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The Real Challenges of Startup Marketing

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Startup marketing is challenging. If you’ve come from larger or more established company background as many of you will, you may be used to relatively stable working environments. Startup marketing doesn’t operate in this, comfortable, fixed, luxurious environment. This is not only with respect to burn rates and cash runways, but also in the way you will have to work to develop your understanding of your customer, your available marketing channels and everything in between. The level of unknown and the flux between all these unknowns is huge, sometimes overwhelming. However, by being systematic and having a process in place you can win, and win big.

Status quo? What status quo?

Startups are highly dynamic environments so many aspects of the business are rapidly changeable. Tech startups can now make changes to their product in real time, changing pricing structures manually or programmatically, turn advertising off here, on there and so forth. Never before has the status quo been so non-existent.

Couple all of this combined  with low volumes of customer data and you have a potential cacophony of information from which to make decisions.

Decision making is just your best guess

Low volumes of customer data terrify me. When you have small sample sizes, outliers carry disproportionate amounts of weight. You won’t even know which data points are the outliers yet, exacerbating the problem. Companies have the ability to make terrible decisions based on outliers.

One question that regularly gets raised is: “how do I know when I have enough data to make this decision?”. It’s a tricky one to answer. The statistician in me wants to delay the response until I’ve got a significance level of 95%. However, startups rarely can wait this long.

It is time to get comfortable with the fact that the decision you’re going to make is really just your best guess. There is a subtle nuance between allowing data to guide you (relying on 95%+ significance), and making decisions that can be justified using the data available. The first one is easy. It is achievable by anyone with the required sample size and a deft hand at Excel. The second one less so. Justifying your decision making requires you to ask the right question of your limited data, get a result, perhaps test the significance (although a lot of the time this might freak you out). Accept the potential for it to be wrong. Regardless of outcome, use the result to further inform your inherent knowledge about the question to make a decision one way or another. When you have low data you need to gather all the information about a scenario possible and use your judgement to make a call.

This is a tough gig by the way – as a startup marketer you’re being asked to make decision based off limited data in a highly dynamic environment. Lots of the time you’re going to make a ‘wrong’ decision. Paradoxically this is where the dynamic nature of startups will help you as it will allow you to correct your course and avoid that Titanic sized iceberg before it is too late.

A section about metaphorical escalators (bear with me…)

One mistake I often see is a company resting on its marketing laurels. It’s a moment when the company has typically found a marketing channel that has sufficient scope to grow the business and the CPA is in line with expectations. At this point there is sometimes a process of optimisation of the channel in question, and in other cases the channel is just left to itself. This is bad.

Visualise this scenario by thinking of two escalators side-by-side going at slightly different speeds. You’re on the faster one and your friend is ahead of you on the slower one. You get on the escalator and immediately start making ground on your friend. You represent your marketing efforts and your friend represents a marketing channel (i.e. Facebook ads, Adwords etc). Importantly, both are moving independently of each other.

When you and your friend align next to each other on the escalator you have a channel that is working efficiently. Now, knowing that you’re moving at different speeds you are aware that you need to optimise this channel. You can do this by taking a step backwards every so often to maintain your alignment next to each other. You can keep doing this for a while, and until you reach the end of the escalator otherwise known as your marketing channel efficiency inflection point, that’s a great scalable channel.

Now what happens if you speed up the escalators? When you do this you’re effectively pushing the channel harder, driving more from it at an accelerated rate. All seems good if you can optimise yourself at the same rate (although there will be a point where you can’t and fall over backwards – don’t try this at home). However, the end of the escalator approaches faster, meaning you have less time in this channel until you reach your maximum scale whilst maintaining efficiency.

If you only have one channel, this looks fairly simple. However, in reality you’re going to need to spool up some more escalators in case one escalator breaks down. Bringing more escalators online is akin to performing marketing channel diversification. Similar to financial portfolio diversification this aims to act as a bit of an insurance policy if one channel decides to stop working effectively. Another way of saying this is “don’t put all your eggs in one basket”.

Framework for escalator maintenance contiguous marketing

The steps below should ensure that your marketing never reaches the end of the escalator, and that if your escalator malfunctions you’ve got some backups in play.

These first two steps, A & B, are crucial to perform before you go to market.

  1. Establish your personas
  2. Find pockets of high audience density

The next 6 steps should cycle, to ensure you’re adding to your list of channels before any stop working.

  1. Channel test – using the rapid-fire technique
  2. Establish a first channel
  3. Begin optimising that channel (to prove it can indeed be optimised)
  4. Channel test – using the rapid-fire technique
  5. Watch out for scalability issues in your first channel
  6. Launch new channel

 

  • Repeat 1-6 (forever, and ever, and ever-ever…)

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About the Author

This article was written by Thomas MacThomas of the Path Forward. The Path Forward was developed by Forward Partners, a VC platform that invests in the best ideas and brilliant people. Forward Partners devised The Path Forward to help their founders validate their ideas, build a product, achieve traction, hire a team and raise follow on funding all in the space of 12 months. The Path Forward is a fantastic startup framework for you to utilise as an early stage founder or operator. The framework clearly defines startup creation as being comprised of three steps. The first step of this framework involves understanding customer’s needs.Tom is Head of Marketing at Forward Partners. He is an award winning growth marketer, having gained experience heading up the marketing function at high growth daily deals site Wowcher, online gaming firm William Hill Online and more recently the mobile app Bizzby. Tom helps our startups with marketing strategy and support, everything from PPC all the way through to TV.

Callum Connects

Benjamin Kwan, Co-Founder of TravelClef

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Making music to create a life for his family, Benjamin Kwan, started an online tuition portal and his music business grew from there.

What’s your story?
I am Benjamin and I’m the Co-Founder of TravelClef Group Pte Ltd, a travelling music school that conducts music classes in companies as well as team building with music programmes. We also run an online educational platform which matches private students to freelance music teachers. We also manufacture our own instruments. I started this company in 2011 when I was still a freshman at NUS, majoring in Mechanical Engineering.

I was born to a lower income family, my father drove a taxi and was the sole breadwinner to a family of 7. I have always dreamed of becoming rich so that I could lessen the burden placed on my father and give my family a good life.

After working really hard in my first semester at NUS, my results didn’t reflect the hard work and effort I put in. At the same time, I was left with just $42 in my bank account and it suddenly dawned on me that if I were to graduate with mediocre results, I would probably end up with a mediocre salary as well. I knew I had to do something to gain control of my future.

During that summer break, I read a book “Internet Riches” by Scott Fox and I knew that the only way I could ever start my own business with my last $42 would be to start an online business. That was how our online tuition portal started and after taking 4 days to learn Photoshop and website building on my own, I started the business.

What excites you most about your industry?
Music itself is a constant form of excitement to me as I have always been an avid lover of music. As one of the world’s first travelling music schools, we are always very eager and excited to find innovative ways to a very traditional business model of a music teaching.

What’s your connection to Asia?
I was born and raised in Singapore and I love the fact that despite our diversity in culture, there’s always a common language that we share, music.

Favourite city in Asia for business and why?
Hands down, SINGAPORE! Although we are currently in talks to expand to other regions within Asia, Singapore is the best place for business. I have had friends asking me if they should consider venturing into entrepreneurship in Singapore, my answer is always a big fat YES! There’s a low barrier of entry, and most importantly, the government is very supportive of entrepreneurship.

What’s the best piece of advice you ever received?
I have been blessed by many people and mentors who constantly give me great advice but right now, I would say the best piece of advice that I received would be from Dr Patrick Liew who said, “Work on the business, not in it.” This advice is constantly ringing in my head as I work towards scaling the business.

Who inspires you?
My dad. My dad has always been my inspiration in life, for the amount of sacrifices that he has made for the family and the love he has for us. He was the umbrella for all the storms that my family faced and we were always safe in his shelter. Although my dad passed away after a brief fight with colorectal cancer, the lessons that he imparted to me were very valuable as I build my own family and business.

What have you just learnt recently that blew you away?
You can not buy time, but you can spend money to save time! With this realisation, I was willing to allow myself to spend some money, in order to save more time. Like taking Grab/Uber to shuttle around instead of spending time travelling on public transport. While I spend more money on travelling, I save a lot more time! This doesn’t mean that I spend lavishly and extravagantly, I am still generally prudent with my money.

If you had your time again, what would you do differently?
I would have taken more time to spend with my family and especially my father. While it is important to focus our time to build our businesses, we should always try our best to allocate family time. Because as an entrepreneur, there is no such thing as “after I finish my work,” because our work is never finished. If our work finishes, the business is also finished. But our time with our family is always limited and no matter how much money and how many successes we achieve, we can never use it to trade back the time we have with our family.

How do you unwind?
I am a very simple man. I enjoy TV time with my wife and a simple dinner with my family and friends.

Favourite Asian destination for relaxation? Why?
Batam, it’s close to Singapore and there’s really nothing much to do except for massages and a relaxing resort life. If I travel to other countries for shopping or sightseeing, I am constantly thinking of business and how I can possibly expand to the country I am visiting. But while relaxing at the beach or at a massage, I tend to allow myself to drift into emptiness and just clear my mind of any thoughts.

Everyone in business should read this book:
Work The System, by Sam Carpenter. This book teaches entrepreneurs the importance of creating systems and how to leverage on systems to improve productivity and create more time.

Shameless plug for your business:
If you are looking for a team building programme that your colleagues will enjoy and your bosses will be happy with, you have to consider our programmes at TravelClef! While our programmes are guaranteed fun and engaging, it is also equipped with many team building deliverables and organizational skills.

How can people connect with you?
My email is [email protected] and I am very active on Facebook as well!
https://www.facebook.com/benjamin.christian.kwan

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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Entrepreneurship

Before you enter a Startup or before you choose your founding team or new hires read, “Entering Startupland” by Jeff Bussgang

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Before you enter a Startup or before you choose your founding team or new hires read “Entering Startupland” by Jeff Bussgang.

Jeff knows how to spot and groom good culture, as the book session was held in Zestfinance a company he invested in and now, “The Best Workplaces for Women” and for “The Best Workplaces for Tech”, by Fortune.

These are the questions during the Book Launch.

How to know if a hire including the founder is Startup material?
Jeff says to watch for these qualities.

First, do the hires think like an owner?
Second, do the hires test the limits, to see how things can it be done better?
Are they problem solvers and are biased toward action?
Do they like managing uncertainty and being comfortable with uncertainty? And comfortable with rapid decision-making?
Are they comfortable with flexible enough to take in a series of undefined roles and task?

How do we know if we are simply too corporate to be startup?

Corporate mindsets more interested in going deep into a particular functional area? These corporate beings are more comfortable with clear and distinct lines of responsibility, control, and communication? They are more hesitant or unable to put in the extra effort because “it’s not my job”.

If you do still want to enter a startup despite the very small gains at the onset, Jeff offers a few key considerations on how to pick a right one.

He suggests you pick a city as each city has a different ecosystems stakeholders and funding sources and market strengths. You have to invest in the ecosystem and this is your due diligence. Understand it so you can find the best match when it arises.
Next, to pick a domain, research and solidify your understanding with every informational interview and discussion you begin. Then, pick a stage you are willing to enter at. They are usually 1)in the Jungle, 2) the Dirt Road or 3) the Highway. The Jungle has 1-50 staff and no clear path with distractions everywhere and very tough conditions. The Dirt Road gets clearer but is definitely bumpy and windy. Well the Highway speaks for itself, doesn’t it?

Finally Please – Pick a winner!

Ask people on the inside – the Venture Capitalists, the lawyers, the recruiters and evaluate the team quality like any venture capitalists would. Would you want to work for the team again and again? And is the startup working in a massive market? Is there a clear recurring business model?

After you have picked a winning team and product, how would you get in through the door?

You need to know that warm introductions have to be done. That’s the way to get their attention. Startups value relationships and people as they need social capital to grow. If you have little experience or seemingly irrelevant experience, go bearing a gift. Jeff shared a story of a young ambitious and bright candidate with no tech experience who went and did a thorough customer survey of the users of the startup she intended to work with. She came with point-of-view and presented her findings, and they found in her, what they needed at that stage. She became their Director of Growth. Go in with the philosophy of adding value-add you can get any job you want.

And as any true advisor would do, Jeff did not mince his words, when he reminded the audience that, “If you can’t get introduced you may not be resourceful enough to be in startup.”

Startupland is not a Traditional Career or Learning Cycles

Remember to see your career stage as a runs of 5 years, 8 or 10 – it is not a life long career. In Startup land consider each startup as a single career for you.

Douglas Merrill, founder of Zestfinance added from his hard-earned experience that retention is a challenge. Startup Leaders to keep your people, do help them with the quick learning cycles. Essentially from Jungle to Dirt road, the transition can be rapid and so each communication model that starts and exists, gets changed quickly. Every twelve months, the communication model will have no choice but to break down and you have to reinvent the communication model. Be ready as a founder and be ready as a member of the startup.

Another suggestion was to have no titles for first two years. So that everyone was hands-on and also able to move as one entity.

Effective Startupland Leaders paint a Vision of the Future yet unseen.

What I really enjoyed and resonated with as a coach and psychologist was how Douglas at the 10th hire thought very carefully what he was promising each of his new team member. He was reminded that startups die at their 10th and their 100th hires. He took some mindful down time and reflected. He then wrote a story for each person in his own team and literally wrote out what the company would look like and their individual part in it. In He writing each of the team members’ stories into his vision and giving each person this story, it was a powerful communication piece. He definitely increased the touch points and communication here is the effective startup’s leverage.

Douglas and Jeff both suggested transparency from the onset.

If you think like an owner and if you think of your founding team as problem solvers. Then getting transparent about financials with your team is probably a good idea. As a member of a startup, you should insist on knowing these things
Such skills and domain knowledge will be valuable. There is now historical evidence of people leaving startups and being a successful founder themselves because they were in the financial trenches in their initial startup. Think Paypal and Facebook Mafia.

What drives people to enter a startup?

The whole nature of work is changing. Many are ready to pay to learn. Daniel Pink’s book Drive showed how people are motivated by certain qualities like Mastery, Autonomy and Where your work fits into big picture. Startups do that naturally. There is a huge amount of passion and the quality of team today and as it grows then the quality of company changes.

The Progress principle is in place, why people love their startup jobs is not money rather are my contributions being valued? Do I see a path of progress and do I have autonomy over work and am I treated well?

Find out more about StartupLand on Amazon

And learn from Zestfinance

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