Marketing Sense

Stanford has released a couple of more classes in addition to the high-profile popular AI class. Three caught my attention. Lean Launchpad by Steve Blank, and Technology Entrepreneurship by Chuck Eesley are two that I will at least follow, whereas the Game Theory class sounds like a good brush-up on my Rationality and Choice class from my philosophy studies. Since it is listed under Computer Sciences, the cool thing would be start to bring those principles into computational form. Maybe I will have to take the time to learn Matlab one day.

I haven't been able to get very excited about the entrepreneurship literature flying off the shelves lately. What is missing is a certain specificity. Interestingly, many books do the common-sense thing and introduce a general principle that should then be applicable to more specific case in practice. That's not how it works, however. It is not the general things that matter, but the specific things. That's why case studies are so powerful - you can imagine the situation and the context, and are able to prepare for a similar, although never an identical situation.

There's a guideline in screenwriting and fiction writing that goes something like this: for universal appeal, write about very specific things. Nobody wants to see yet another generic rom-com with lukewarm, thin characters. What viewers want is specific characters because they, we all, can better identify with them, even if they were very different from us. Being specific is powerful.

This should also hold in entrepreneurship literature. The examples need to be deep with background and context, and even personal details. One of the best books on entrepreneurship I know is still Founders at Work, which is just a collection of interviews. Those interviews are powerful because they are very specific stories, but also educational because they empower the reader and prepare themselves to face similar challenges. No literature can prepare an entrepreneur to the exact challenges they will face - since without the risk, it wouldn't be entrepreneurship.

I'm seeing lots of startups these days. Startups at events, pitches in emails, even pitches over SMS at 00:15 on Friday night (yeah – not recommended).

There are good ones in there, always, but I'd like to air a personal opinion. Almost always the ideas are too small. Even if there's the ambition level to create a great product for the global masses, what I would really like to see are big ideas. Are you really making a difference?

It's like we've moved from digitization to widgetization. There are wonderful platforms out there that you can easily build products on – phone apps, web apps, mashups – but that doesn't mean that everything should be just an extension of a platform. You're trading off flexibility and reach of the idea to speed and reach of users, which definitely feels like a fair balance. But in addition to shoehorning ideas into smaller molds, widgetization also drives a long-term risk. If you build on an existing stack of platforms and create something very useful for that platform, the next update of that platform may well kill off your idea. Updates to Twitter, Facebook and iOS for example kill startups every time. If you are so awesome, why wouldn't the platform provider just build that functionality into the platform? Of course you can aim for being that functionality, but aiming at a specific exit from the start is easier said than done.

Think outside the platform. Don't be a widget. What are the really big things you'd want to do? How do you want to change the world? How do you want to affect people's lives? I think I'll start asking those questions more.

This week on Wednesday I spoke at the UKTI seminar at the UK Embassy in Helsinki, attended Arctic15 on Thursday and a VC matchmaking day on Friday. I met investors, startups, startup hopefuls and seasoned founders preparing for the next exit. Here are a few thoughts about the last three days.

The country has taken impressive steps forwards in terms of attitude. If you repeat something over and over again, you wear through even the toughest cynicism. Startups are now the theme of the day politically and in the media. Entrepreneurship is the new dream job. Startups are the new real estate. The scene, the people talking about them, working with them and promoting them, are to thank.

The startup fan scene is impressive. The people are ambitious, often self-congratulating, sometimes delusional. And sometimes talented. Rubbing shoulders among aligned thinkers creates a tight echo chamber, evidenced for example by the observation that most of my chats about startups in Finland involved someone quoting something Steven Blank said. He was just in Finland for a week, meeting everyone from government to academia and from startups to investors. Someone, elated, had just received an email from Steven, I learned in one conversation. Nest time I saw the same person he was showing the email from Steven to someone different. If anything, everyone is hungry for success. At least it seems that success is within anyone's reach. As it should be: success is not magical. It is well to listen to the experts, try to relate to the experiences, and think of ways how you can learn from others' successes and failures to make the little tiny piece of the world you are trying to change that much bigger.

Disappointingly, the pieces that people wanted to change are for the most part minute. There are to many B2B businessmen, too many small improvements, too many features talked up as products. This is a classic conflict of interest, of course: an investor wants to see entrepreneurs take big risks, while entrepreneurs in general want to take controlled risks. That's how I translate "passion" in investor-speak: dedication and desire so great that it changes one's risk profile. Investors love finding the Alex Honnolds (you have to check him out) of the startup world - it would be damn crazy if he wasn't that damn good. If you know how to get a firm hold of the rock, being a bit nuts only means you'll go orders of magnitude higher than anyone else.

But passion and skill are not enough. You need personal, private integrity: the guts it takes to realize and tell yourself that you are indeed so damn good you should do something great. That's what I would like to see more of. It is not easy. Maybe it's a cultural thing.

For a small market like Finland, the market is surprisingly fragmented. Guys running a massively successful vertical search engine would be a top success story if the startup fan scene would know about it. An international celebrity massively relevant to another company just gave a speech, and they didn't know he was in the country. There's Arctic Startup of course, a blog bordering on being a niche media in itself that drives a little bit of the community, but in a small market, it is enough to do things just that well, not any better. You're not aiming for much beyond your own country or region anyway, are you? Maybe you should. More international success stories are needed. And they won't come unless we make them happen. 

October 13th is National Fail Day in Finland. I wanted to write an op-ed about the day and did some research on the Facebook page and the site promoting the day. I looked at some of the testimonials there, and it still sounds like this is not failing people are talking about, but somehow celebration perfectionism. 

To hell with perfection. There is no perfection. Perfection is moot. What color is perfection? It isn't. Exactly. Forget about it.

If it works well enough, it should be as big as it can be, and then some. If not, fail well, fail fast and fail forward.

I just had a quick read through of the Startup Genome report. The ambition level and aims of the team are commendable. But I was disappointed by the substance. I would like to make it clear that I respect the endeavour immensely and would certainly like to see a more robust reporting of the findings. Maybe concentrating on just a couple of the points the list as their 14 key findings would make it even more valuable. I also respect getting Steve Blank to launch it with this article.

As a disclaimer, having written my Master's dissertation on the topic of using evolutionary analogies in the social sciences, I hope you'll understand I'll take a pretty critical view to anything claiming to map the genome of anything above the level of biology.

First of all, you have to remember this is survey report. Surveys are inherently flawed in selection bias, and this issue should always be addressed in any report claiming findings based on a survey. Based on the description on their blog, it is impossible to say how large this bias has potentially been. To put this simplistically, if you survey startups about success, are you sure you are including the failed ones in the first place? Further, how do you make sure you are reaching out to those succesful ones that are no longer startups at all? Maybe they tackled this, but selection bias has a great risk of turning a survey report into an echo chamber. Here is a long post on analysis methodology. But the most important disclaimer would be the data gathering description.

The high-level points are good reminders of some of the things that are important.  I'll go through their 14 key points here.

1. Founders that learn are more successful: Startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth.

Startups that follow success stories and learn from them are likelier to succeed. Sounds pretty good, if a bit obvious. Also, without exact methodology, the numbers mean very little. Also notice that the survey includes both very very early stage startups, and companies that have been developing their product and their company for a long time. In the longer run, it is likelier that you read and follow more of what happens in your field, and it also likelier that you are getting funding, since you have survived (yes, notice the tautology).

2. Startups that pivot once or twice times raise 2.5x more money, have 3.6x better user growth, and are 52% less likely to scale prematurely than startups that pivot more than 2 times or not at all.

This is certainly pretty open to interpretation. What is a pivot, anyway? At what point? If you change your idea twice during the first week, did you use up your pivots? Another way of saying this is: If you can't adapt, you fail. If you lack focus, you fail.

3. Many investors invest 2-3x more capital than necessary in startups that haven’t reached problem solution fit yet. They also over-invest in solo founders and founding teams without technical cofounders despite indicators that show that these teams have a much lower probability of success.

It would very interesting to see how this changes over time and over economic conditions. No, I won't mention the b-word.

4. Investors who provide hands-on help have little or no effect on the company’s operational performance. But the right mentors significantly influence a company’s performance and ability to raise money. (However, this does not mean that investors don’t have a significant effect on valuations and M&A)

This sounds interesting. But this needs to be opened much more, since hands-on help is not a hard-and-fast data point, and can vary from individual to individual greatly. Another explanation for this is that there is just too much noise in interpreting this that it looks exactly the same.

5. Solo founders take 3.6x longer to reach scale stage compared to a founding team of 2 and they are 2.3x less likely to pivot.

Not surprised, but given the concerns about the methodology and terminology, the numbers are pretty meaningless.

6. Business-heavy founding teams are 6.2x more likely to successfully scale with sales driven startups than with product centric startups.

Not surprised.

7. Technical-heavy founding teams are 3.3x more likely to successfully scale with product-centric startups with no network effects than with product-centric startups that have network effects.

Not surprised. Another way of saying the above points is that you should do what you are good at. The learnings about core competence are nothing new.

8. Balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.

Great! Sounds like most of the opinions of traditional VCs and incubators about ideal teams.

9. Most successful founders are driven by impact rather than experience or money.

That they want to make something big happen? Awesome, I agree.

10. Founders overestimate the value of IP before product market fit by 255%.

Ok. How do they know what the actual value of IP is, against which the 255% is calculated? I would definitely need more data, or will continue to take this with a massive chunk of salt. Also notice that even if this was exactly true, it would still be enough in the ballpark for an estimate to be pretty good. It is not off by an order of magnitude.

11. Startups need 2-3 times longer to validate their market than most founders expect. This underestimation creates the pressure to scale prematurely.

A resounding yes! Notice though they say "validate". Do you know exactly when you validate your market, or is that something you will realize after the validation happens, and has itself been validated, and has maybe survived an invalidation... you get the point. It is a moving target. But yeah, things tend to take longer than you expect them to.

12. Startups that haven’t raised money over-estimate their market size by 100x and often misinterpret their market as new.

I would love to know how many of these unfunded startups are teams who have actually worked on the company for over 3 months full time.

13. Premature scaling is the most common reason for startups to perform worse. They tend to lose the battle early on by getting ahead of themselves.

This is a golden nugget of wisdom and should certainly be opened more. Please, please research this more.

14. B2C vs. B2B is not a meaningful segmentation of Internet startups anymore because the Internet has changed the rules of business. We found 4 different major groups of startups that all have very different behavior regarding customer acquisition, time, product, market and team.

Yeah. But we tend to not do a hard division of businesses anymore anyway. Business-to-user or self-service B2B are flavours of companies between the hard borders of B2B and B2C.

Additionally, I am not a big fan of their "Marmer stages" (pretty gutsy naming them after the main author, well done there), as descriptive as they are. Here is the justification:

"We attempt to provide that evidence for the existence of the Marmer Stages int wo ways:1) The Marmer Stages correlate with traditional indicators of progress. 2) Startups that don't move through the stages consistently, show less progress."

How does that prove the existence of something new if it correlates with traditional progress indicators (which themselves are validated by #2)? This sounds like repackaging more than discovery.

There is more in the report, and like I said, the things they bring up are good reminders. There just isn't that much news in it.

This blog post was originally posted at the HackFwd Blog.

With the release of The Telegraph’s European Start-Up 100, Europe gets another benchmark for tech companies that are looking to break it big. From our perspective, the list mostly features companies quite far into their startup life, but it provides an interesting perspective into what the European startup landscape is looking like. There are certainly successes, with many more on the way.

Starting up in Europe has its unique challenges. Working across Europe, we at HackFwd are keenly aware of having to take them into account. There are the immediate ones, such as different paperwork and widely differing requirements in setting up companies. There are some cultural challenges and challenges of language. While much of the European startup crowd is fluently bi-lingual (or even tri-lingual) and English is lingua franca, this may not extend to the support functions, customers or partners that the startup might have or is looking to go after. In the paper-pushing side, the European Company Statute, while promising as an initiative, has not yet proved to be a solution for startups. Less than 800 such companies in total were registered by the time of writing.

Startup financing is equally fragmented. HackFwd has a fixed investment model across Europe, and we like to think that’s a bit of breath of fresh air, given that investment sizes, practices and both public and private instruments vary from country to country.

Geographical fragmentation is also interesting from the perspective of competitive research. You might be working on the next big thing in your niche and nobody in the English-speaking world, according to your extensive, near-paranoid googling seems to be doing the same. But how do you know there is not something big brewing in the German or French parts of the web, that just hasn’t been localised yet, possibly on purpose? Not translating into English is no way to keep a startup in stealth, of course, but limited market areas can serve as test beds for certain types of products that benefit from social spreading but are not ready to be brought out in a big way. Intimate local knowledge is one of the reasons HackFwd likes to keep feet on the ground in as many countries as possible in the form of our referrer network.

There are many more special aspects of starting up in Europe. The biggest, implicit even in this discussion, is the constant comparison to the US. Europe is fragmented, and we point that out over and over again because the US is not. This will continue to be a relevant comparison for a long time, but it is good be mindful of another comparison, well delivered by Benjamin Joffe at last week’s GeekNRolla in London. It is not only the US we should be comparing against and considering, but Asia as well, in some cases foremost. There are many good reasons why European startups want to get traction in the US (tapping into the big-name VCs and startup experience not being the least). But there can be many valid reasons why European companies could look East instead of West.

The key to starting up in Europe is thinking big, thinking the world instead of just parts of Europe. Being multilingual is a given in most of Europe and even fragmentation can be used to your advantage. There is financing and no shortage of talent capable of exceptional execution. All these are needed. But, especially in Europe, thinking big is the key.

We learn from UX and design experts that products must be user-centric. Thereby, we go out and do extensive qualitative research with the potential users. We interview them, ask them questions about their needs, even spend time with them observing their actual behaviour in everyday contexts. This is all very good, but it is not nearly enough.

You might think that if you know who your user is and what their needs and behaviour with your product is, you can align your marketing to address these needs, and Bob's your uncle. It would be wonderfully simple if this was the case. Even if you have done careful qualitative user research and meticulous surveys to make sure you are doing the right thing for your exactly defined target audience, you are not in fact done.

The environment in which users interact with your product may change so much that they behave differently depending on the time of the day, the other engagements they have going on at the same time, or the person they are interacting with. We like to think of other people – and by extension, ourselves* – as having unchanging, fixed personalities. At the same time, we acknowledge rash decisions, heated tempers, stress. We buckle under persuasion, and we claim the mind is willing but the flesh is weak. We may behave and react very differently to the same stimuli in the morning and in the afternoon. Think about yourself. You like to think you have a pretty standard way of dealing with, say, your email inbox, but do you behave differently with emails that are in the queue in the morning, when compared to those that drop one by one during the afternoon hours? It is very difficult to accurately capture and represent such time- and context-dependent changes in behaviour. Add to this changing personality the changing external world, and you have quite a few variables to handle.

An example: you have a web service with a freemium business model. You monetize by offering a paid version, and the upgrade-link on your free product's dashboard is your number one revenue driver. Let's assume you've seen a 5% conversion rate in the past, and now that you've started to acquire a bit more customers, conversion rate has dropped to 3%. This could be due to a number of factors. It could be due to your new users being slightly different from the ones you acquired previously. Or maybe the free features you've introduced have made upgrading less appealing. Or it could be that your users have been conditioned by the use of another product to disregard your upgrade link more than previously. It could be those or a couple of dozen other options.

These causal hypotheses are very good and help you learn and think things from your user's perspective. Educated guesses about why a user does what they do, or why they might stop doing something, are good, but you don't have to get to the truth of the matter here. In fact, you don't have time to get to the truth. Your product is changing too fast and so is the rest of the world to nail down exactly why a single link works the way it does. All you need to know is what works. For this, you need variation, testing and iteration.

*yes, it goes in this order, but that's a topic for philosophy of mind, and a different blog

Related articles

• The 3 Keys to Success with Freemium (startup-marketing.com)
• Guerilla Website User Testing: Small Scale Usability Testing, Massive Benefit (xemion.com)
• Who Do You Engage in a Freemium Business Model? Everyone? (customerthink.com)
• Psychology Professor Addresses Qualitative Research in New Book ... (newsroom.duq.edu)

Iteration is an indispensable term and principle in software development and increasingly other project management. While the concept may be clear, a definition of terms should be useful. Here is how I think about it. An iteration is a version of a product or a project that best meets the currently known (prioritized) requirements within the currently available resources. To iterate, therefore, is to develop the product or project in such a manner that you end up with consecutive versions of it, each meeting the known needs within the know requirements within the current resources.

The Scrum project management method illuminates the idea of an iteration well. Scrum is also strong with the idea of a shippable product at the end of each iteration (or Sprint, in Scrum-talk). For software development, this makes a lot of sense. You want to have a functioning unit of a product that is aimed at meeting a need ready for testing at the end of each of development cycle. That way, you can incorporate the results of testing in future development cycles (to simplify). The point is to get a small piece 100% done, instead of getting larger wholes 80% done within a cycle. 80% done is half-baked.

The crucial takeaway for marketing is the idea of a shippable product. However you set up your marketing, you will want to have the current parts functioning 100%. You don't have to have 100% of your marketing ready and running at any point really. You likely never will. Software versions don't really end – you have version 2, not version 2 out of 10. Likewise, product marketing will never be ready. You will construct your marketing from various components – AdWords, a newsletter list, a Facebook campaign, a video contest – and what ever your palette at any given time is, you will want that palette to function well enough to yield results. You should be interested in the results on two levels.

First, obviously, are the results that tell you if you are making money. Is the channel working? Are you paying less for a lead than the lead is worth?

On another level, you should be interested in the results on a higher level. Your product marketing will give you valuable feedback on what is working and what is not. You will be able to test not only different copy or different landing pages, but different positionings and even different business models. A/B testing is crucial in this, but if you can, don't start off by testing designs. Start off by testing offers, differentiations and even business models. Consider, for example, can you launch both a freemium and a paid model with a low entry fee at the same time? How long would you need to test your marketing to get strong signals on customer value in the different models?  Or to put the same inquiry in a larger context: What is your burn to feedback?

The next posts will address the human reasons on why iteration is necessary and what kind of tools could you have in your iterative marketing toolbox and in what order.

In this blog I aim to pour together all the collected marketing knowledge and experience that I, and more importantly, many other experienced product marketing experts have accumulated.

The bulk of my professional experience comes from Google's product marketing team. Although it read "product marketing manager" on my business card, in actuality we spoke about product marketing as marketing. And while we mostly worked with products, product and feature launches and new market openings, the designation "product" was still mostly a territorial and not a functional one. In this blog, I want to concentrate on product marketing as a subset of the vast field of marketing which includes as much as you can find concepts starting with the letter P ("These go to eleven."). I'll touch on other Ps than product, but only as a subordinate to Product.

In marketing, the product must take priority. In fact, the product can and ideally is the marketing. This is especially true for startups looking to build their products on 'viral' (or organic, as I like to call them) mechanics. It is also your marketing, because people talk. Seth Godin has distilled many big concepts into a handful of words, and he does the trick for marketing better than anyone, so to paraphrase him: "Your marketing is not what you say about your product, but what other people say about your product". Get that, and you're very far into your marketing strategy.

Marketing starts with a product that makes sense to people who (are to) use it. It makes sense because it works, it benefits them, it fits their life, their social situation, mindset and their culture. It makes sense because it fills a gap. It makes sense because the price (or other trade-off) is right. Some of these are absolutely necessary for a successful product: others you ignore at your peril. I intend to dive deep into all of these topics and what they mean to marketing a product.

The next post will be on why marketing is an iterative process, and how you can iterate it.

This blog will be used to collect and share educational material, links and video discussions related to product marketing: the kind of scalable, sensible marketing that every non-marketing person is perfectly capable of doing, once we remove the blinders and open the black box. Let's get started. Please come back soon.