market and the better your product is the more efficient your marketing will be.Of course you can sell ice to an eskimo, but I don’t consider that as very substantial and I doubt you will have long term success.BUT, I hate all this overgeneralization that’s going on here and in most reactions.I am sure you and everybody else don’t mean it that way, but it’s still a fact that overgeneralizing is a direct way to failure.At first you have to differentiate between two markets. The early adopter market and the mass market. According to statistics the early adopter market makes up 18,5% of the population that’s why so many companies think they reached mass market, but in reality still have an early adopter only product.The early adopter market is driven by world of mouth and it’s your only chance to get early adopters approval. That’s why you should focus on the product and PR mostly. Only cheap marketing methods like Guerilla Marketing and Social Media are really efficient.On the other side is the mass market and it’s a myth (a totally stupid myth) that world of mouth plays the same role in the mass market.Let’s say a non early adopter called Tim wants to buy shoes for sports. Tim has two friends who go running a lot and the tell him he should buy this XYZ non brand shoes, because they are really great. Of course Tim will go buy these, because his friends know a lot about the topic and it’s world of mouth NOT Tim as a average consumer will buy these brand new Nike super shoes that are probably worse, but he doesn’t care.Even if there would be 100 better social networks than Facebook, Tim would still use FB and he doesn’t care if there is a better possibility most of the time he will buy Windows.18,5% this means even Mac Os is still an early adopter product, despite Apple’s Brand. The Iphone on the other hand is on it’s way to mass market and is probably a part of it in the USA.Most people don’t get this, because a company can be hugely successful, but at the same time can still be an early adopter product.Even if 5 people tell the average consumer that there is a better new cola out there called ZYX, he will still buy Coke and not ZYX, but at the same time ZYX can make millions of dollars since 18,5% are lots of people.World of mouth plays a role in mass market, but only as support for branding and marketing.Even most of the successful tech companies have an early adopter product and only a few like Google and Groupon reached mass market.Why Groupon and Google?That’s a very important questions that leads us to the solution how to reach mass market.At first both products are so easy to use and simple that they appeal to the mass market.Secondly, their way to mass market was very different.Google is a perfect example for a company that isn’t successful, because of its branding and marketing. Goole is a product useful for everyone that’s why they could get most early adopters as users. This is what you need to get to mass market without marketing. Most products can’t do it, because they are simply not for everyone. As a product that’s useful for everyone and so simple to use that it’s useful for the average consumer, you have to get nearly all early adopters to use you then you will automatically will get into the mass market. (That doesn’t mean marketing wouldn’t help you)Groupon on the other side nearly got into the mass market immediately. Why?At first their product is easy to use. Secondly, the marketing.Groupon reached the mass market, because of efficient and intelligent marketing.(The superbowl ad wasn’t very intelligent)Let’s look at other successful companies in the tech space.Dropbox is still an early adopter product, but with the potential to reach mass market. It’s easy to use, has a great product experience and is useful for nearly everyone. They never made lots of advertising and they got successful by world of mouth. Now nearly everyone uses Dropbox in the early adopter space. That’s why like Google they can reach the mass market, but if they would start with branding for the mass market now, they would have a much higher probability of doing this.Evernote on the other side is a great product and very successful in the early adopter space, but at first it’s not as useful for everyone like Dropbox and there is a greater percentage of people who don’t find a real use for it. Furthermore, it’s more complicated to use. (You need to do more to make us of it) (I love Evernote )They will have a hard time reaching mass market and without branding and marketing they have no chance. If they want to keep their growth after the early adopter market, they will have to do marketing.As a startup you have to know your market and if you would start the next Groupon and would concentrate only on the products, you will not have the same success.I always read about rules and what to do as a startup. Forget it, you wont be successful by following rules.Know your market, know your consumers, know your product.Act intelligent and don’t listen to rules.

    1. ShanaC

      Honestly, I think dropbox is starting to pass into the mass market. My dad has some of the most surprising customers who use it (accountants with home offices…)

  30. Alex Murphy

    Fred – I think that this go around is quite different than 1999 or 2006. There is far more profit today than there were in either of the previous two peeks.I do question the idea of being product focused alone, perhaps because I am more of a marketing person. With concepts such as Lean Startups, the emphasis of some entrepreneurs is to focus on testing product market fit through customer discovery first. In other words, learning first what people are willing to pay money for <or> what activity you can get users to take that will generate revenue. Then learning how to scale user acquisition.The discussion around being focused on product alone, with an expectation that a social or viral effect will naturally come along is an awfully large risk. Sometimes viral leads to a big brand which you can then spend more money to expand, but sometimes you need to drive users through paid methods to get enough critical mass to show that it can grow. If you can drive those users for less money then you are generating in revenue in a Direct Response sort of way then you have an opportunity to predictably scale the business.

  31. Adrian Bye

    the way now is to make money from the companies with newly inflated marketing budgets lol

  32. Dave W Baldwin

    Staying simple…in the world of retail you spend on marketing/ad when it is hot. If it is cold (seasonal, holiday…) you are wasting your money. It is as simple as not trying to sell for the swimming pool when it 20 degrees).Instead of trying to explain your niche of product/marketing, it all comes down to whether your product has appeal and works. You can spen $1mm on advertising for a piece of junk and end up with that piece of junk.I’ve had interested (generally big talkers) folks who would want everything figured to the penny in the future which is silly. It comes down to changing the storyboard and delivery vehicle as you move to Beta and Launch learning from potential customer, which bracket to hit first and so on followed by the true cost of delivery. That doesn’t even take into account if you are going with the ‘free’ or whichever price point you think is best.

  33. Suzanne Lainson

    If you think of marketing is a synonym for communication, it is going to be part of everything you do. And you are going to inherently budget for it by making sure there are the necessary ways to communicate, be it online, via customer service, in product design and packaging, etc. You may not break out marketing as separate part of the budget, but if you are paying anyone anything in the creation of your company, you are paying for marketing.

  34. Donna Brewington White

    Fred — This has been an exciting weekend. My brain is vibrating.Feels like I’ve been to a summit.I’ve heard new thoughts from familiar voices (I love how “full of surprises” this community is!) and you’ve drawn in some stimulating new (or normally on the sidelines) voices — not to mention what William Mougayar described as the meme that this has inspired outside AVC — like the party continuing in other venues.This trifecta of posts must go down in the annals as “among the best of AVC.”I’ll stop before this gets mushy. But, I’m really grateful for what you’ve done here. You are a fantastic listener (which is part of great marketing BTW).Thank you.

  35. PhilipSugar

    I think the point is this.If you spend a ton of money on product and give it away for free, that is a marketing expense.I would argue that all of FB costs of development, bandwidth, and server have been marketing costs.You can call it product expense but I would argue that if you are not making more than the COGS from the end user, then in fact it is a marketing expense.So we’re back to that ugly word: semantics.When you are trying to make more than the COGS from a product you spend a ton on “marketing” which I guess Seth would call “advertising”. See Mozy, Lifelock, 1800flowers, StubHub, etc. et al.When you don’t then instead of buying radio ads in my very specific examples you provide a product with huge value for free.

    1. Dave W Baldwin

      I agree with your philosophy…you have to enable the target use of your product no matter where they are. You do that and the data gained related to forward strategy is priceless.

  36. ShanaC

    I loved these posts and comments coming out of it. I do wonder about the “too much me too” – i get the feeling that the market is becoming crowded, and there isn’t space for all of these companies to go and grow.Meanwhile, I do think without some marketing, they wouldn’t gain any traction even….

  37. dmgerbino

    I skimmed the activity over the past days and wow. Having grown up in the direct marketing profession where the goal of all marketing spend was to have a positive ROI, my initial reaction was disbelief. I continued to read and found the following quote (I apologize for not including the poster’s name – I forgot to copy it)”What torques Fred – and he’s right – are the massive marketing expenditures that many startups make, and you divide them by the number of new users or customers acquired, and they will NEVER be profitable.”The issue was framed for me. What most people consider to be marketing is not applicable to startups.Somewhere I saw the company Instagram mentioned. Nice product, I have seen the picture links on Twitter. My marketing background said to me why is this company only looking at a sub-set of the smartphone industry (Device: Apple; Network: AT&T and most recently Verizon)?When almost every cell phone in the USA has a camera, why limit yourself? It is not about the APP? I do not know but sending pictures from a mobile device via MMS and e-mail can allow filters to be chosen as can a web front-end to upload pictures. Despite all these limitations the company grew. How? Marketing. Marketing? Word of Mouth Marketing, BUZZ Marketing, and Apple iTunes marketing. Their website and links all had a marketing messages – Instragram – Fast beautiful photo sharing for your iPhone.I do not use this service. I do not have a smartphone. I have a Verizon feature phone, smarter than an old fashioned cell phone but dumber than a smart phone. Would I use Instagram if I could? No. Why? I use a competitor of theirs….PICPLZ. How did I find out about this company? Marketing. Robert Scoble raved (Word of Mouth Marketing) about them so I checked them out. How do I use them with my cell phone or disital camera? I can upload pictures from their website. I was sold. They support two app platforms (Apple and Android) which covers many phones on many mobile networks. That is a huge advantage over Instagram.I do not invest in startups, but a simple “marketing” analysis would tell me that PICPLZ can reach more potential consumers in the USA. A gap analysis would show that PICPLZ may have better technology (they retain original image and its resolution). If I did have the money to invest, I would research whether a subsequent investment in PICPLZ with the sole purpose of taking over Instagram (and their customer base) would be a profitable decision or stay the course and grow. Word of Mouth and Buzz marketing may help, but to over take the company in a lead position, in this case Instagram, would take ALL the tenants of marketing (i.e. not the “poor” marketing Fred Wilson experienced) done right.Post mortem: A bit of a rant but I stand by what I say even though I have no experience in the VC world where Fred Wilson lives.

    1. Dave W Baldwin

      Good post, thought don’t go too far in implication with the word smart for the phone ;).It does really come down to testing with potential customer base(s) and seeing the reaction of the different potential market groups that will allow the formation of at least 3 possible marketing strategies per consumer bracket.That at least places you on the next plateau.

  38. Ted Maidenberg






    1. DGentry

      Step 1 seems challenging. Unless you have a very large and/or exceptionally famous team, or you happen to be a giant robot of enormous destructive potential, getting enough attention to start a viral spread seems tough.



    2. Me

      all caps grimlock??

  41. Vladimir Vukicevic

    It seems like that you too, Fred, have gone through a significant pendulum swing over the past few days. As always, the startup community appreciates your transparent thought process analysis.

  42. Ben Sesser

    “so more startup teams leaving MBA school” … This is a bit of an aside from the conversation, but the collective disdain for MBAs by a lot of VCs and founders is getting old.Start-ups and VCs in New York post unpaid internships for MBAs, I know a ton of MBA students (myself included) that spend time working with start-ups simply for the experience, founders and VCs come to MBA programs to talk about the merits of entrepreneurship, and MBA programs do their part to support entrepreneurship in many cities, and yet some VCs or founders relish the opportunity to take shots at the MBA and the MBA student. I can’t figure out why.If the assumption is that MBAs don’t have technical skills, start-up experience, expect to get paid too much, and show that they are risk averse by getting an MBA, these assumptions are mostly wrong. I know MBAs with technical skills, start-up experience, many that simply want to find their way into an interesting and rewarding role, and many that are getting their MBA to “buy the time” to take risks.

    1. bsess

      Sorry for repeat posts! As you can tell I am clearly not in the technical skills camp.

  43. Guest

    “so more startup teams leaving MBA school” … This is a bit of an aside from the conversation, but the collective disdain for MBAs by a lot of VCs and founders is getting old.Start-ups and VCs in New York post unpaid internships for MBAs, I know a ton of MBA students (myself included) that spend time working with start-ups simply for the experience, founders and VCs come to MBA programs to talk about the merits of entrepreneurship, and MBA programs do their part to support entrepreneurship in many cities, and yet some VCs or founders relish the opportunity to take shots at the MBA and the MBA student. I can’t figure out why.If the assumption is that MBAs don’t have technical skills, start-up experience, expect to get paid too much, and show that they are risk averse by getting an MBA, these assumptions are mostly wrong. I know MBAs with technical skills, start-up experience, many that simply want to find their way into an interesting and rewarding role, and many that are getting their MBA to “buy the time” to take risks.

  44. Guest

    “so more startup teams leaving MBA school” … This is a bit of an aside from the conversation, but the collective disdain for MBAs by a lot of VCs and founders is getting old.Start-ups and VCs in New York post unpaid internships for MBAs, I know a ton of MBA students (myself included) that spend time working with start-ups simply for the experience, founders and VCs come to MBA programs to talk about the merits of entrepreneurship, and MBA programs do their part to support entrepreneurship in many cities, and yet some VCs or founders relish the opportunity to take shots at the MBA and the MBA student. I can’t figure out why.If the assumption is that MBAs don’t have technical skills, start-up experience, expect to get paid too much, and show that they are risk averse by getting an MBA, these assumptions are mostly wrong. I know MBAs with technical skills, start-up experience, many that simply want to find their way into an interesting and rewarding role, and many that are getting their MBA to “buy the time” to take risks.

  45. Rhys Davies

    But if a company is market focussed I as an original and loyal customer feel a bit hard done by if I know part of the high price I am paying is to market the product for other people. I agree that marketing does creep into the business activities when competition and lack of ideas set in but I maintain that focus on product and service should always override any compunction to start marketing and mass advertising.

  46. Bill Phelan

    All start up teams, before they actually begin their start up, need to be reading Steven Gary Blank’s book “Four Steps to the Epiphany.”Read it immediately. After you have read it, carry it with you everywhere. Sleep with it under your pillow.But most importantly, follow it religiously…every single word of it.The biggest risk of the product focused swing in the cycle is that it attracts people to start ups who are not ready for the grungy, grime ridden task of actually talking to prospects and customers, and then figuring out what they are actually saying. This is just not nearly as exciting as raising capital and running off to the races with a heads down product build.The dreamland like life of raising capital, building the product that you THINK a customer wants, and then sending your newly hired sales person out to try and sell it, is a well worn path that usually kicks off the re boot or close down part of the cycle, which never ends pretty.Steven Blank’s process will dramatically change your odds if you follow it to the letter. It will also help you figure out early, whether you really want to be doing a start up. It will also dramatically change the odds of success…by not flushing the first dollars into the start up. This does not mean you win…but will reduce the odds of failing fast for the wrong reasons.It might also help you reach the conclusion that you are not really cut out for the grime ridden world of start ups. Perhaps you should be finding someone who is ready for this to be your co-founder? This could also improve your chance of success?

  47. tripfoster

    Online media has changed since all the dotcom boom’s shouting. Impression media is much cheaper (and seemingly less effective) so it doesn’t cost the startup marketer and their investors as much, nor does it always have the desired impact.Today’s day and age presents the savvy marketer with the ability to build awareness with-perfromance-based media, where the marketer (and investor) only spend on the desired outcome…the impression is effectively risk-free. Due to the evolution of the media model, there is less marketing risk in the spend and more resource focus on the ways a firm can turn an impression into a customer…and keep the customer. (think perfromable, google analytics, kissmetrics)Assuming you do a have good product and a quality content marketing strategy, you should have much less financial marketing overhead.So now you can spend less and get more results, which should theoretically allow your team to be less worried about marketing and more worried about quality product. The balance is easier to achieve today than it used to be back in the orgy days.That said, there is still plenty of room for frothy debate…

  48. falicon

    Completely off topic here, but I know you’re interested in Education Hacks and rethinking the education process…so I thought you might enjoy today’s Monday Morning Memo from the Wizard of Ads (just a random email newsletter I happen to subscribe to) -> http://www.mondaymorningmem…Today’s was all about US eduction and I found it somewhat interesting/motivating…

    1. Dave Pinsen

      It was about the education bubble. I’ve been blogging about that on occasion for a few years (e.g., here).

  49. Jorge Guzman

    I wonder on the geographic reach of this tech bubble. Due to the way the VCs are interconnected, I’d imagine it is extending to other countries as well or segments. Is there a frenzy also in Finland, Israel, or India for example? is it just a consumer web bubble or is all tech?

  50. jengrogono

    Nothing like a meaningful debate started by an absolute position and ending up as yet another reminder that business as in life — no matter how uncomfortable it makes us — is not black and white. (And thank goodness it’s not or 99% of the people reading this post would be bored to tears!)

  51. vruz

    The problem for the VC is that valuable startups are still created during shouty periods, possibly in the same proportion to the total startup pool size. Hence there’s also more valuable startups being created and more opportunities.The problem for you is when you’re in a shouty period, it gets harder to hear the non-shouters, in an inversely proportional way.The bigger the pool, the more good ones you get, but also the harder it gets to identify them.I think the VC business needs the equivalent to a law firm’s team of paralegal researchers. In droves.

  52. Carl Rahn Griffith

    The trouble with good marketing (when in excessive hype mode and way off tangent from the true value of a product/service) is it can create a buzz around a product/service that actually has no, erm, substance.Expectations set way too high will typically result in immense disappointment.”All sizzle, no steak” – as they used to say…

  53. Melinda Byerley

    Couple thoughts:A. I find it fascinating that so many people without any background in marketing have so many opinions on it. In my experience, everyone thinks that they can do better marketing but few marketers try to tell engineers how to code. Doubtful same people would be so supportive of marketers like me commenting on engineering–like I think there are just as many charlatans in engineering. Trying to find a technical coworker who won’t rob you blind because they don’t know as much as they think; or is incapable of realistic ship dates is a challenge for non technical founders. But I digress….B. As a profession, we marketers have forsaken the 4P’s of marketing, because we’ve yielded the PRODUCT to the engineers. It’s a failure of our profession. It’s why I try to learn code in my spare time. It’s why I won’t take any job in any company that separates marketing and product management.C. For every Google and Facebook who grow on so little marketing, there are thousands of small companies who live and die on it. (hence Google’s revenue numbers….) Expecting that a new start up is only successful if it’s on the scale of Google/Facebook is rather unrealistic.D. Marketing is 90% execution, 10% strategy. It’s easy for anyone, especially tech guys (and they are mostly guys) to assume that strategy is what marketing is about, and then say that Marketing has no value. It’s a cheap shot, it’s been done before and if I didn’t respect Fred so much I’d think it was link bait.But….Sometimes I find the engineers are the most risk averse and least customer sensitive people I know, standing in their own way on the way to adoption. The VCs give marketing advice all the time: *what the product should be (aka product/market fit) * how it’s promoted * the price it’s charged * where it should be placed/distributed. The devil is in the details. If VCs focused on execution in hiring and not strategy I think they’d be happier in their hires. And the conspiracy theorist in me wonders if the reasons VC’s don’t like marketers is because they don’t want to share the money. Everyone wants a totally viral product that requires no marketing. Everyone. But I’d call that an arbitrage–a temporary, unusual, and ultimately unsustainable advantage.

  54. Stephanie

    I am thinking of doing some internet marketing ourselves, what do you think of using a website and newsletter like thishttp://marketing-mistress.c…

  55. Steve E

    Phew! Everyone wants a methodology to business. It drives a million management tomes a year (or so it seems) into endlessly analysing companies and trying to draw out the ‘sauce’. There isn’t any. Any fool can find a 100+ year old who claims to have smoked 40 a day since the age of six but that doesn’t mean that smoking since age six will guarantee you a long life. The odds are against you. So don’t look to Google and FB as exemplars as they are fashion bubbles. If both disappeared tomorrow others would fill the vacuum.VC’s look to methodology more than anyone as most don’t know how to evaluate the potential of start-ups – not all, but most. They look to ride investment waves just like they did in the equities and commodities markets, and in a stable economy that strategy can work – sell the othr guy a doozy and get out of town before he realises what he’s holding, or CDO’s as the banks call them.Marketing is full of charlatans and process people as that is how the industry grew up, peddling wants as needs. Aspiration over value. But we’re all wiser now…or are we? Good modern marketing is a dialog that needs to add value at every interchange or it stumbles and all we consumers with butterfly brains and no powers of concentration….oooo shiny! Hopefully you get my point. Good marketing like good engineering is at a premium. If you’re hiring and teh person in front of you speaks a language you don’t understand, doesn’t ask you questions or listen to your answers then make sure your door hits em in the ass real hard. Just like good sales guys, good marketeers listen first. Just like good engineers too.As for service: The need for service at one level is an admission of failure, just like the doctors need for a surgeon. But failures are inevitable so make sure you do it well. If you think marketing can only be done thru service and word of mouth then I would question who sells the original product and how many people can you meet in a day? That is the role of marketing – matching the product or service to the needs of a market and communicating to that community. I tell you that no matter how great a companies service dept is, if everytime I buy a product I have to call service then I’m going to buy another brand.There are no shortcuts. Development in a cave is wrong and if you build it in a field of dreams in all probably you’ll be ‘enjoying’ it alone. Find your community of enthusiasts. Engage with them. Challenge them and delight them. That’s your salesforce not your marketing team. Give them tools to tell your story and you have soem marketing going on right there. Good luck people and hey, be careful out there…


    Lots of great people see trends as pendulum swings. My measurements show that things are more accurately predictable as complex waveforms than as a single wave alone (single wave being a pendulum swing).

  57. Douglas Crets

    I’m glad to see this follow up to the first post you did. I think that completely lambasting marketing as being ineffectual is not seeing the forest for the trees. Good marketing in my mind is intelligence work among the community, led by a collaborative-minded researcher who really wants to make the connection to people who need the product or service. Marketing in this sense produces feedback, response, testing and ultimately a better product. Google, one could argue, has the best marketing gimmick ever. It’s all about you, and what you want. And filling in the search box is a bi-directional bit of marketing. you tell us what you want, and we give you what you want, and it’s a constant feedback loop. You could argue it’s just what a search engine does, and it’s done so well that the product speaks for itself, but it would not be so good without that interaction. today’s marketing is ensuring that constant interaction.

  58. johndodds

    Shouting is bad marketing. Good marketing is about speaking clearly in a way that is credible to potential customers because it aligns with that which your product/service delivers and is supported by your customer service and overall ethos. .

  59. hockeynut

    I think of many of the companies listed in a recently posted article on Business Insider titled, “The 11 Greatest IPOs of Our Time” as companies with a very clear and compelling brand promise and sales and marketing DNA in their company. Whole Foods, Starbucks, Staples and Cisco are just a few on the list that come to mind. These are companies that don’t necessarily advertise but have strong marketing and sales in their company which enabled them to capture the heart and mind of their customer. There are many other great companies not on this list, like Kevin Plank’s Under Amour, which were built on sales and marketing prowess. I can think of several high-tech companies that could benefit from more marketing. Google comes to mind. Maybe marketing could help Google focus on a few viable, lucrative market segments to build its next great business. Apple, Microsoft, Cisco and Amazon all have great sales and marketing leaders running the company forcing focus and strategic decision making to drive the business and build a great company. I’d argue that many of the greatest venture investors of our time have a strong sales and marketing background, investors like John Doerr and Mike Moritz. I don’t understand your rant against marketing, it sounds like you’ve been burned by bad marketing or had limited marketing thinking at your portfolio companies. Unfortunately, many founders who have a product or technical orientation think marketing equals advertising and they are the very ones who need strong marketing at their company.

  60. Matt A. Myers

    “Someone said it best though in the comments–customer service is the best marketing, and I’ll say your product is the best vehicle for delivering customer service. Serve your customers through great product, give them so great an experience they write poetry about it and put it to music. “Music to my ears .. la da da da deeee da deee da deee.. la da da da deee du dum da dooo .. dance with me now!

  61. reece

    I agree with customer service being an extension of marketing.Really, every touch point the customer has with a company is a chance to market your brand.That being said, I think customer service still goes beyond the product itself.

  62. Mwiya

    I agree completely, some of the greatest companies todate did not spend a cent on advertising early on. Google, Facebook, Twitter etc. Their product was so good that people were drawn to it. The best advertising there is is word of mouth and that should be the focus for any founder working in a startup. Get people talking about your product in a positive light all by themselves, they will talk about it to their friends and family simply because they are excited about it. A lot of companies outside tech have used this to their advantage too, The Body Shop did (i think)….yes once you’ve scaled and the law of diminishing returns starts to kick in, then its time to start actively marketing your product! Until then if the product is creating a user-base because of its awesomeness why spend any extra money?!I agree with Fred and you Charlie, customer service and customer development are great marketing tools that can help drive user satisfaction and help anticipate user demands. This is ultimately the goal of marketing; anticipating user demands and driving user value profitably. If a startup does this and gets people talking about their product, its free advertising and good marketing. That said this shouldn’t always be seen as the standard for every startup, sometimes some startups need to advertise to build a user-base; especially if their technology isn’t new/novel or providing a unique experience.Regarding marketing and product my startup runs on these three points:Focus on productContinuously demonstrate product-market fitContinuously determine and create value for users

  63. Mark Essel

    Just a heads up in case you didn’t get a chance to read it, Rand’s post was pretty damn tight. It covered specific cases where a little elbow grease in the marketing department (he created SEOmoz) could attract a healthier market share without breaking the bank. Great product is like great art and music. It’s worth talking about because of it’s sleek design or nearly magical utility far outside the company’s walls.

  64. awaldstein

    customer service as the best sales channel does hold true.

  65. Tereza

    Totally agree — every moment where a customer experiences you is a marketing expression — your product, your promotion, all of it. And yes absolutely that includes customer service.In this age of less and less human interaction, the interactions we do get to have with real humans carry more resonance than ever. Possibly the most memorable expression of who you are as a company.By definition, if a customer is reaching out to you for ‘service’, it’s one of two scenarios. Either they already love you (and might be converted into an evangelist), or, they have an issue (the more likely scenario). They don’t come to you neutral.When they have an issue, you must minimally get them to “neutral” but really you want to get them to “delighted, loyal, and talking about you”.Because really that customer service interaction is a mini-personal training session in who you are and how you think they’re important. They’re lookin’ for love. You need to deliver.Why am I not surprised that you know this already. 🙂

  66. reece

    Agreed.With our SaaS business, our support is excellent and we often surprise anddelight our customers with how responsive and genuine we are.That word of mouth goes a long way…

  67. reece

    agree. just point out that not all products are truly self-serving.

  68. Tereza

    The one thing I’d say, though, is frequently the product is built for a customer that is themselves…..and who incidentally looks and smells nothing like me.And so if it doesn’t fit with me, it’s apparently my fault because I don’t “get it”…when my perception is they don’t “get me” and didn’t try to reach me. Or didn’t try to show me, at least, some examples where it adds value to my life.I think a lot of the chasm that products are supposed to cross is self-created. I’m pretty sure a bunch of companies die before they had to, and at the same time, a bunch of needs of people not like them are unmet.

  69. ShanaC

    That may not be so true. One of the foundations of webwork is that your user will do something that you aren’t going to expect. Hence, document until you can’t document anymore

  70. reece

    haha… thanks Tereza!I’m going to nitpick one little point you made though! ;)”By definition, if a customer is reaching out to you for ‘service’, it’s oneof two scenarios. Either they already love you (and might be converted intoan evangelist), or, they have an issue (the more likely scenario).”I think that it’s the customers who have an issue – assuming it’s a ‘bad’issue – who are in the best position to become evangelists.Customers who like you already like you. They’re the low hanging fruit onthe potential evangelist tree.We make it a point to ‘turn’ upset customers into happy customers and then,evangelists.You have to bury your ego and let them beat you up as you hear them out,then actively respond, fix their issue AND then somehow go above and beyondto delight them. We think that makes true evangelists.

  71. Donna Brewington White

    The fact that customer service can be such a competitive edge makes me wonder if there is a market opportunity for outsourced c/s that hasn’t been fully maximized. The current outsourced model falls short. Way short.

  72. Tereza

    Actually I completely agree with you.It was getting to be a long comment!The person who’s been turned around….who could be a better advocate?(and, incidentally, people love transformation stories….highly persuasive)

  73. awaldstein

    One of the most interesting things about Apple is that their customer service is better than the product in many instances.Mac’s and iPhones break. Genius Bars and direct dial customer service from someone in California are free, high quality and somewhat hassle free.Remarkable formula that breeds an every enlarging group of fans and enthusiasts.

  74. Donna Brewington White

    Ha! You call THAT long?Brilliant BTW.

  75. Mwiya

    Groupon is a site that uses massive marketing online, and it works for them. But then again their business model is dependent on it.

  76. reece

    ha. very long comment for me indeed.

  77. reece


  78. Tereza

    It’s nice to have someone that’s not me leave a long comment. :-)And a good one, too.





  81. Donna Brewington White

    Someone’s gotta keep saying this.My guess is that more and more this may be where opportunity lies.