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“We have thousands of users and we have done no marketing!”
This has become a common refrain among companies that I’ve been meeting with recently. I know their expectation is that I’ll be impressed by their thriftiness, but my internal reaction is quite different:
Why the heck not?!
If you’re starting a company that will ultimately need to balance customer acquisition cost and lifetime value, whether it be an ecommerce company, subscription service, or some kind of productivity app, not spending time and/or money on marketing from day one is a huge mistake. I don’t expect startups to have a churning content marketing engine or hustle their way to a SuperBowl commercial (though startups have done both), but a few hundred dollars in ads on Google or Facebook is a no brainer.
“Lean Thinking,” popularized by Eric Ries, has been a huge boon to the startup community and while the notion of building a Minimum Viable Product has taken hold, entrepreneurs often think of customer acquisition as an all or nothing proposition. Something they’ll do after we invest.
This is backwards.
Go Down the Funnel or Down the Drain
First, you should be marketing for your own sake. If you have a decent product, spend a thousand dollars, and get no customers — well that’s not a good sign. Better to know earlier rather than later when the business is at its most formative state.
Second, if you spend a thousand dollars and the test goes well, you’ve just dramatically improved your chances of getting funded! VCs love nothing more than seeing an humming engine they can pour gasoline into, rather than one that might not even start.
Third, even if your test marketing efforts fail, it’s a helpful discussion to have with investors. It shows scrappiness that’s invaluable in getting a company off the ground.
Finally, not grappling with customer acquisition at an early stage can permanently damage your organization. It allows your culture to calcify and become permanently dependent on investor dollars.
Here are some examples of companies that marketed early, often, and inexpensively:
- Mint is the classic case study in this area and got people excited about banking software by pioneering the use of infographics and content marketing with nearly no budget.
- SparkFun/AdaFruit/iFixit built marketing into their product. All three are part of the “maker movement” and created high-quality tutorials featuring the components they sold which were passed around eagerly by hackers.
- Wayfair is now a massive player in e-commerce, but built its business through smart Search engine marketing, buying up over a hundred domains with exact matches for popular searches.
- HubSpot became a billion dollar company by blogging and producing content that complemented their core marketing software.
- GoldieBlox created a web video that went viral and founder Debbie Sterling hustled to the point where she earned a Super Bowl spot, worth $4 million dollars, for free.
- Tinder co-founder Whitney Wolfe evangelized the dating app by going door to door at fraternities and sororities, tripling the user base in the process.
- ProductHunt is the new gold standard in early-stage, budget marketing. Before there was even much of a product, founder Ryan Hoover managed to whip up an energy around the concept like a latter-day PT Barnum.
- Plated, one of our portfolio companies, appeared on Shark Tank, sending tens of thousands of viewers to their site.
These examples are fun and wildly creative, but you don’t need to come up with an award-winning strategy to start traction.
I’ve often seen companies led by product founders try to solve every problem with another rev of an app. But “lean thinking” doesn’t have to be limited to product development. Apply the same principles to customer acquisition. Iterate on marketing strategies until you find something that works.
Acquiring customers and making money is a skill and if you go too long without practicing it, you might find yourself in the market for bankruptcy lawyers.
Gaurav Jain is a Principal at Founder Collective, an early stage VC firm based in Cambridge and NYC that has made investments in 150 companies including Uber, Buzzfeed, and Makerbot. He cofounded Polar and was an early Product Manager for Android. Follow him @gjain.
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