Marketing Strategy: The Most Important Decision a CEO Must Make
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Marketing Strategy: The Most Important Decision a CEO Must Make

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The only thing I can say for certain about your marketing strategy is that it’s wrong.

Wait. I haven’t seen your marketing plan?

Yes, but I know it’s a plan. As boxer Mike Tyson famously quipped, “everyone has a plan until they get punched in the mouth.”

As a VC and marketer, I’ve seen and worked with hundreds of startups, and I’ve helped some of them grow very big very fast. Many business types – ecommerce, B2B, B2C, SAAS, marketplaces… And many types of CEOs – some get deeply involved in marketing strategy, others delegate it completely. And the right approach varies enormously from one business to the next. But there are a few things all these approaches have in-common.

You’re in the Danger Zone

As a venture-backed business, you have a fixed, precious amount of time and money, and a deadline (and I do mean deadline) You need to hit aggressive growth targets. Each day spent is a scarce finite resource.

What levers do you have? Your budget is fixed. Your people can work harder, and that can maybe give you an extra 20% – 30% impact. They should work hard, but that’s not leverage.

The two things that will determine your success or failure are:

  1. Which work you choose to do
  2. How well you execute it
Let’s start with #2 – Execution

As a CEO, you can set high standards, model excellence in all you do, hire great people and inspire them to do remarkable work. But if they execute the wrong work perfectly, it’s for naught.

Hence, your single imperative is to make absolutely sure your team is doing the right work.

Your most important decision as a CEO

The most important marketing decision you make as a CEO is to decide which work your team will do. That is your marketing strategy.

If you set the wrong targets, tell the wrong story, select the wrong channels, and don’t course-correct, it doesn’t matter how hard you work or how well you execute – your business will die.

How do you make the best decision possible?

These four steps are simple, but often feel counterintuitive.

1. Do not decide which work you choose to do.

I know I just told you that your most important decision was which work to do. But you’re probably (hopefully) not the best person to make that decision. If you’ve built a truly great team, the best people to make that decision are the people closest to the customers, and the marketing experts themselves. So your job is to create an environment that will ensure they’re making the best decisions. (And even if you do have all the right answers – better to let your employees figure stuff out for themselves: If they make the decision, they’ll be more committed to the outcome, and they’ll execute better as a result).

This is very very hard and unnatural for many founders. In my experience, many talented founders are used to being the “smartest person in the room.” A bit paranoid, they crave control. Their teams feel pressure to tell them “yes” even when they’re wrong. Letting go of decisions is one of the hardest things for founders, but it’s key to building an outstanding company and team. Even famously tyrannical founders like Elon Musk and Steve Jobs are able to attract, inspire, and delegate to exceptionally talented teams.

2. Start with your customers’ needs

What are they trying to accomplish? And how can you help them achieve that goal? What exact words do they use? How do they talk about their problems? What are they stressed about? What brings them joy at work? Who are they trying to impress? Who are they afraid to disappoint? (These are surprisingly powerful subconscious influences).

3. Then choose the right metrics

Once you understand your customers’ needs you need to carefully determine how to measure the impact of your work, so you focus on messages, channels and campaigns that will have the greatest bang for your buck. If you have a good team, you’ll get exactly what you measure. So choose the right metric. In other words, the target you set will determine the work your team chooses to do. I’ve seen many (many!) teams execute beautifully, crush their target, only to realise, in hindsight, it was the wrong metric, and they had wasted months, years, millions, and achieved nothing.

4. Fail Fast

It’s safe to assume you will make lots of bad decisions along the way. So follow a lean, fast, iterative process (I recommend weekly sprints). Identify and test your riskiest assumptions. And meet with the team weekly to review learnings and decide which work to do in the following week.

Your Growth Backlog or your Product Backlog?

Think about your product backlog. Would you ever let your devs make random decisions about what they feel like coding each day? Of course not! You have a carefully prioritised and scrutinised backlog of work. And you should! The future of your business depends on it!

Believe it or not, your marketing backlog is probably more important than your tech backlog. Consider this:

  1. Marketing, not dev, will become the largest variable cost in your business.
  2. Growth is the main way you’ll get to breakeven or raise more cash.
  3. Most startups fail for lack of growth. (Source: Peter Thiel)
  4. Marketing is less controllable than internal tech resource, so arguably needs more rigour.
  5. If your product is good, then marketing becomes the most important lever.
  6. If your product is mediocre, marketing becomes even more important!
Why leave your marketing strategy to chance?

 

Acknowledgements: Many talented mentors! Thanks first to Peter Karpas for introducing me to this thinking. Second – Tom Carrington Smith’s feedback was instrumental. Thanks to Diego de Jodar for pointing me to Jobs To Be Done theory (parroted above in the understanding customers section). And thanks to the brilliant Nopadon Wongpakdee for showing me the example of a marketing vs. an engineering backlog.

This post is an excerpt from “GROWTH HACKING FOR FOUNDERS”
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Why You Should Not to Hire a T-shaped Marketer

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If you’re a marketing recruiter in 2018, “T-shaped marketer” is the brief. That illusive combo: Broad “base knowledge” of analytics, psychology, UX. Plus deep tactical experience in one or two areas (e.g. paid performance marketing, analytics).

It’s hard enough to hire a decent head of growth at all! If you can get this elusive “T” why wouldn’t you? And who am I, random blogger, to tell you otherwise?

Learn from My Mistakes

Over my career as a “growth marketing” director (3 Valley Startups, PayPal) and an early-stage VC (Partner @ 500 Startups), I’ve had the chance to recruit, manage, work with and invest in many marketers over the years. I’ve made every imaginable mistake. And I’ve made some extraordinarily good hires and backed some extraordinarily good founders. And I finally have a sense of “what good looks like” (and what bad looks like). And I’ve outlined it in my “8 Traits for a Perfect Growth Marketer” blog post here.

So what’s wrong with Mr. T?

It’s not that the “T-Shaped” attributes are bad things themselves. But they distract from what you should actually be hiring for: A mindset and an approach, values and attitudes. And it’s hard enough to hire good marketers without imposing unnecessary filters on your search. Grr. Pity the fool.

1. Problem: Skills & Experience

The popular “T-shape” definition focuses on skills and experience. What makes the best marketers? Not knowledge or skills. Not at all. Not even a little. The best marketers I ever hired at PayPal had no prior marketing experience, no background in UX or Psychology or storytelling. What matters much, much more are personality, attitudes and values. (Ray Dalio talks a lot about values over skills in his book Principles.)

To succeed, a marketer needs to understand your customers’ mindset and your “growth equation;” and identify the rate-limiting step. Then they need to focus the entire organisation – Engineers, Finance, Product, even the CEO, on opening up that bottleneck. Re-aligning your entire company. They don’t teach you that in General Assembly Adwords Bootcamp.

2. Problem: Blind spots

If you hire an experienced performance marketer, don’t be surprised if you end up spending a lot of money on Google and Facebook ads. It doesn’t matter how T-shaped we claim to be, when the pressure is on, most of us will revert to our comfort zone – doing what we’re comfortable doing (e.g. pouring money into Google and Facebook, doing a “rebrand” etc). And there’s a 90% chance that’s not what you need.

When you have a hammer, everything ends up looking like a nail. With T-shaped marketers, I just see too many hammers looking for nails.

3. Problem: “Great man” theory

The “great man” theory of history is a fallacy that attributes huge historical swings to the vision and actions of a single man (e.g. Napoleon, Martin Luther, George Washington), when they were in-fact broad societal changes with many fathers (and mothers!).

We make the same mistake in growth – ascribing the growth at Facebook, Dropbox, PayPal and AirBnB to single talented individuals. And that is never ever the case (as those famous individuals will tell you!). Growth is 100% a team sport. If you do not have the entire company aligned around your growth goals, from the CEO down, you will not succeed. You can’t bolt this on – you need to reconfigure your whole organisation to focus on growth.

Again, no matter what it says on LinkedIn, your head of growth is your CEO.

And the single greatest strength your “growth hackers” need is the ability to align the organisation around a target and a plan, and get them all to work together and execute well and fast. (That’s also known as “leadership.”)

What do you do instead?

Maybe don’t hire a Head of Growth at all. For the price of one Head of Growth, you can get 2 – 3 really smart people who have a growth mindset. (See my 8 traits). Set them to work executing against carefully chosen targets. (How you choose those targets, how you manage them – that’s critical to your success).

Manage them well and ask them the right questions. Have these smart people start in more junior roles, and have them spend a lot of time with your customers, really understanding their problems and how they think about the value you deliver. If you create space, they’ll grow into broader more senior roles. Historically, home-grown leadership talent has always had a much higher success rate than outside hires.

This Hire is Not your Big Lever.

Most of all, please understand that your “Head of Growth” is not actually the biggest lever you have to pull. As the CEO of a pre-Series-B company, you are the head of growth. What could you possibly have to do that’s more important than finding and engaging more customers?

CEO as Head of Growth?

Being a great “Head of Growth” CEO doesn’t take much time. As I outline in our Playbook, you can probably do it in two hours per week. Here’s what you need to do:

  1. Understand your growth formula, and define your KPIs
  2. Find the rate-limiting step and make it your “North Star” metric
  3. Align your whole company (not just a marketing hire) around that North Star metric
  4. Drive a company-wide mindset change to enable you to exceed your goals faster – by modelling the right behaviour and setting the right expectations for your team.
  5. Insist on a lean experiment-driven process that lets you quickly identify your riskiest assumptions and “turn unknowns into knowns” as fast as possible.

Truth is a lot of us would be lucky to get a good t-shaped marketer. A good t-shaped head of growth is valuable, but it’s a compromise. The best heads of growth have the mindset and understand the process. They won’t be the hammer looking for nails. They’ll actively eschew their own comfort zone, and lead the entire organisation headlong into the unknown – to make it known.

Even the most talented head of growth cannot succeed without the explicit focus and support of the CEO and the rest of the organisation.

You could spend £10,000 to hire your Head of Growth. Spend 5 minutes figuring out how to help them be successful – read: CEOs – How to Manage the Growth Function in our Playbook.

This post is an excerpt from our Playbook – Download the full book today.
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2018 Fundraising KPIs – European Series A

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The $100,000 Myth

People seem to believe that $100K monthly revenue is the magic fundraising KPI for a Series A. Sometimes it’s £100K or €100K, sometimes it’s recurring revenue, sometimes it’s gross merchandise volume. But it’s always an even 100K. In any case, that’s just wrong, please forget it.

An active VC in London for the past 3 years, I’ve backed 35 companies, and so-far, 12 of them have raised “up rounds” and many of the others are on-track to do so. I’ve been working with a lot of founders on fundraising, and talking to a lot of Series A VCs about what they do and don’t want.

What’s wrong with $100,000?

Now let me tell you why the $100K thing is bunk: I’ve seen a company with no customers or revenue raise from top tier international VCs on a $10M valuation. I’ve seen a company with around $50K in monthly revenue raise from a top-tier international VC with a valuation above $50M, and I’ve seen companies with $300K MRR struggle to pull a round together at all. Ask other VCs, they’ll tell you the same thing. Series A investors are far too intelligent and selective to apply such a simple business rule.

So what are the Series A fundraising KPIs?

Let’s look at it from the investor’s perspective:

  1. What do Series A VCs want? They want to do investments that can “return the fund.”
  2. Since a normal Series A check is £3M – £10M, and the funds are £50M – £200+M, that means, after dilution1, they need a 10X – 50X return.
  3. Since the average Series A valuation is around £30M, that means, assuming some dilution1 in later rounds, they need to believe your company can exit for a £500M – £2B valuation within the lifetime of their fund (e.g. the next 7-10 years).
A £1B+ exit in 7 years? How do you prove that?

It is, of course, impossible to prove. But these are the best signals – the things you should demonstrate with your traction as you begin your raise.

  1. Large & expanding market – The market exists and is underserved, as proven by other companies, but isn’t too competitive or impenetrable.
    KPIs You demonstrate this by showing that your customer base is growing quickly, that the growth is not slowing down, that you’re getting a lot of referrals, CPAs are going down and that your targeting can be quite broad, but still effective. Show, with the diversity of your customer base, that your service’s appeal jumps across national borders, industry/vertical sectors, age and demographic barriers. Back this up with a detailed bottoms-up sizing that shows you understand who you are selling to, what problem you’re solving, and how you plan to reach them.
  2. Amazing Team – Your company could grow 100X in 10 years, you’ll wake up and have 500 employees. Can you handle that as a leader?
    KPIs This is quite subjective. One major “signal” for VCs is to look at your track record of past accomplishments, so highlight previous leadership roles, successes and failures. Also, once you get into due diligence, investors will do extensive interviews and background checks to see how you think about the business and scaling. And of course they will want to spend lots of time with your team to get to know you and see how you work together.
  3. Good Unit Economics at Scale – Venture businesses grow quickly and perform well because they have such high margins. High COGS are a direct drain on cash, and create operational hassle and limit your speed of growth. For specifics, see my post “What I Learned at PayPal.” (Or check out the Sonos, FitBit and GoPro stock prices since their IPOs).
    KPIs Gross margins, realistic estimates of what those margins will look like at scale (including “touch costs” and fully allocated CPA), and a realistic sense for how you will get to those margins as the business grows.
  4. Strong Product-Market-Fit – Evidence people love you!
    KPIs How much of your traffic is via referral/word-of-mouth? Do your retention curves flatten? Do your accounts become more valuable over time (AKA “negative churn”)? How quickly are you signing up new customers? VCs will also check this by speaking to your customers to make sure they are happy now, and their broader needs align with your roadmap.
  5. Competitive Moat – How does your business systematically lock out competitors? Do you have a strong network effect or an insurmountable first mover advantage? Exclusive access to some kind of resource or customer or supply acquisition channel? How wide is the gap and long will it last?
    KPIs Again look at the acquisition dynamics, can you quickly and cheaply acquire, engage and retain customers? Do your customers bring you more customers?
  6. Downstream Appetite – Will your business need to raise more money? If so, how much and when? Is it the sort of business that Series B, C, D and E investors would want to back? Some markets, rightly or wrongly, are just “cold” to investors. (e.g. ecommerce, ad-tech).
    KPIs Amount and growth of later-stage funding into your industry (in Europe or elsewhere), a thoughtful detailed plan that shows how much you will need to raise, when, and possible sources.
  7. Limited downside – Even though venture capital is famously “high risk,” most VCs, especially in Europe, are looking to limit losses.
    KPIs Recurring revenue stream from loyal customers, or very active M&A market for your tech and talent, rare & valuable intellectual property – anything that could provide a “floor.”
So what about the $100,000? Does revenue matter at all?

That number is “helpful but not sufficient.” It should get you investor meetings. Below that threshold, only the most extraordinary companies (e.g. founder’s previous company was very successful) can pull together a big raise. And it provides a large enough data set to divine the more meaningful metrics above. However, that six-figure monthly revenue will go a lot further if you have:

  • A high and consistent MoM growth rate
  • Very high (e.g. SAAS or Marketplace) gross margins
  • Recurring revenue, as in a subscription biz
  • A founding team with a track record of success, and big bold goals
  • A CEO who can connect the long-term goals with short-term objectives
  • Very low CPAs driven by referrals, organic, network effects
  • You have an obviously large and expanding market
  • Every VC in-town wants into your cap table because of raging FOMO
Animal Spirits

Speaking of FOMO… that last point is important. Warren Buffett once said “The market is a voting machine in the short term, and a weighing machine in the long term.” He means that in the short-term, investors’ irrational emotions set prices, but over the long term, underlying business value drives returns. (And smart investors like him arbitrage the difference between the two).

Nowhere is that more true than venture. Seed rounds are all about the dream: Charismatic founders with vision; potential and possibility divined from early traction. But by the time you get to Series B, it’s all KPIs: The calculators come out, and valuations must bear an obvious mathematical relationship to revenue, margins and growth. The Series A folks live in that awkward in-between stage, a weird mix of hype and traction, what could be and what is. As a founder hoping to raise, you ignore either at your peril.

Acknowledgements: Huge thanks to a few outside experts who reviewed and commented on this post, including Sean Seton-Rogers of PROfounders Capital, Ben Blume at Atomico, Katie Marrache from JamJar, and 500 Startups’ Rob Neivert for the Silicon Valley perspective.

1 Dilution is when the value of an investor’s equity is reduced as more equity is sold in subsequent fundraises. For a super-simple example: Suppose you own 10% of a company. The whole company is only worth $100, and your portion is worth $10. If that company then raises $100 from another investor, the company is now worth $200, but now you only own 5% of the company. So you could say your ownership has been “diluted” from 10% to 5%.

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Marketing Job Descriptions: 8 Traits for the Perfect Growth Hire

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Marketing Job Descriptions: 8 Traits for the Perfect Growth Hire

Why this matters: Hiring (attracting, selecting and inspiring) amazing people is the #1 lever you can pull as a leader. Talent is the only proven true consistent source of competitive advantage.

Why should you listen to me?

I’ve screwed it up many times! For years as a Marketing Director, I hired dozens of people and repeatedly built high-performing teams. Later, as a VC, evaluating founders and their teams became my most important job. During that time, I made lots of mistakes, and learned many things the hard way. I also had some shining successes, of which I’m very proud. Anyone who has worked with me, even my detractors, will tell you that these days I hire great people.

Roles on a Growth Team

On any growth team, you need 5 roles. As an early stage startup, you may not be able to fully staff a dedicated growth team with all 5 roles. But the growth people you do have will need access to all of these resources on some sort of part-time basis.

1) Product – one PM who can spec growth features, manage the growth product roadmap.

2) Engineering – Engineer who can focus on user acquisition and engagement, work on growth experiments. Will likely need to do A/B testing, front-end and database work.

3) Analytics – Somebody who can define your growth KPIs, run the queries, connect the tracking systems, build and populate the dashboard, swim around in the data looking for patterns and insights, and answer millions of questions.

4) Design – A mix of UX, landing page design and branding – very user-focused, can work quickly, “done is better than perfect.”

5) Actual marketing – Last but not least, someone who knows how to understand customers, demonstrate the value of your offering to them, select and optimize channels, run this whole process, and inspire the rest of the company to support their quest.

Silos = Death

One common misconception is that “marketing” is a group that sits independent of product, dev and data, and “puts traffic into the funnel.” This couldn’t be further from the truth, and marketing pretty much only works if it’s part-and-parcel with the rest of your product experience.

The 8 Traits for your Marketing Job Description

Over the years, building growth teams inside big companies and startups, I have identified a pattern of traits that have consistently stood out. Obviously, no single individual possesses all of these traits. (In-fact some of them sit in conflict.) Instead, you should try to make sure they are all present and leveraged among the various members of the team, and that they can work through those conflicts in a constructive, healthy way.

1. Humble

Marketing is a process of learning. You’re only really learning if you’re aware you don’t have all the answers. The best marketers often have no reason to be humble – they are brilliant accomplished people. But they remain humble because they take risks, fail often, and learn constantly.

2. Curious

Great marketers are incessantly curious. It can even be a bit annoying. But when they see results that don’t quite make sense, they are not willing to “assume away” anomalies in the data. Instead, they dig and dig to find insights. They always want to know why things work or don’t work, constantly interrogating data, co-workers and customers.

3. Scientific

Growth is literally a science. Many of the best marketers have a background in the hard sciences. You’re developing hypotheses, calling out your assumptions and validating them via a rigorous process of experimentation. These people can design a sound experiment, interpret the results, and design the next test.

4. Artistic

There’s no getting around it, great marketing is beautiful. Great design uplifts us , makes us feel good about ourselves. Great writers can draw us into their worlds, inspire and move us. And truly effective marketing connects with us at a deep level.

The artists and the scientists will clash, there’s tension inherent in their collaboration. But they need to work through that conflict to deliver great marketing that converts.

5. Optimistic

Building a startup is hard work, the pay isn’t great, and neither are the odds. Great marketers will persevere. In our “Distro Dojo” we’d work with batches of 6 – 10 companies. And in each batch, one of the companies would get lucky, and post an early win – an experiment that doubled some important KPI. We’d celebrate the success. But the other teams struggled with that FOMO. They would run test after test, week after week, never managing to move the needle. “Trust the process” we’d say.

Sometimes it took them 2, 3, 5, even 8 rounds of testing to find a “win.” But eventually they did. But this can be hard, gut-wrenching, demoralising stuff. Everyone will question and challenge you. (Everyone thinks they’re a marketing expert). And you need to be able to survive on faith that one way or another, you’ll figure this out.

There is something of a paradox here, it’s true. But it is possible to be both humble and optimistic. (Google “The Stockdale Paradox”). As a VC, I often ask founders “On a scale from 1 – 10, how do you rate your odds of success with this venture?” (I know the actual odds, it’s not pretty). The best founders all seem to come up with the same answer: “How sure am I that we’ll succeed in the long-term? 10 out of 10. But am I sure we’re doing the best work we can and making the right decisions over the next few months? 3 out of 10.” So you see, they are at once deeply humble and deeply optimistic.

And yes, for the record, great entrepreneurs are delusionally optimistic. Just like Steve Jobs’ famous “reality distortion field” they see a clear vision of the change they are trying to make in the world. It’s so real they can touch it, and they are drawn inexorably towards it. “Leadership” is the act of inspiring others to join you on that journey. So yes, you do want to hire somewhat delusional marketers.

6. Tenacious

If you haven’t read Shoe Dog (Biography of Nike founder Phil Knight) or Ashley Vance’s biography Elon Musk, or The Everything Store about Jeff Bezos’ years building Amazon… that’s some good reading! One thing every normal human being will think, as they read those books, is “why does he keep going?” Each of these men went to hell and back, multiple times, before these businesses became the “obvious” successes you now see.

Before founding their current companies, Phil Knight had an MBA from Stanford, Elon Musk made a fortune from the PayPal IPO, and Jeff Bezos was a hedge fund manager. None of them ever really needed to worry about financial security or success. And all three of those founders’ companies should have been dead multiple times. (In-fact Musk is going through that again with the Tesla Model 3 and Space-X simultaneously!) And where most normal people would have given up 100 times… these nuts persevered. Of course you could say this is “hindsight bias.” And lots of entrepreneurs persevere like crazy and fail. But if you look at all the successful ones, every single one of them was insanely tenacious. (It’s a necessary but not sufficient condition of success).

7. Bridge Builders

Done right, growth really involves the entire organisation. Not just the designers, analysts, product and engineers, but the CEO, operations, customer service. Everyone’s role is connected, somehow, to that “north star” metric. Great growth leaders understand that, and bring everyone on the journey with them. That the company will succeed or fail as a whole. They make sure everyone understands their role and their goal. They are extremely generous with (honest) praise, calling out good behaviours, and acknowledging successes. They give everyone the benefit of the doubt and assume positive intent. There’s no petty politics or backstabbing, the entire team shares in the credit for victories. And when things fail, they don’t get into the blame game – they own it and fix it so it won’t happen again.

8. Integrous

Integrity describes the alignment between the thoughts in your head, the words that you speak (honesty) and the actions you perform (follow-through). If people lie, even about small things… nobody lies about just one thing… that’s a huge red flag. People who take credit for the ideas or work of others, people who make excuses and pass blame… any hint of impropriety or dishonesty, do not hire. No matter what. In a startup, every employee has the “keys to the kingdom.” Any employee can walk out with the codebase, the financials, customer lists, cash. It happens all the time. Plus these people just have all kinds of other dysfunctional behaviours. This is especially important for growth marketers, who are are, by definition, leaders in your organisation.

What’s not on this list?

Reading these “8 Traits for the Perfect Growth Hire” you might have noticed a few omissions… I didn’t mention Facebook campaigns, Mixpanel, AdWords, SEO, ad agency experience, B2B, B2C, Optimizely, Mailchimp, Hubspot, Marketo, Lead Generation, AppsFlyer, ASO, affiliates, partners, Hootsuite, WordPress, outbound, inbound, direct mail, SQL… or pretty much everything you’d put in a job spec for a marketer is not on my list.

That’s no accident.

Over the years, the best marketers I’ve hired have had no marketing experience at all. I hired them purely for their thinking and approach – to business problems and organisational problems.

In his excellent book Principles, Ray Dalio makes the point I think many of us have learned… skills and experience generally don’t matter, and we should focus instead on attitudes, values, personality and ability.

Marketing Isn’t Rocket Science

Marketing in particular doesn’t require deep technical skill or off-the-charts computational, athletic or musical ability. For me, that really skews the equation over towards the “attitudes, values, ability” vs. “skills/experience” end of the spectrum.

What’s more, in today’s European market, skills and experience around performance marketing command a real premium – it’s hard for an unknown startup to hire people with performance marketing experience. Funny thing is, they don’t need to! (For more on that, see my post Why you should not hire a T-shaped head of growth.)

So next time you have to write a marketing job description, focus on these attitudes and abilities over experience, and you’ll find better people faster without over-paying.

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Your Startup’s Strong Core

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It doesn’t matter what sport you play – cycling, climbing, football – experts agree that having a strong “core” (back, hips, abs) is essential. If you do sports with a weak core, your performance will suffer, at best, and you risk serious injury.

But what does this have to do with startup marketing?

As a CEO, it doesn’t matter what kind of marketing you want to do – Facebook, SEM, SEO, PR, outbound, sales or “guerrilla” – you will struggle to scale customer acquisition on tactics alone if you don’t have the Five Core Strengths of Startup Growth.

As a VC, I see so many startups pouring money into Adwords and Facebook, using all kinds of crazy math to justify the CAC:LTV, kidding themselves that this will ever pay for itself. (Andrew Chen: “How Startups Die”) And there are such easy obvious opportunities to cut that CAC and speed acquisition if only they had a strong core.

How do I know? I spent 15 years as a Silicon Valley marketer and GM myself. Since then I’ve been an early-stage VC and run a post-seed “growth hacking” accelerator in London. I’ve helped dozens of startups scale acquisition, with consistently strong results.

We have worked with 35 companies of all sorts – B2B, B2C, software, ecommerce, marketplaces. We kept seeing the same gaps and mistakes consistently across companies and the root cause was almost never around tactical execution. Great execution flows quickly and naturally from a strong core.

But what is a “strong core” when it comes to growth?

The 5 Core Strengths of Startup Growth

Once you really have “core strengths of startup growth,” your tactics start to make a bigger impact. Organic acquisition and conversion go up, so your CPAs go down. Your activation spikes and your retention curves flatten, so your LTV goes up. That means you have more cash to play with, which means you can grow faster without having to sell as much equity.

There are 5 strengths that form your Growth Core.

Strength 1: Message

The quickest, easiest wins we’ve seen with companies have come from messaging.

Great messaging is precise and specific, and resonates with your customers at a deep emotional level. When it works, it’s reflexive, Pavlovian. We’ve seen companies increase conversion as much as 7X by changing just a few words. But they need to be exactly the right words that speak to underlying behavioral triggers.

First you need to deeply understand your product/market fit, what itch you scratch for your customers at the most mundane nuanced level. Second, you need to speak in a way that instantly resonates with their needs.

Most companies who have product/market fit don’t actually understand why.

Uncovering customers’ deep needs is a journey of surprises. For example, we all know drivers want safe cars. But what makes drivers feel safe? It turns out people feel safer when driving cars that have smaller windows. Who knew?

This stuff is not obvious. You can start by reading The Mom Test. We have developed a simple process to help you discover these insights and turn them to exactly the right words – to drive traffic, signups and conversions.

Here’s an example from our program – working with Photobook company Popsa. Really strong team, and they had a good understanding of their customers problem: People love to have photobooks, but they hate to make them: £50 and 2 hours wrestling with badly designed software. They changed their app store listing from “Print Photobooks” to “Photo Books in 5 minutes.” Do you see the difference? It increased their install rate by 4X overnight.

Strength 2: Metrics

If you have a strong, effective team, you will get what you measure. But if you pick the wrong metric, your highly effective team will march steadily in the wrong direction.

I’ve seen countless companies squander countless millions deluding themselves with, and waste top talent through misaligned incentive structures.

At PayPal, we had access to metrics on over 10 million businesses. My team built predictive models to find the ones with the highest revenue potential. As a marketer, I’ve amassed years of insider knowledge on industry benchmarks. As a VC I’ve seen hundreds of startups. I know what “good” looks like. And the key is to find your “rate-limiting step.”

Smart people have published reams of great info about SAAS and Marketplace KPIs, so I won’t repeat all of it here. But here are a few common mistakes:

  • Vanity metrics – Being focused on metrics like visits, installs, activations, that don’t necessarily represent customer attitudes or behaviours or business value. Simple rule of thumb: The magic is not in the numbers themselves, but the ratios between them.
  • Misaligned incentives – Poorly chosen numbers drive all sorts of unintended and unhelpful outcomes and behaviours.
  • Bad Data – Just that – session-based rather than user-based tracking, conflating customers with visitors, repeat visitors vs. uniques, inconsistency across platforms, common attribution errors – all lead to dangerous miscalculations and misguided focus.
  • Too much complexity – This one surprised me. Some of the most intelligent founders I’ve met have incredibly complex analytical frameworks that connect marketing and product behaviour. Massive spreadsheets, integrating heaps of key ratios and KPIs. I was astounded by how often these businesses fail. It is possible to overdo analytics. Instead, winning founders choose a few simple metrics that are easy to understand and powerful for galvanizing the team. Good metrics empower your whole team to make good decisions based on the data.

This one is fairly easy to fix. A conversation with the right outside expert can help you find this “rate-limiting step” quickly.

Strength 3: Focus

Focus on the highest impact work. Again, sounds obvious, but who actually does this well?

Most founders know that 90% of their customer acquisition will come from 10% of their work. But they struggle to figure out which 10%. Companies have a dozen competing priorities at any given time. And the result is you often do the wrong work, and do it badly.

How many months of runway do you have? Six? Twelve? Each day you try to guess and pivot around, that’s one day less to make progress towards your goals.

At any given time, you probably have 100 growth ideas you want to try. First review your numbers, and find the rate-limiting step. De-prioritise everything that is not focused on that area. (A mentoring session with a seasoned startup marketer who has experience with your type of business can help you do this). You’ll knock out 50 – 70 ideas quickly. From there, it’s on to process: Prioritize the others, identify the key assumptions behind them, and run a series of fast experiments to whittle down the list, narrow your focus, and optimize execution.

Strength 4: Team

As a marketer and a VC, I have learned time and again that this Core Strength trumps all the others. If your team has a growth mindset you’ll probably find the right metrics, invent good process, learn enough about your customers. And if you don’t have the growth mindset… none of the other things in this blog will help you for very long.

In mathematical terms, over the long-run, a strong slope beats a high y-intercept.

Sadly, most companies make the mistake of hiring for experience and skills, rather than mindset. (Lots more about hiring in my blogs 8 Traits, and Why You Should Not Hire a T-Shaped Head of Growth). But let’s talk here briefly about leadership creating mindset.

How to Lead for Mindset?

The good news: If you, as a CEO, have that growth mindset, there are simple ways to seed that thinking in your team. Start by modelling the behaviour: Speak openly about your own mistakes and what you learned from them, and things you learn from your customers each day. Then, encourage people to talk openly about their mistakes (and more importantly the lessons they’ve learned)! Create a safe space where people can talk openly about their mistakes and uncertainties without fear of retribution.

You can bake these conversations into your operating rhythms. Make that part of your daily / weekly standups or weekly status emails, or make a Slack channel #lessons.

One example: Before we ran each A/B test at PayPal, I’d ask each person involved with the experiment (especially the senior execs) to make a public prediction about what they’d expect for a result. Then, when we had the actual results, we could compare them with our predictions (eliminating hindsight bias) and unpack the assumptions that led us to our correct or false conclusions.

Strength 5: Process

Execute fast, learn fast.

Once you’ve found your 10%, how do you maintain consistent focus on the highest impact work? Despite all the random ideas, suggestions and crises that crash in every day? Engineering teams have prioritised backlogs and short “sprints.” Why should your marketing team be any different?

First, make sure everyone in the company understands the rate-limiting step, and track it with a “north star metric.” Everyone in customer acquisition should be able to explain how, by a series of steps, their work impacts that number.

From there, you run a process that looks a lot like engineering. You’ve identified a small number of ideas that you want to try, and you prioritise them by effort and impact. Turn each idea into a “minimum viable test” that you can run in a week or two. For each idea, identify the riskiest assumption, develop a hypothesis, and run an experiment. If the results are promising, double-down.

The drumbeat of the process is a weekly growth meeting with the CEO, the analytics person, and the marketing team. Review the numbers, talk about the most important things you did last week, what you learned, and decide what you’ll do this week.

When Fast isn’t Fast

I hate to say “execute fast” because everyone thinks that means “type faster, fewer meetings, no chairs in meetings” etc. While these “life hacks” might make you move around your office faster, they do not move your company faster.

Remember from The Lean Startup that progress means moving quickly through the “build-measure-learn” feedback loop – running experiments, quickly turning unknowns into knowns. Same thing with growth – every piece of work you do is based on a set of critical assumptions. You need to identify your riskiest assumptions quickly and validate (or disprove) them via “minimum viable tests.” Even if you do not have enough traffic to run A/B tests, there are lots of fast powerful techniques to get this learning.

Silver Bullet Sauce

So that’s it, the secret sauce with the silver bullets mixed in. From these five strengths, great companies grow.

Before you invest in growth by…

● Spending money on Facebook or Adwords
● Building new product features for customer acquisition
● Hiring and training a salesperson
● Doing a re-brand
● Hiring a recruiter to find you a t-shaped head of growth…

… first take an honest look at your company and think about these five Core Strengths of Startup Growth. How do you rate? Does your company live these strengths every day? If not, any additional investment into tactics will be a waste of money and precious time.

This post is an excerpt from our Playbook – Download the full book today.
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Startup Marketing: The One Inch Punch

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If you haven’t seen a video of Bruce Lee’s “one inch punch” take a minute to watch it. Bruce Lee was 171cm (5’7”) tall, weighed 58 kilos (130 lbs), and his “one inch punch” carried a force in excess of 70KG (154 lbs), and would knock a full-grown man back two metres. What can the Little Dragon teach us about startup marketing?

True Power is Often Completely Hidden

How could such a small man deliver such an enormous force so quickly? Physiologists understand that strength does not come from the size of your muscles. Rather, it comes down to how much of your muscle fibre your central nervous system can recruit and fire in unison. When we practice a motion, such as a penalty kick or a backhand, we get stronger with repeated effort. That’s largely because our brains are learning the movement, and they’re able to take fuller advantage of more of our muscle fibres. The fibres do get stronger. But the real power comes from the central nervous system.

The perfect analogy for startups

How could teeny startups like AirBnB, PayPal and Transferwise, with only a few dozen employees, challenge giant companies like Hilton, Visa and Barclays? Just like Bruce Lee, the key is to get everybody pointing in the same direction and firing in unison towards a clear common goal.

Big companies have all the advantages – heaps of cash, loyal customers, brand awareness, supplier relationships, government protections. Extremely formidable foes! They only have a few weaknesses: They are slow, risk averse, and lack focus.

Therefore, as a startup, your only chance to win is if you can focus intensely, take risks, execute and learn fast!

Most startups are moving in too many directions

The product team is trying some new features that might draw customers. Online marketer is trying some search campaigns, A/B testing the homepage. BizDev is working on a corporate B2B2C opportunity. PR person is trying to get the CEO some press quotes and a speaking gig. Analyst is making decks to answer investor questions. Operations fighting fires. CEO maybe fundraising… Sound familiar?

Focus! Easy to say. Hard to do. That’s why we spend so much time training teams around process.

More Muscle For The Punch

Our five Core Strengths of startup marketing: Message, Metrics, Focus, Team, and Process, can be abbreviated MMFTP. That’s “More Muscle For The Punch.” And it’s no coincidence that we end with Process, the Punch.

Startups come into our programs with all manner of marketing goals: Fix our CAC, help us hire so-and-so, find more channels… But when we survey CEOs afterwards, and ask what was the most valuable thing they learned? They always mention the process. Getting everyone firing in unison, moving in the same direction, quickly – that’s the punch.

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Note: This essay is an excerpt from the “Growth Hacking For Founders” eBook.
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